Will a Pandemic Wave of Automation Be Bad News for Workers?

The New York Times reports: When Kroger customers in Cincinnati shop online these days, their groceries may be picked out not by a worker in their local supermarket but by a robot in a nearby warehouse... And in the drive-through lane at Checkers near Atlanta, requests for Big Buford burgers and Mother Cruncher chicken sandwiches may be fielded not by a cashier in a headset, but by a voice-recognition algorithm. An increase in automation, especially in service industries, may prove to be an economic legacy of the pandemic. Businesses from factories to fast-food outlets to hotels turned to technology last year to keep operations running amid social distancing requirements and contagion fears. Now the outbreak is ebbing in the United States, but the difficulty in hiring workers — at least at the wages that employers are used to paying — is providing new momentum for automation... [S]ome economists say the latest wave of automation could eliminate jobs and erode bargaining power, particularly for the lowest-paid workers, in a lasting way. "Once a job is automated, it's pretty hard to turn back," said Casey Warman, an economist at Dalhousie University in Nova Scotia who has studied automation in the pandemic... A working paper published by the International Monetary Fund this year predicted that pandemic-induced automation would increase inequality in coming years, not just in the United States but around the world. "Six months ago, all these workers were essential," said Marc Perrone, president of the United Food and Commercial Workers, a union representing grocery workers. "Everyone was calling them heroes. Now, they're trying to figure out how to get rid of them...." The push toward automation goes far beyond the restaurant sector. Hotels, retailers, manufacturers and other businesses have all accelerated technological investments. In a survey of nearly 300 global companies by the World Economic Forum last year, 43 percent of businesses said they expected to reduce their work forces through new uses of technology... Daron Acemoglu of the Massachusetts Institute of Technology said that many of the technological investments had just replaced human labor without adding much to overall productivity. In a recent working paper, Professor Acemoglu and a colleague concluded that "a significant portion of the rise in U.S. wage inequality over the last four decades has been driven by automation" — and he said that trend had almost certainly accelerated in the pandemic. "If we automated less, we would not actually have generated that much less output but we would have had a very different trajectory for inequality," Professor Acemoglu said. "We'll look back and say why didn't we do this sooner," fast-food franchisee Shana Gonzales told the Times after implementing an automated voice-recognition system that takes customers' orders. Gonzales added that she'd gladly hire human workers instead, but she just can't find them, and says she's even tried raising their starting pay rate — from $9 an hour to $10. "Ms. Gonzales acknowledged she could fully staff her restaurants if she offered $14 to $15 an hour to attract workers. But doing so, she said, would force her to raise prices so much that she would lose sales — and automation allows her to take another course."

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