Welcome to Thrustblog

Welcome to Thrustblog. This blog is new as of February, 2011. New posts will be added as they are completed. Our main author is Tom Rossi, but we will sometimes have guest posts and eventually maybe even another regular poster.

Comments will be moderated, mostly to prevent spam and threats of violence or anything just completely whacked-out. However, I will publish comments that strongly disagree with my posts. I believe in free speech and open discussion. Debate lies at the heart of civilization.

Friday, February 4, 2011

Where have the jobs gone?

There certainly is a lot of blame flying around about job losses in the United States. For the last year, the "Tea Party" has taken the bullhorn and blamed the government with hefty political results. But is government spending or regulation really at fault? I got my answer last month when I went to the checkout line of my local (corporate chain) grocery store. There I saw what I had already seen at the "big box" home improvement store and at the airport: machines. These weren't just any machines; they were machines that had replaced human beings and their jobs.

Because I refuse to use automated checkout machines, I waited in line for one of the familiar human beings. She told me that, against previous promises of what would happen with the addition of the machines, her hours had been cut back by more than 1/3. When I think about it, how could there be any other result? Some of the cashier lines had no cashier anymore, just machines.

When I go to the airport, there are lots of passengers, lots of machines, and a small handfull of workers. The passengers are usually frustrated and waiting for help with a machine. Tension runs high. Where is the comfort of a competent human being? Gone.

This is one way a corporation can cut costs and improve the bottom line – by eliminating salaries (and the pensions and benefits that come along with the deal) and making a one-time investment in a machine. Of course, machines require maintenance, but that will certainly cost much less than the money saved by this substitution and the extra work of maintenance technicians will hardly make up for the employment that the machine eliminated.

This is why you get an annoying answering system when you call a big corporation for customer "service": "Your call is important to us, that's why you are talking to a machine instead of a person and why you will be kept on this system until you get sick of it and hang up. Press 1 for something nobody could possibly care about, press 2 for something completely irrelevant to your issue, press 3 to be put on hold for ten more minutes and then returned to this same menu, press any other key for this system to hang up on you." Always in a very polite (condescending) voice.

And so the burden has been shifted to the customer. No longer must businesses suffer the perils of over-employment – having a cashier or customer service rep sit idle when there simply aren't enough customers in the store or on the phone. Instead, the customers just have to wait: wait on hold, wait for a machine, wait for the one human being to help with an issue, or wait for a human being to help with a machine.

Of course, customer service is only one area where jobs are lost to machines – others include manufacturing, milling, logging, mining, and so on. And certainly automation isn't the only drain on American jobs. We've been hit with a one-two-three punch – automation, jobs sent overseas (the most well known of job-losers for Americans is cheap labor somewhere else – China, India, Mexico etc.), and consolidation of business into "big box" stores . But economists seem to agree that automation is the most important of these. The truth is that jobs are being lost to machines even in China. The machines are taking over everywhere.

So what's the difference between Megalomania Incorporated replacing customer service employees with machines, and Joe's Neighborhood Tire Shop using a machine to balance your tires? It's simple: Joe's tire machine is necessary to do a good job. The machine is not there simply to save the owner the expense of hiring an actual human being; it's there to perform a function that could never be done anywhere near as well by human beings. The same is true of the circular saw used by the contractor building the new deck in your backyard. Hand saws do exist, it's true. But a hand saw could never give you the precision that's possible with a power saw in the hands of a skilled human being.

So, is the solution to the job situation to give big corporations tax breaks so that they will hire more people? Let's travel back in time to my college chemistry course and a concept known as "activation energy." Activation energy is simply the small amount of energy you have to put into a system, sometimes, in order to get a whole lot more in return. Think of it as what happens with a firecracker – you have to strike a match and apply the flame to the fuse, but then... BANG! All the energy in the explosive inside is released. In today's world, this is how big corporations use any "extra" money that they save on their taxes. They make an investment in some machines, often with a large initial cost, but they then make that money back over time by saving on salaries, wages, and benefits. Why would corporations invest tax-break money in the United States and in hiring American workers when they clearly think that the most profit is to be made from machines or foreign workers?

This is the reason that Joe's Neighborhood Tire Shop will not replace the human being working at the counter with a machine – it requires a big initial investment. It simply would not make sense on the scale of a small, local business. Small businesses actually do what we were taught in ECON101 – they have employees whose work earns money for the business while they earn wages for themselves. Then, they spend those wages at other business like the grocery store or hamburger joint, where the whole process is supposed to be repeated, circulating money and goods through the community. But this cycle is interrupted and the money is left to trickle down (which it usually doesn't) from corporate bank accounts when the "employee" is a machine.

I know, I know... I can hear you thinking it now: "But isn't efficiency good?" It seems to me that the answer is: up to a point. First of all, "customer service" machines are NOT more efficient than human beings at selling something in a store or at dealing with billing issues on the phone. They are only more efficient from the corporation's standpoint in that they make people do their business without requiring a paid employee, and/or they make people give up, hang up, and just pay their bill because it's too much trouble to question the extra $3.82 on their phone bill. But this form of efficiency does nothing for the customer and certainly does nothing for American employment.

But even real efficiency, taken to an extreme, will mean that, contrary to Henry Ford's desire (for his employees to be able to buy the cars they produced) nobody will be able to afford the products that are for sale because hardly anyone will have a job. This will essentially shut down the economic cycle, leaving many Americans in poverty while international corporations pursue profits elsewhere. Should this be the direction of U.S. tax policy? Or, should American policy, in general, protect both American workers and American businesses?

-Tom Rossi


© Thrustblog, 2011

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  1. TB - Enjoyed your observations. Much to thnk and have conversations about.

  2. I actually remember reading somewhere that this job loss to automation has been going on for decades, without being noticed much, whereas the more recent off-shoring of jobs seems to be more conspicuous. Automation is mainly what is responsible for the so-called growth in productivity (GDP/number of workers).