An analysis by the WSJ tells a story familiar story to readers of this blog—that labor productivity is soaring. Output per hour worked in nonfarm businesses has increased 6% during the recovery. Hours worked are up only 1.5%. Generally this is a good thing, at least in the long term.
What I found fascinating is that low financing costs of technology is a driver of this trend. Because of the low borrowing costs, many corporations are bulking up on labor saving machinery and technology.
Unfortunately for many, growth in jobs is not keeping pace with the growth in technology. In fact, some jobs are being replaced with technology, such as robotics.
According to the article, the U.S. today is second only to Japan in the use of industrial robots. Orders for new robots were up 41% through September from a year earlier, according to the Robotics Industries Association trade group. That has helped fuel the boom in productivity.
I’m not pessimistic about this trend. Ultimately, economic restructuring will occur and a skilled and engaged workforce will be needed to run these robots.
This should not be a surprise. The same trends have been in play for years, they have just been accelerated by the current economy.