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Do we need humans for that job? Automation booms after COVID

Economists at the International Monetary Fund found that past pandemics had encouraged firms to invest in machines in ways that could boost productivity – but also kill low-skill jobs. “Our results suggest that the concerns about the rise of the robots amid the COVID-19 pandemic seem justified,” they wrote in a January paper.

The consequences could fall most heavily on the less-educated women who disproportionately occupy the low- and mid-wage jobs most exposed to automation – and to viral infections. Those jobs include sales clerks, administrative assistants, cashiers and aides in hospitals and those who take care of the sick and elderly.

Employers seem eager to bring on the machines. A survey last year by the nonprofit World Economic Forum found that 43 per cent of companies planned to reduce their workforce as a result of new technology. Since the second quarter of 2020, business investment in equipment has grown 26 per cent, more than twice as fast as the overall economy.

Past experience suggests that such automation waves eventually create more jobs than they destroy, but that they also disproportionately wipe out less skilled jobs that many low-income workers depend on.

The fastest growth is expected in the roving machines that clean the floors of supermarkets, hospitals and warehouses, according to the International Federation of Robotics, a trade group. The same group also expects an uptick in sales of robots that provide shoppers with information or deliver room service orders in hotels.

Restaurants have been among the most visible robot adopters. In late August, for instance, the salad chain Sweetgreen announced it was buying kitchen robotics startup Spyce, which makes a machine that cooks up vegetables and grains and spouts them into bowls.

It’s not just robots, either – software and AI-powered services are on the rise as well. Starbucks has been automating the behind-the-scenes work of keeping track of a store’s inventory. More stores have moved to self-checkout.

Scott Lawton, CEO of the Arlington, Virginia-based restaurant chain Bartaco, was having trouble last fall getting servers to return to his restaurants when they reopened during the pandemic.

Automated transport robots are becoming more commonplace in warehouses.

Automated transport robots are becoming more commonplace in warehouses.Credit:Bloomberg

So he decided to do without them. With the help of a software firm, his company developed an online ordering and payment system customers could use over their phones. Diners now simply scan a barcode at the centre of each table to access a menu and order their food without waiting for a server. Workers bring food and drinks to their tables. And when they’re done eating, customers pay over their phones and leave.

The innovation has shaved the number of staff, but workers aren’t necessarily worse off. Each Bartaco location — there are 21 — now has up to eight assistant managers, roughly double the pre-pandemic total. Many are former servers, and they roam among the tables to make sure everyone has what they need. They are paid annual salaries starting at $US55,000 ($74,000) rather than hourly wages.

Tips are now shared among all the other employees, including dishwashers, who now typically earn $US20 an hour or more, far higher than their pre-pandemic pay. “We don’t have the labour shortages that you’re reading about on the news,” Lawton says.

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The uptick in automation has not stalled a stunning rebound in the US jobs market – at least so far.

The US economy lost a staggering 22.4 million jobs in March and April 2020, when the pandemic gale hit the US Hiring has since bounced back briskly: Employers have brought back 17 million jobs since April 2020. In June, they posted a record 10.1 million job openings and are complaining that they can’t find enough workers.

Behind the hiring boom is a surge in spending by consumers, many of whom got through the crisis in unexpectedly good shape financially – thanks to both federal relief checks and, in many cases, savings accumulated by working from home and skipping the daily commute.

Mark Zandi, chief economist at Moody’s Analytics, expects employers are likely to be scrambling for workers for a long time.

For now, the short-term benefits of the economic snapback are overwhelming any job losses from automation, whose effects tend to show up gradually over a period of years. That may not last. Last year, researchers at the University of Zurich and University of British Columbia found that the so-called jobless recoveries of the past 35 years, in which economic output rebounded from recessions faster than employment, could be explained by the loss of jobs vulnerable to automation.

Despite strong hiring since the middle of last year, the US economy is still 5.3 million jobs short of what it had in February 2020. And Lydia Boussour, lead US economist at Oxford Economics, calculated last month that 40 per cent of the missing jobs are vulnerable to automation, especially those in food preparation, retail sales and manufacturing.

Some economists worry that automation pushes workers into lower-paid positions. Daron Acemoglu, an economist at the Massachusetts Institute of Technology, and Pascual Restrepo of Boston University estimated in June that up to 70 per cent of the stagnation in US wages between 1980 and 2016 could be explained by machines replacing humans doing routine tasks.

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“Many of the jobs that get automated were at the middle of the skill distribution,” Acemoglu says.

“They don’t exist anymore, and the workers that used to perform them are now doing lower-skill jobs.”

AP

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