Lauren Saidel-Baker is an experienced speaker and economist. Her experience in finance supports her commanding grasp of ITR Economics' programs and subscriptions and their practical applications.
The tight labor market is one of the toughest, if not the toughest, of the problems currently facing business leaders –– and it is unlikely to improve in the near term. With near-full employment and the number of job openings exceeding the number of job seekers nationally, companies must get creative in solving their labor challenges. While there are many strategies available to firms – including focusing on retention efforts, creating a more attractive company culture, and prioritizing benefits – this blog post will instead address one of the more maligned solutions: automation.
The US has several large advantages when it comes to adopting high-tech solutions:
- The abundance of talented and creative entrepreneurs and our robust start-up culture make this country a natural home for new technological advances.
- The strong rule of law and intellectual property protections foster investment in innovation.
The longer-term shift to near-sourcing also favors US manufacturing – and automation solutions. Many businesses were surprised by supply chain disruptions during the COVID-19 pandemic. The shutdowns revealed vulnerabilities that perhaps otherwise would have been ignored. As a result, many firms are interested in relocating their sourcing closer to home – even if doing so involves a higher cost basis.
In some industries, the prospect of automation may be contributing to the labor shortage. For example, the expectation that self-driving trucks are just around the corner is likely exacerbating the shortage of long-haul truck drivers. There is a perception that with self-driving trucks, a human would no longer be needed in the vehicle. With this industry, which is notorious for its ageing workforce and beset by retirements, it makes sense that younger workers would avoid committing to a career and learning the specialized skillset when the need for such may cease to exist within their lifetime.
Unfortunately for industries like trucking, there is no simple answer. However, even if a technological solution cannot fully replace a human in your firm, consider the efficiency gains that it may offer. In many cases, a machine or a program can make existing contributors more effective – enabling you to do more with fewer workers.
As 2021 winds down, it is a great time to consider your investment strategy. Calculate your rates-of-change and consider whether an investment in automation is right for your business at this time.