Why robots are a worker’s friend

Instead of displacing American workers, robots may soon make many of their jobs more efficient. Intelligent machines increasingly scooting across America’s warehouse floors show just how. Companies use automated transporters to move packages without a human forklift driver. A few years ago, their adoption would have meant a lay-off. These days, it means a promotion.

"People are so needed that it's nearly impossible to displace a good worker," says John Hayes, Charlotte, North Carolina-based vice-president of sales and marketing at Vecna Robotics, which makes mechanised helpers for manufacturers and shippers. "What they're looking to do is automate the simplest of functions – point-to-point transfers – take those people, and move them to a more value-added job."

Early in a business cycle, productivity-enhancing investments can spell trouble for workers: “streamlining” and “efficiency” can sound a lot like “unemployment” to some observers. But in this tight labour market, technology investment could improve productivity and give companies room to raise wages without eroding profit. And employees transferred to more training-intensive positions could see their future career prospects improve.

"Workers are more likely to reap the gains from productivity when they have more bargaining power," says Nick Bunker, a Washington-based economist at hiring website Indeed. com who focuses on the US labour market. The unemployment rate is below 4 per cent for the first time since 2000, and recent data show that the country has more job openings than unemployed Americans. As the hot labour market bites, company earnings calls are full of complaints about worker shortages.

Business investment

Against that backdrop, business investment is finally creeping higher following a recession-exacerbated drought. Morgan Stanley’s capital expenditure tracker posted a succession of all-time highs earlier this year, indicating continued momentum in equipment investment. Spending on both structures and intellectual property remained robust in the second quarter. Productivity has yet to take off as a result. While output per hour grew at a 2.9 per cent annualised rate in the second quarter, on a year-on-year basis it has only averaged 1.3 percent gains since the expansion began in 2009. That’s down from average growth of more than 2 per cent in the 1990s and early 2000s. That slow progress could be holding back pay. Companies are often hesitant to hand out raises if they eat away profit: efficiency gains give them the cover they need.

Federal Reserve chairman Jerome Powell noted in a June speech that moderate wage growth is "consistent" with low productivity growth. "A tight labour market may also lead businesses to invest more in technology and training, which should support productivity growth," he said. Higher productivity would be welcome by the Central Bank because it could help the economy run at a faster pace without sparking unwanted inflation. Robot-marketer Hayes is watching Powell's prediction play out in real time. Vecna's transfer machines – stout, bright green contraptions reminiscent of a space-age lawnmower – are hotly demanded in retail and manufacturing warehouses. As they trickle onto concrete floors to fill shortages, it's often a welcome development.

"It doesn't take an MIT scientist to maintain it or keep it running: usually the folks on the floor can manage the system," he says. "You see workers move into way more productive positions, not just for them, but also for the company." – Bloomberg LP