Automation Makes Jobs

March 5, 1962

Ever since technological progress began, men have feared efficiency and machinery as a threat to their jobs. In the Industrial Revolution new stocking frames as they were introduced were destroyed by the handicraft workmen (more than 1,000 in a single riot), houses were burned, the inventors were threatened and obliged to flee for their lives. Yet before the end of the nineteenth century the stocking industry was employing at least a hundred men for every man it employed at the beginning of the century. And so with scores of other industries.

Yet the belief that machines on net balance destroy jobs, no matter how often disproved, never dies. Whenever there is prolonged unemployment, machines get the blame anew. In the depression of 1932, a group called the Technocrats emerged to blame the mass unemployment in that era once more on the machine.

Well, here we go again. A reporter at the press conference on Feb. 14 cited an estimate by the U.S. Labor Department that 1.8 million jobholders are replaced every year by machines. “How urgent,” he asked, “do you view this problem—automation?” And the President replied: “It is a fact that we have to find over a ten-year period 25,000 new jobs every week to take care of those who are displaced by machines and those who are coming into the labor market. So that this places a major burden upon our economy. . . . I regard it as the major domestic challenge, really, of the ’60s—to maintain full employment at a time when automation, of course, is replacing men.”

RECORD EMPLOYMENT

Now “automation,” in its broader sense, is simply the latest name for increased technological progress. To regard this as “a major burden” or “the major challenge” is to misunderstand it completely. It is true that machinery or automation can displace specific men from specific jobs, and this creates a problem. But it is not true that mechanization destroys jobs on net balance. Historically, it has always created jobs. In spite of our unemployment, U.S. employment in January exceeded 65 million, the highest for any January in our history.

It is important to understand not only that mechanization, automation or scientific progress has never reduced the total number of jobs, but just why it does not. First, a huge number of new jobs are created just to make the new automated machines. Secondly, scientific progress turns out innumerable products—telephones, motor cars, planes, air conditioning, radios, television, plastics, synthetics, miracle drugs—that never even existed before. A huge new demand is created. Thirdly, automation is most often adopted because it reduces costs of production. This means that it brings down prices. Then people either buy more of a product or have more money left over to buy other products. More jobs are created.

IT RAISES WAGES

Mass production, in brief, has made possible mass consumption. Mechanization increases production, real wages, and living standards.

When this is not understood, the policies adopted are precisely the opposite of what they should be. Unions no longer smash machines; but they still insist on slowdowns, make-work practices, featherbedding, retention of wholly unneeded workers, and other penalties to discourage mechanization. These policies injure all of us, and workers most of all.

It is not true, as the Administration thinks, that the government must “do something” to “find” jobs lost by automation. It is above all not true that it must resort to inflation or to massive new spending to “create jobs.” What it must undo are the ill-considered laws that have destroyed jobs.

To blame automation for current unemployment is to divert attention from the real cause. That cause is excessive wage rates in certain lines. It is no accident that some of our most serious unemployment is in the coal and steel industries, in which hourly wages have been $3.10 and $3.26 an hour respectively, compared with an average of $2.34 an hour in all manufacturing. And these job-destroying wage rates are the result, in turn, of the special legal powers and immunities that government has conferred on the unions.