Automation Also Powers Product Innovation In A Way No Other Tech Capability Can By Completely Changing The Economics Of How Things Get Made.
Last month, hot on the heels of his inauguration as the 46th President of the United States, Joe Biden announced his plans to strengthen the U.S. manufacturing sector in the midst of the worst economic downturn since the Great Depression. Dubbed the “Made in America” executive order, it outlines the various ways Biden intends to fuel economic recovery in the wake of the pandemic, including investing $300 billion in R&D and advanced technology, while creating a whopping 5 million jobs in manufacturing.
To many, these two things may seem at odds with one another, considering the anti-human reputation that has plagued technology (specifically, automation technology) since the first Industrial Revolution (who could forget Trump’s unmaterialized plans to bloat factories with human workers, without so much as a whisper about tech/automation’s role in the sector?).
But Biden’s aim to both invest heavily in tech and job creation isn’t some idealistic future dreamed up in a political war room. I believe Biden’s onto something that critics and skeptics may be too afraid to admit: Automation tech is the catalyst for economic growth in the U.S.
Arguments against automation largely ignore the past; any glance in the history books will prove that it has in fact been fueling the economy since its inception. Let’s first consider the heart of the issue: job growth. Back when computers were first introduced in offices, they displaced secretaries and typists, but over time they also led to the introduction of an entirely new professional category of technical roles like computer technicians and IT professionals.
Fast forward to today, technical occupations are the fastest growing labor category in the U.S. Plain and simple, automation creates more jobs than it destroys. Indeed, this was a projection made by the World Economic Forum several years ago, noting that by 2022, automation will lead to the creation of 133 million new jobs despite a loss of 75 million. In fact, employment in total will continue to rise even if automation disrupts specific industries.
Automation Also Powers Product Innovation In A Way No Other Tech Capability Can By Completely Changing The Economics Of How Things Get Made. Thanks to the proliferation of advanced tech like computer vision, machine learning, adaptive robotics, and software on factory floors, manufacturing is no longer a clunky and expensive process requiring a massive financial investment or heavy equipment. Tech investment in the space has powered smaller, nimbler factories that can quickly and easily spin up and scale new products or adjust existing ones.
Over time, barriers to entry will continue to lower, so that anyone with a good idea can turn that idea into a tangible, marketable product. When more people are given the tools and the opportunity to engage in the manufacturing process, it opens the door to higher quality products and boundless innovation.
Job growth and innovation aside, tech investment in manufacturing has several other important economic advantages. At its core, automation is a productivity booster — McKinsey predicts automation could raise productivity growth globally by 0.8 to 1.4 percent annually. This increase in productivity results in a number of positive outcomes: higher output, which results in higher margins for companies, higher wages for employees, and lower prices for consumers. It also has the unique power to turn unpaid labor into paid labor.
Consider the example of the washing machine: the introduction of the common appliance monetized unpaid time spent cleaning clothes (previously a household chore) as washing machine manufacturers and laundromats took off and created a booming industry. The same can be said for the agriculture industry in the U.S.: between 1950 and 2000, the majority (82%) of the 7 million farmers who lost jobs to automation were unpaid family workers. Meanwhile, the loss of unpaid work in this industry had zero negative impact on overall employment in the country.
By 2000, the number of employed persons in the country (137 million) far exceeded that same category in 1950 (59 million). In addition to raising overall employment, automation in agriculture has indeed been critical to increasing productivity to meet the needs of a growing population. In sum, automation is a powerful economic stimulant (so powerful, in fact, that some estimate it’ll add $1.2 trillion to U.S. GDP over the next five years).
Trump’s idea that the health of the manufacturing sector should be measured only by the number of humans working in factories was gravely misinformed. While both Trump and Biden prioritized job creation in their manufacturing policies, it’s Biden who rightly acknowledged technology as the mechanism to achieving this goal.
Tech investment and job creation aren’t mutually exclusive goals — rather, tech/automation is the catalyst to enable meaningful job growth in a sector ripe for change, while also stimulating the economy at large. Fortunately, Biden is also taking the appropriate measures to ensure displaced workers can successfully transition to new roles through an investment in high-quality training programs. One year into the Great Lockdown, and with a new president at the helm, I believe we’re (finally) on the right track.
This news was originally published at Venture Beat.