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Automation and the Job Market

Posted on 10/5/2004

I never use the self checkout at stores. The reason? I believe it takes away cashier jobs. I would rather stand in line for a little while longer rather than feel that I might be responsible for someone losing their job.
Kay

Kay sure is a thoughtful individual to be concerned about costing someone their job. And, she's right. Automated check-outs will eliminate some cashiers. But is refusing to use self-checkouts an effective response?

Let's begin by learning a bit about automation. Manufacturing jobs are being eliminated worldwide. It's not just a U.S. phenomena. Even India and China are losing manufacturing jobs.

And manufacturing is not the only area effected. Other labor intensive jobs have been targeted. For instance, over 300,000 telephone operators have been replaced since 1972.

Automated checkout kiosks are among the current wave of automation. Just as Americans got used to pumping their own gas and using ATM's, we're expected to gradually adapt to checking out our own purchases. Most of the major grocery chains and other retailers including Wal-Mart, Kmart, Home Depot and Walgreen's have started to install self-checkout stations.

The purpose of the stations is to replace check-out clerks. Turnover has prevented layoffs, but fewer replacement clerks are being hired. So Kay is right. The self-checkout stations have cost some jobs. Will Kay's waiting in line for a clerk make any difference? To answer that we'll need to take a look at economics and the job market.

First, the economics. Kay would need to get a lot of help to make a difference. Her protest is likely to go unnoticed. The trend to kiosks will take five to 10 years. And, the fact that they save the store money will cause lower prices for consumers. In fact, consumers are the big winners in automation. So stores that have higher rates of self-checkout will tend to save the shopper more money and do even more business.

What can Kay's friends who work as checkout clerks do? First, they can recognize that this is nothing new. It's been going on since the earliest inventions. At one time 30% of the U.S. population was involved in agriculture. Today only about 3% make our living on the farm.

The auto assembly line put horseshoe makers out of work. But it also created jobs making, selling and repairing cars. The very technology that takes away some jobs creates other new ones.

In fact, according to the U.S. Bureau of Labor Statistics (BLS) the job outlook improves over the next 10 years. The U.S. population is expected to grow by about 25 million while total employment will grow by 21 million.

So there will be jobs available for Kay's friends. The trick will be to find what fields will be hiring and then getting the necessary education and training for those jobs.

What jobs will be available? The BLS expects that education and health services will grow by over 30% in the next 10 years. Approximately 25% of all new jobs will be in these two areas. Professional and business services are expected to grow by 30%. Leisure and hospitality will increase by over 25%.

The BLS projects that 20 occupations will account for about one-third of all new jobs. Registered nurses, postsecondary teachers and retail salespersons are expected to have the three largest increases. For more on what jobs should be available visit http://www.bls.gov/oco/oco2003.htm.

One warning to Kay's friends. You will need skills to be marketable in the future. The trend is for fewer jobs for untrained, unskilled labor. According to the BLS "education is essential in getting a high-paying job".

The majority of the best paying jobs requires a college degree. Fortunately, there are many options for earning that degree. Community college and correspondence degrees make a college education much more attainable. Many employers pay for employees college courses.

And, not all jobs require college. The BLS points out that on-the-job training is a significant source of education for 8 of the 20 fastest growing occupations. The BLS list includes a variety of types of work including truck drivers, waitresses and waiters, home care aides and teacher assistants. Many of the educational requirements can be filled by technical institutes, adult education programs and company training.

The bottom line? Kay's right. Jobs for checkout clerks will be lost. But, looked at another way, those people have a chance for a new job with a bright future. Hopefully they'll find that they've been relieved of a boring, repetitious job for one that offers more personal growth and satisfaction.

The author, Gary Foreman, is a former Certified Financial Planner who currently edits The Dollar Stretcher web site and newsletter.
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