Only Terminators Need Apply

Catherine Rampell’s article in today’s New York Times makes it clear what’s important to U.S. businesses: investing in equipment rather than hiring human beings:

Since the “recovery” [quotes are mine] began, businesses’ spending on employees has grown 2% as equipment and software spending has swelled 26%, according to the Commerce Department.

The article also makes it clear that American workers aren’t competing with workers from developed nations (whose economies have a strong public/private sector alliance); they are competing with workers from developing nations such as China:

”I want to have as few people touching our products as possible,” said Dan Mishek, managing director of Vista Technologies in Vadnais Heights, Minn. “Everything should be as automated as it can be. We just can’t afford to compete with countries like China on labor costs, especially when workers are getting even more expensive.”

In the U.S. corporate mindset, capital expenditure on equipment is equivalent to hiring workers. Managers bemoan the problems that extend from humans rather than machines:

”I dread the process we have to go through when we want to bring someone on,” [said Mr. Mishek]. “When we have a job posting these days, we get a flurry of resumes from people who aren’t qualified at all: people with misspellings on their resumes, who have never been in the industry and want a career move from real estate or something. It’s a huge distraction to sort through all those.”…”You don’t have to train machines.”

There are tax subsidies to offset costs when a company buys equipment, but none to mitigate the cost of hiring an employee, which includes training and testing (although anecdotally I know recent hires that had to pay out of pocket for testing after they were hired):

Some economists support policies that might shift the balance away from capital spending. Andrew Sum, an economist at Northeastern University, advocates tax incentives for hiring that mirror those for capital investment. Congress passed a hiring tax credit along these lines last year, but it was not well publicized, and some said it was poorly devised.

American companies are not experiencing the recession that’s affecting the labor force. Even if someone has a job, they may not keep it if a machine can replace them. Technology is moving at warp speed compared to the learning curve of human beings, so watch out:

”If you’re doing something that can be written down in a programmatic, algorithmic manner, you’re going to be substituted for quickly,” said Claudia Goldin, an economist at Harvard.

Although pundits rightfully bemoan workers’ lack of mathematical and scientific learning, as far as I can tell, a “programmatic, algorithmic manner” requires mathematical, scientific abilities.

The only way corporations will use the huge pile of cash they’re sitting on to hire is if human beings and machines (such as computers) are combined. According to Sue Halpern’s article in the New York Review of Books, that is precisely what is happening. It seems that if human workers are to survive, they must accept computer chip implants or EEG force field invasion of their thoughts.

I take it back. We’re not competing with developing nations on labor costs, we’re competing with machines. Unfortunately, this is not science fiction, it’s science fact.