“Governments can choose to help close the pay gaps created by automation.”
Dr. Lou Martin
Associate Professor of History at Chatham University, Pittsburgh, United States
Recent advances in artificial intelligence and robotics have been stoking new fears about automation and the likely changes to the workplace. The term automation can lead one to imagine wonderful possibilities or nightmare scenarios.
The term was popularized by the 1952 publication of John Diebold’s “Automation: The Advent of the Automatic Factory.” An early promoter of computers in industry, Diebold envisioned a revolution that would “take us beyond the civilization of an industrial society, a revolution in which human beings will be largely freed from the bondage of machines.”
That same year, Kurt Vonnegut’s novel “Player Piano” imagined a world where engineers recorded the movements of workers and replaced them with machines. Then, the displaced workers were forced to live out their days in a dying town.
While neither extreme scenario came to fruition, elements of both did. Industries embracing automation at that time included steel, coal and auto manufacturing. Just after World War II, when the U.S. Steel Corp. developed a more automated process to manufacture seamless pipes, managers decided to close an older plant about 40 miles outside of Pittsburgh, known as the Steel City. Yale social scientist Charles Walker studied its effects and predicted more shutdowns would come from technological innovation, which would then necessitate labor migration. “Those effects,” Walker wrote, “should be anticipated and reckoned with by responsible industrial, labor and government leaders.”
They weren’t.
In the 1950s, American coal companies — with the backing of the miners’ union — began investing in machines that cut coal, loaded it, and transported it to the surface. Hundreds of thousands of mining jobs vanished with no discussions about the displaced workers. Over the next two decades, more than a million people left the coalfields, heading to cities like Detroit — the Motor City, home to General Motors, Chrysler and Ford.
But Detroit was also in the process of shedding jobs to automation. Ford opened an Automation Department in 1947, which included installing mechanical arms for moving parts, automated welders and automated painting. Between 1947 and 1963, Detroit lost some 134,000 jobs even as migrants were arriving. During the 1960s, the chemical industry, commercial airlines and other growing sectors absorbed a lot of displaced workers, but that was more a case of fortunate timing than good planning.
By that time, the coal, steel and auto industries of Europe were booming, and by the 1980s, countries like Brazil, Japan and China were entering those markets. Automation was one of several factors for the changes in the labor markets, but again shutdowns, mass layoffs and labor migrations soon followed.
In the Ohio River Valley, steel companies went bankrupt. Displaced steelworkers lost half of their pension payments and, if they were under 65 years old, scrambled to get healthcare. Nations with robust welfare systems in western Europe were often able to soften the blow of mass layoffs with national healthcare and retirement plans. But even in state-driven economies, industrial workers have faced tough times. In northeastern China — the country’s rustbelt — one miner said that they had been left behind “on the road to China’s prosperity.” He added, “If they paid us our pensions and health insurance, we’d at least be able to survive.”
The coming innovations in automation will once again fundamentally change the nature of work and the labor market. Now is the time to start forecasting the effects, preparing the workers likely to be affected, and planning smoother transitions. With action, governments and industry leaders can choose to help close the gaps created by tech advances. There doesn’t have to be a nightmare scenario.
“Tech advances aren’t going to close the skilled vs. unskilled pay gap.”
Dr. Florian Lehmer
Senior Researcher, Institute for Employment Research (IAB), Nuremberg, Germany
According to our research, technological innovations in the workplace aren’t necessarily closing the gap between qualified and unqualified workers.
While service providers have been investing in new technologies during the pandemic, manufacturers haven’t been as quick to do so. Service-oriented companies invested in technology that allowed employees to work and collaborate remotely, so service sector employees have benefited more from digitization than those working in production sectors. And even when production sectors have invested in these technologies, we’ve observed that the positive wage impact is greater for those in service industries.
Whether a worker will benefit from technological developments in the workplace strongly depends on what kind of work they’re actually doing. Among those who benefit the most are employees in IT occupations. That’s where we see that innovation and investments in technology are really complementary to the tasks these employees are already doing.
When it comes to someone working in a job that’s considered unskilled, then it gets a bit more difficult. If my job consists of carrying things in a warehouse and a robot could take over those tasks, then it really depends on what other tasks I’m doing in my job. If I’m doing skilled tasks, such as programming the robot or overseeing its supply routes, then this innovation can translate into higher wages. But if that’s not what I’m doing, then there’s no reason for an employer to pay me. So we think that the income gap between skilled and unskilled workers will increase.
So what does this mean for unskilled labor in the future? It depends on how far into the future we’re trying to look. Right now, especially in Germany, we’re seeing an acute shortage of unskilled workers, especially in areas such as the restaurant industry and the transportation sector. So right now there’s still a high demand for these jobs. But as digitization and tech innovation in the workplace continue to advance, workers will be required to bring more specialized skills to the table. And that’s why employment researchers consider lifelong learning and training to be essential.
In our research, we prefer to focus more on the nature of the tasks that workers are performing, as opposed to the broad terms of “skilled” and “unskilled” labor. The key will be whether a worker’s tasks are supported and made easier by tech innovations, leading to more productivity and higher wages, or if they are made obsolete, making it necessary for the worker to develop new skills.
I think we’re slowly moving away from a qualifications-based market, where your wages are determined by what kind of official training and degrees you have, and more towards a skill-based system. And that’s why it’s so important that constant learning is modeled and promoted throughout entire company structures, including from leadership positions.
Traditionally, companies didn’t really bother to provide training opportunities for low-skilled or unskilled workers to adapt to new tasks and technologies. Germany’s apprenticeship system is rather interesting in this regard. The German labor market is shaped by the tradition of “dual-learning,” where apprentices are gaining technical skills in a work environment while simultaneously participating in schooling.
The difference between what qualifies as “skilled” and “unskilled” labor in Germany is much wider than in other countries, but people are more likely to get the opportunity to continue developing. In order to ensure that as many workers as possible benefit from increased digitization, employers need to develop strategies to promote continuous skill-building among all levels.
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