Batesville Tool & Die’s quest to hire 70 workers last year in a small Indiana community was challenging due to fierce competition with nearby big-name manufacturers. Despite this, they managed to fill only 40 vacancies.
To address labor shortages, the company turned to robots, investing in machines that mimic human workers and vision systems that enhance robot efficiency.
This scenario is emblematic of a broader trend across the United States in recent years. Companies facing chronic worker shortages have increasingly turned to automation to fill the gaps. They’ve also been upskilling existing workers to leverage advanced technology, resulting in a surge in productivity.
This productivity boom has been instrumental in maintaining the resilience of the US economy, contributing to robust growth and low unemployment despite the Federal Reserve’s aggressive interest rate hikes aimed at curbing inflation.
Strong productivity growth has a transformative effect on the economy, allowing companies to increase output per hour, boost profits, and raise wages without triggering inflation. This productivity surge is akin to “magic beans” for the economy, as it enables faster income increases, wage growth, and GDP expansion without fueling inflation, according to Austan Goolsbee, president of the Federal Reserve Bank of Chicago.
Joe Brusuelas, chief economist at RSM, noted that the last time such a productivity surge was observed was in the late 1990s. Back then, a similar increase in productivity helped the Federal Reserve keep borrowing rates low while the economy flourished.
The current productivity boom represents a stark departure from the pre-pandemic era, when annual productivity growth averaged a modest 1.5%. The acceleration in productivity growth can be traced back to the economic rebound following the 2020 pandemic recession, which led to businesses struggling to rehire workers and, consequently, turning to automation.
Despite concerns about automation replacing human workers, history suggests that technological advancements ultimately create more jobs than they displace. Additionally, automation often leads to more satisfied workers, as they are able to transition to higher-paying, more fulfilling roles.
For example, Justin Thompson, a former police officer, found a more fulfilling role as an operations manager at a charter airline. His job allows him to work from home and utilize skills gained during his time in the Marine Corps, highlighting how technology and automation can lead to more engaging and rewarding work experiences.
Overall, the productivity gains driven by automation and advanced technology are not only boosting economic growth but also reshaping the nature of work, providing opportunities for workers to enhance their skills, increase their earnings, and find more fulfilling roles.
Featured Image: Freepik @ wirestock
