The surprising reason companies are investing more in automation

Companies aren’t necessarily leaning on technology as a way to push entry-level workers out of the workforce.

It’s a good time to be a worker. As unemployment sits at 3.9% (up 0.2% from September, when the unemployment rate hit a 49-year low), the market is swinging in favor of the employee instead of the employer. That sometimes means raises for all skill levels — but especially those in low-skill jobs.

“As they have for some time, contacts indicated that the labor market was tight and that they had difficulty filling positions at all skill levels,” wrote representatives from The Federal Reserve Bank of Chicago in the Federal Reserve System’s January 2019 Beige Book. For some businesses, that’ll mean offering better compensation to entice new employees.

In the Beige Book, every Federal Reserve Bank uses anecdotal information from reports, phone, and in-person interviews and online questionnaires to paint a picture of its district’s economy, beyond data and statistics. In Chicago — the seventh district — the report’s authors picked up on a phenomenon that’s emerged from a market where low-skilled workers who at one time made less can now demand more. And it’s not what you might assume.

“Multiple manufacturing contacts reported that rising wages for entry-level positions were leading them to invest in automation that would increase these workers’ productivity and justify the higher wages,” the authors wrote.

This means that companies aren’t necessarily leaning on technology as a way to push entry-level or low-skill workers out of the workforce; instead, they’re looking to it to make everyone more productive so they earn the salary bump that this market mandates. As employees fear that their jobs will soon be replaced by robots, businesses are actually finding ways to make automation complement higher salaries for their low-wage workers and make the overall operation run smoother.

Of course, there is still the possibility that some jobs will become obsolete as workplaces rely more and more on new tech. When 42% of jobs can be automated, that means that a lot of them could, in theory, be replaced with more efficient robo-workers. Whether that’ll happen long-term is still up in the air.

But for now, it’s definitely interesting to watch businesses adapt to an employee-driven economy. As companies look to fill the major talent gaps in their factories and offices, they’re clearly trying out win-win solutions — and that’s kind of cool!

Alexandra Villarreal|is a reporter for Ladders and can be reached at avillarreal@theladders.com.