Automation: Unemployment and productivity

In the month of July, the US economy added 163,000 nonfarm payroll jobs in July, according to the Labor Department, about 100,000 more jobs than were added in June.

Meanwhile, the unemployment rate ticked up from 8.2% to 8.3%.

If you look only at the employment number, you get the picture of an economy that is trying to rock itself out of a snowbank. One month it moves a little bit forward and then next month it slips a little bit backwards. At the end of the day, it’s still stuck in the snow.

But there were two intriguing sentences in the New York Times report on the data:

“For context, the economy now produces as many goods and services – more, in fact – than it did before the downturn officially began in December 2007. But it does so with almost five million fewer jobs.”

Think about that for a moment. Our economy is churning out more product today than it did five years ago, when the economy was still humming along, but hitting those numbers with at least 5 million fewer people – or more, if you consider the people who were working but have permanently left the job market or are under-employed.

That is a productivity story. In better times, those are the kinds of numbers we would celebrate.

I ran this idea by Hal Vandiver, president of F. Hal Vandiver & Associates, who put the statement in the context of the materials handling industry. “If you look at why manufacturing companies are making money today, it’s because they have found more productive ways to deliver the same or more output,” Vandiver said. “That’s what our industry is all about.”

While none of us celebrates unemployment in a down economy, there’s no question but that US industry has been implementing warehouse and factory automation solutions at a record pace over the last four years. By all accounts, our industry is poised for continued, albeit slower growth in 2013. That’s a reflection that industry will continue to do more with less.