OM in the News: Obama vs. ATMs and Technology vs. Jobs

In headlines last week, President Obama linked technology to job losses when he stated:  “There are some structural issues with our economy where a lot of businesses have learned to become more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM, you don’t go to a bank teller”. The Wall Street Journal (June 22,2100), however, says: “We usually call it progress. It isn’t exactly a new phenomenon. Businesses relentlessly look for ways to replace workers with machines”.

It’s true that telephone operators lost jobs to automated switching, toll collectors are being replaced by E-Z Pass, and that auto workers lose jobs to robots. The Journal gives 2 great examples of productivity increases that benefit society with lower priced goods. The 1st is the textile industry where 50 years ago, one N. Carolina worker operated 5 machines at once, each running a thread through a loom 100 times a minute. Now machines run 6 times as fast, and one worker overseas 100 of them. That’s a 120 fold increase in productivity!

The 2nd example is how 2 workers can now manage an egg laying operation of 1 million chickens laying 240 million eggs a year. The two keep an eye on the highly-mechanized, computerized process that no one could even imagine 50 years ago.

 The result of such productivity gains is a higher standard of living for all of us, in which we work fewer hours to afford enough money to buy  a dozen eggs, a flat-screen TV, or new shoes. Our blog a few months ago discusses why productivity increases are such a plus to society.

Discussion questions:

1. How do new jobs get created to replace the old ones?

2. Why do productivity increase help our society?