Last month, graduation ceremonies were held all over the U. S., and now the newly minted ex-students face the challenging task of finding a job. A recent New York Times report details just how challenging it will be in today’s economy. And engineers, even recently graduated ones, need to ponder the effects of their work on the employment picture.
First, the bad news. After the world economy nearly melted down in 2008, a severe recession (some are now calling it the Great Recession) caused widespread job losses and a general slowdown for the better part of two years. It seems that by now the U. S. economy, when measured strictly by production of goods and services, has fully recovered to the level of productivity that prevailed before the 2008 debacle. The only difference is, it’s humming along with 7 million fewer jobs than were in existence in 2008. And what is worse from the viewpoint of job hunters, is that firms are very reluctant to take on new workers, but are spending bucketloads on new equipment, much of which is made overseas. Since 2008, spending on employment has risen only 2 percent, but spending on capital equipment has soared by 26 percent.
Much of this capital equipment consists of highly engineered manufacturing technology such as computers, robotics, and other devices that allow makers of goods (and often providers of services as well) to replace people with machines. This sort of thing has gone on at least since the dawn of history, when some clever person devised an irrigation water wheel pump that one person could operate while replacing four or five people armed with individual buckets. But at certain times, a whole lot of people are thrown out of work at once and replaced by a whole lot of technology, and the newly unemployed people tend to notice.
Another time this happened was the 1930s. Although statistics were kept differently then, by some estimates the U. S. unemployment rate soared as high as 25% and stayed close to that for most of the decade. Some people then saw the advances in manufacturing machinery as an important cause of the disruptions accompanying the Great Depression, and posed various solutions, including the short-lived political movement called Technocracy. Technocrats, as they termed themselves, believed that the economy was too complicated to be left in the hands of non-expert business people, who had clearly let things get out of hand. The solution posed by the technocrats was to abolish money and place the economy in charge of technical experts—engineers, mostly, but with a few doctors and economists mixed in. The engineers would allocate a new unit of exchange that represented energy (joules were proposed) so that everybody would get an equal amount of energy and be free to decide what to do with it.
The technocrats turned out to be better engineers than politicians (in fact, most of the leaders of the Technocracy movement had little engineering experience either), and Technocracy as a political movement vanished from the scene shortly after World War II began, when the Great Depression ended in a flurry of economic activity stimulated by war production. But the idea of putting government in the charge of experts has by no means gone away.
One could even argue that the present White House occupant represents modern-day technocracy carried to an extreme. The Obama administration pushed through a health-care plan that envisions centralized monitoring and control of supply by experts. Its Environmental Protection Agency has extended its reach far beyond former limits and opposed state regulatory agencies in its efforts to apply its own expertise to everyone’s pollution problems. And while organized labor is favored in certain ways, the overall trend of the economy toward increased mechanization, as opposed to higher rates of employment, has continued unabated.
Besides the Technocracy movement, a few voices in the 1930s called for an alternate vision of what could be done about the increasing replacement of human workers by machines. When it takes fewer people to make the same amount of stuff, you can either get rid of some workers and keep the remainder working full time, or you can lower the number of hours per week that everyone works and keep everyone working at reduced hours. The latter possibility was the basis of the notion that in the future, most people would have to work only ten or fifteen hours a week to earn as much as they got from forty or fifty hours of toil every week before mechanization. The promoters of this vision saw a landscape of leisure time opening up in the future, as people enjoyed the fruits of advances in productive automation by working less for the same pay.
There are many flies in that ointment, as history has shown, but perhaps the biggest reason why this is not happening today is what you can call the fixed and overhead charges associated with hiring people. Back in the early 1930s, there was no Social Security, no Medicare, no tax break for employers who paid for workers’ health insurance, and little advanced training needed for most jobs. So the cost of hiring a worker simply amounted to what he or she was paid. If things were still that simple, it might make sense for a company to retain most of its employees at reduced hours as it buys equipment that allows it to make each unit of product with a lower total man-hour input.
However, we have strayed far from that path today, with a huge number of fixed costs associated with every hire, and those costs are slated to rise if the health-care machinery passed by Congress remains in place. Quite literally the last thing many employers want to do right now is to hire another warm body, much preferring to acquire equipment that needs no training or health insurance, can be depreciated on a tax return, and does just as good a job, if not better, than a human being can. And engineers have largely made this possible. All in all, however, I sometimes wonder if the tools made by engineers have been used wisely by managers, corporation heads, and politicians. When it gets to the point that engineers design tools that are used largely to replace engineers, we at least need to think twice before proceeding.
Sources: The Austin American-Statesman reprinted a New York Times article on labor versus equipment costs by Catherine Rampell on June 12, 2011, page E1.