The American Workforce and Workplace Evolve

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The American Workforce and Workplace Evolve

For those who take advantage of change, it's a powerful ally.  For those who fail to understand or exploit it, change is a deadly enemy. 

Nowhere is that more clear than in the labor market.  The hurricane-force winds of demography, technology, and psychology are sweeping away the safe assumptions of the past and leaving behind a whole new reality. 

Let's start with the most fundamental of all economic concepts:  productivity.  From a labor standpoint, productivity is defined as the value of the goods and services created per hour of labor input.  America's productivity soared 4.3 percent in the second quarter of 2008, while labor costs fell at an annual rate of 0.5 percent.1  This was a pleasant surprise because many economists had begun to worry that inflation would be triggered by increases in wages. 

Since early 2007, the economy has been stuck in a period of slow growth with inflation pressures confined to the prices of energy and food.  As we've explained earlier, the economy continued to avoid recession quarter-by-quarter because of rising productivity. 

In many industries, companies are deploying robots and automating jobs that were once done by human workers.  Manufacturers have used automation to boost their productivity for decades.  But, it wasn't until the 1970s that it began to transform service businesses like gas stations, where electronic pumps allowed drivers to fill their own tanks, and banks, where ATMs let customers withdraw cash and make deposits without the help of a teller. 

More recently, the Internet has empowered people to make travel arrangements, trade stocks, and create their own music playlists.  Now, many retailers are adding self-checkout lanes.  All told, millions of customer service jobs are being "outsourced" to the customer through automation.

Before long, even more cashiers will lose their jobs as RFID tags will be used in most stores at point-of-sale checkouts.  Sensors will detect purchases and automatically charge the customer's credit card.  Shoppers will save time, while merchants, like Wal-Mart, Target, The Home Depot, Kroger, and Safeway, will cut their costs and lower their prices as they reduce their payrolls even further.

This is only the beginning.  According to the Robotics Industry Association, companies increased their spending on robots by 27 percent during the first quarter of 2008.2  When these machines are installed, they will not only eliminate more service jobs, but they will give manufacturers the ability to keep making products in America rather than sending them to India, Malaysia, or China...

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