The U.S. labor market is in hot water, and robot substitution is quietly rising?

Millions of American workers have decided to quit or retire early during the pandemic, making it harder for businesses to find the right jobs.

The labor shortage has contributed to rising wages, according to Svenja Gudell, chief economist at The Wall Street Journal, employment website Indeed: "The extreme mismatch between supply and demand for labor has pushed up wages to a large extent. ”

In response to rising wages and labor shortages, automation is rapidly expanding in businesses of all sizes. Robots help companies simplify inefficient tasks and cut labor costs in an inflationary environment.

Bloomberg cites a new report from the International Federation of Robotics that spending on professional service robots increased by 12 percent last year.

01

Machine labor replaces labor

During the pandemic, U.S. airports and hospitals have introduced microbial-killing disinfection robots, fast-food chains have adopted robots that burn hamburgers, and restaurants have begun to use robotic waiters.

As the pandemic eases, the automation trend will continue to intensify. Orders for robotic machinery from U.S. automotive, agricultural, construction, electronics, food processing and warehousing companies have increased significantly since last year.

According to Zero Hedge, manager of Polar Manufacturing, a small company that makes hinges, locks and brackets south of Chicago, hiring a robot on the production line costs just $8 an hour, compared to a minimum wage of $15 an hour for humans. Robots, he said, allow workers to focus on other tasks while increasing production.

Steve Chmura, chief operating officer of Georgia Nut, another small company that is a confectionery company in Scotch, Illinois, told Zero Hedge: "Any initiative that helps reduce the number of workers or the demand for labor is clearly positive in this particular period." ”

Some robotics companies allow small and medium-sized businesses to pay for robots on an hourly basis, thereby reducing operating expenses and increasing productivity. For small companies, renting a robot reduces the cost of ownership more than buying it outright.

But while the wave of automation is accelerating, millions of workers will be replaced.

02

Wealth inequality in the United States is likely to increase

There are currently about 10 million job openings in the United States, the first time in decades that workers have power in the labor market. They are taking advantage of their "scarcity" to demand higher wages and more benefits from companies, which for employers will raise many costs.

According to Zero Hedge, Harold Daggett, president of the International Association of Dockers, said at a meeting in June that the company "has only one goal in mind — to have more money in our pockets, so we may take layoffs to reduce costs."

Driven by the pandemic, the wave of automation has swept across the economy, and now automation will make america's wealth inequality worse.

According to Zero Hedge, MIT professor Daron Acemoglu, "If automation continues to spread further, labor demand will grow slowly, inequality will increase, and the outlook for many low-educated workers will not be very good." ”

Acemoglu says companies can develop technologies that are more complementary to workers, rather than thinking about how to replace human labor with automation. Robotics could allow machines to replace humans and increase productivity, but it would also eliminate job opportunities for poor workers, which could worsen the U.S. economy even further over the next decade.

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