Mar 30, 2017 - Technology

Automation: raising worker pay while killing U.S. jobs

General Electric's new $100 million jet-engine manufacturing plant in Indiana features a vision inspection system. In the past, a technician would spend four hours poring over the engine in search of defects. The machine, however, can do it in twenty minutes, while at the same time creating a permanent, digital record of the engine that helps reduce maintenance costs if something does go wrong.

  • Easy math: The vision inspection system costs north of $100,000 dollars, and when you consider that aerospace technicians enter the industry fetching between $20 and $40 per hour, that's an investment that can pay for itself in less than two years.
  • A job killer? Without innovations like the vision inspection system, GE workers wouldn't increase their productivity, and higher worker productivity is what enables higher wages. But make no mistake — the purpose of many of these innovations is to cut down on the need for labor.
  • A catch-22: Industries, like manufacturing, that have seen above-average productivity growth are industries where wage growth has a chance to be strong, but these are also industries in which automation is likely leading to less overall employment. In industries like healthcare and education, where productivity growth has been weak, the opposite problem exists. A nursing home assistant earns on average just $11.51 per hour, despite surging demand for workers.
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