German factories have more robots than their US counterparts - so why are Americans four times more likely to leave their manufacturing jobs? By Anna Waldman-Brown.
The number of American workers who quit their jobs during the pandemic - over a fifth of the workforce - may constitute one of the largest American labor movements in recent history. Workers demanded higher pay and better conditions, spurred by rising inflation and the pandemic realization that employers expected them to risk their lives for low wages, mediocre benefits, and few protections from abusive customers - often while corporate stock prices soared.
The answer depends on more than what’s technologically feasible, including what actually happens when a factory installs a new robot or a cashier aisle is replaced by a self-checkout booth and what future possibilities await displaced workers and their children. So far, we know the gains from automation have proved notoriously unequal. A key component of 20th century productivity growth came from replacing workers with technology, and economist Carl Benedikt Frey notes that American productivity grew by 400 percent from 1930 to 2000, while average leisure time only increased by 3 percent. (Since 1979, American labor productivity, or dollars created per worker, has increased eight times faster than workers’ hourly compensation.)
While 8 percent of German manufacturing workers left their jobs (voluntarily or involuntarily) between 1993 and 2009, 34 percent of US manufacturing workers left their jobs over the same period. Thanks to workplace bargaining and sectoral wage setting, German manufacturing workers have better financial incentives to stay at their jobs; The Conference Board reports that the average German manufacturing worker earned $43.18 (plus $8.88 in benefits) per hour in 2016, while the average American manufacturing worker earned $39.03 with only $3.66 in benefits.
As the German example illustrates, robots can improve ergonomics and save workers from drudgery, and recent studies indicate that robot adoption can boost employment for small and midsize manufacturers by enhancing product quality, improving productivity, and allowing firms to branch into new product lines. Yet robots have also been known to have the opposite effect on workers—especially in larger factories with less skilled workers, where extensive automation can break up jobs and leave workers with repetitive, hard-to-automate tasks, such as continuously loading the same item into the same machine. But a lack of robots may make firms more susceptible to being outbid by higher tech rivals, potentially leading to even more widespread job loss in manufacturing. Very interesting read!
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