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Do Humans Still Have a Place in the Work Force?

In my last post, I talked about the introduction of technology and what it may mean to today’s work force.  The crux of the issue is an economic one – new technologies are increasing worker productivity making it unnecessary to have as many people doing the same job.  This means that the wise use of capital is in developing machines and technology that give a better return on the investment than using it for labor that is less productive.

At this point I left you with a question – So what are we to do?

One option is the creation of a new segment of craft manufactures and suppliers of services.  Some things are so intricate, variable, or flexible that humans are still the most productive way of providing them.  It is too complicated and expensive to create a robot that can make small batch Stilton cheese, for example.

The other option is education.  Skilled workers can provide a more productive use of capital in many situations.  This will mean that putting available money into a well-trained work force is a better return on investment than building a team of robots.  In the end, it is really an economics problem.

So what about education?  The Industrial Revolution in the late 1800’s created the greatest innovation in public education up to that time.  With the new technology that was developed, it became important for employers to have access to educated workers who could look after the new machines and take on more and more of the white collar jobs being created due the increase in worker productivity and manufacturing output.

The same need for skilled employees exists today.  For example, many manufacturers find that the most productive use of capital is to send work to factories that have a skilled work force.  This is why cars are being manufactured in Mexico and phones in China.  It is not just about the lower wages paid in those markets but about the productivity of the workers.  With our consumer products becoming more and more complicated, humans, even being paid a living wage for their market, are the most productive use of capital.   Humans are better at qualitative quality control (does it look right?); identifying process inefficiencies that, when corrected, can save money on the manufacturing cost; and, have the flexibility to change design specs to meet rapidly changing consumer preferences and demands (it’s easier and faster to retrain an human that to reprogram a computer or build a new robot).

Believe it or not, this is even true in the US.  More consumer goods companies are starting to produce their goods in the US rather than having it done overseas.  This “on-shoring” becomes economically viable because the work is well done, the turn around time is shorter and more cost effective (you don’t have to ship the finished products halfway around the world), and the U.S. based manufacturers have a better intrinsic understanding of the American consumer that helps the design and collaboration process.

So, if education of the work force is an answer to the technology revolution and income disparity how do we get there?  That will be the subject of my next post.