Interview: Don’t blame the robots!

By Jared Bernstein, for Washington Post

Oct 20, 2016

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JB: This election has clearly elevated the view that our manufacturing sector, and the families and communities that have historically depended on it, has been hurt by trade. A countervailing view says it’s not trade, it’s automation that’s responsible for large-scale job losses. You’ve recently updated your very important work on this question. Does productivity in the manufacturing sector support the automation story?

SH: No, it doesn’t. To see why, consider where that story comes from. The simple automation story says that U.S. manufacturing is doing well and automation is behind the large job losses. At first blush, government data seem to support that story. Manufacturing output growth, adjusted for inflation, has been strong, rising almost as quickly as GDP. At the same time, employment in manufacturing, which previously had been pretty stable, has dropped by nearly 30 percent since 2000. Strong output growth combined with declining employment means labor productivity (output per worker) is growing quickly—much more quickly than in the economy as a whole.

Looking at these numbers, many conclude that the rapid productivity growth must reflect automation and that automation, in turn, must be responsible for manufacturing’s job losses. On the surface, that story seems sensible. After all, everyone has heard about robots replacing workers in factories. But, if you take a deeper look at what is going on in the sector, the narrative doesn’t hold up.

It turns out that one relatively small sub-sector, the computer industry, drives the strong output and productivity growth in manufacturing. The computer industry, which includes semiconductors and related electronics, accounts for only about 13 percent of manufacturing output. Output has been weak or declining in the industries that make up the other 87 percent of manufacturing. If one excludes the computer industry from the numbers, manufacturing output is only about 8 percent higher now than in 1997. It is about 5 percent lower than before the Great Recession. And, without the computer industry, productivity growth is no higher in manufacturing than in the economy overall.

Read the full interview.

 

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