The Ratchet Effect of Labor Automation

Companies are racing toward automation in the face of a tight labor market and a quest for greater efficiencies. Eventually, the labor market is sure to settle down, but when it does, it’s unlikely that jobs that were automated due to a shortage of human workers will de-automate when the labor shortage eases.

In a previous post, we discussed Walmart’s increasing embrace of automation in its fulfilment centers, including the recent acquisition in early October of Alert Innovations, a robotics company that has developed bots specifically designed for Walmart that retrieve and dispense orders.

Consumers Become Part of the Process

Diners and shoppers have likely noticed other forms of automation in certain job spaces in recent years, such as a growth in self-checkouts in grocery stores, self-service ordering at airport bars and restaurants, and even robots programmed to deliver food to restaurant diners or check inventory at supermarkets. And let’s not forget about the ubiquity of automated answering systems whenever one calls a customer service line.

Part of the recent growth in the use of such non-human resources was triggered by the COVID-19 pandemic. There was simply less risk of exposure to the virus from a machine or computer than another human being. But economic and labor market conditions have also played and continue to play an important role. As companies struggled to find workers for a variety of relatively low-skill or monotonous jobs, many made the decision to invest in robots and computers.

Increased Use of Automation Poised to Drive Change

The time, money, and logistical challenges involved in such a transition have meant that companies don’t typically embrace greater automation on a whim. But once that decision has been made and implemented, it’s unlikely to be reversed anytime soon. After all, once a company has invested large sums in purchasing robots or even a robotics company (in the case of Walmart), why would it revert to the old way of doing business just because it might be able to pay workers a few dollars less per hour in a more favorable labor market?

Instead, labor market cycles can have a ratchet effect when it comes to automation: Labor shortages can trigger an increase in automation, but when those labor shortages abate, automation does not tend to decrease to previous levels. The result is an increasing trend toward the obsolescence of many human positions.

Lin Grensing-Pophal is a Contributing Editor at HR Daily Advisor.