Jobless workplace

Machines are increasingly replacing workers. The challenge is to ensure any benefits are shared with those being replaced, write Paul Wiseman and Bernard Condon

MARTIN FORD saw it everywhere, even in his own business.

Smarter machines and better software were helping companies do more work with fewer people.

His Silicon Valley software firm used to put its programs on disks and ship them to customers. The disks were made, packaged and delivered by human beings. Now Ford’s customers can just download the software to their computers — no disks, no packaging, no delivery workers.

“It is getting easier and easier to avoid hiring people by taking advantage of technology,” said Ford, 49, who has over 25 years experience in the fields of computer design and software development.

An ordinary entrepreneur might simply have welcomed the cost savings. But something nagged at Ford: He wondered how a consumer economy — and 70% of the US economy consists of consumer spending — could function if machines kept dislodging the workers who did the vast majority of the spending.

“At some point you simply will have too few viable consumers to power a healthy economy,” he said.

So in 2009, he thought through what would happen to the economy if machines kept replacing human workers. The result was his book, The Lights in the Tunnel.

Ford described a nightmare scenario. Machines leave 75% of US workers unemployed by 2089. Consumer spending collapses. Even those who are still working slash spending and save everything they can; they fear their jobs are doomed, too. As people lose work, they stop contributing to Social Security, potentially bankrupting the retirement system.

Ford knows that his apocalyptic vision defies history. For two centuries, technological advances — from steam power to the combustion engine — have delivered more economic growth, more wealth, more and better jobs. “The historical argument is compelling,” he said. “It’s been going on for 200 years.”

But this time is different, Ford contended.

Machines can do more and more human work. They don’t just replace human brawn the way older machines did; increasingly, they substitute machine power for human brainpower.

And their powers will only grow. Computing power doubles every 18 months to two years. “Information technology continues to advance exponentially. So the future impact is potentially going to be much greater than anything we have seen thus far.”

Just look at what the military is doing: waging war with drone aircraft, deploying robots to sniff out bombs in Afghanistan. “If you can build machines that operate autonomously on the battlefield, you can build machines that operate autonomously in a warehouse.”

In this face of such relentless competition, what can mere humans do?

Don’t fight technology, Ford said. Smarter machines will make life better and increase wealth in the economy. The challenge is to make sure the benefits are shared when most workers have been supplanted by machines.

He suggested imposing massive taxes on companies, which would be paying far less in wages thanks to automation, and distributing the proceeds to those left unemployed by technology. That would give them money to spend to keep the economy spinning.

To prevent the creation of a massive, idle underclass, Ford suggested paying incentives for people to keep going to school and to behave in ways that benefit the environment and society.

He admitted his ideas are “fairly radical and political untenable… But I don’t believe there are any easy conventional solutions.”

Manufacturers have been using technology to cut blue-collar jobs for years. Now, they’re targeting their white-collar workers, too.

Factory Automation Systems makes machines that help companies cut, bundle and load products faster and cheaper than humans can. But it didn’t realise how much technology could help its own business until the Great Recession hit.

To save money, the Atlanta company cut nine workers doing administrative tasks, like booking flights, answering phones, managing employee benefits and ordering parts and supplies.

“I had to lay people off to survive, then I noticed it’s not such a big deal” to do things myself, president Rosser Pryor said. “When I’m buying something, I can go online. I don’t need a buyer.”

Pryor said do-it-yourself software means he doesn’t have to rehire though business has rebounded.

Other manufacturers are using technology to avoid hiring blue-collar workers when business improves.

Stripmatic Products, a Cleveland car supplier, used to assign a worker to each of its stamping machines producing metal tubular car parts to look for jams inside the machines that cause costly stoppages, called “smashups.”

Then the recession struck, and Stripmatic had to cut staff. To monitor the machines, it turned to electronic sensors and got surprisingly good results. Smashups happen only once or twice a year now, instead of four per month before, and the presses are running two-three times faster.

“With a human, you’re going to get distracted, you’re going to feel the monotony of (the work),” Stripmatic president Bill Adler said. “You’re not going to be 100% successful.”

Stripmatic is doing 20% more business than before the recession, with a third fewer employees.

Factory Automation and Stripmatic cut just a handful of jobs each. But multiply those over many companies in many industries in many countries and it helps explain why so many in the middle class can’t find work.