Right-wing media have seized on recent comments by President Obama to claim that Obama "blame[d] ATMs for high unemployment." But Obama's full comments show that he was suggesting that businesses are investing more heavily in automated machines than in hiring new employees, a view shared by economists.
Obama: "[B]usinesses Have Learned To Become Much More Efficient With A Lot Fewer Workers"
Obama: "[T]here Are Some Structural Issues With Our Economy Where A Lot Of Businesses Have Learned To Become Much More Efficient With A Lot Fewer Workers." From a June 14 interview on NBC's Today:
ANN CURRY (host, NBC's Today): You're here encouraging private sector hiring. This just after The New York Times just past -- this past Friday reported that since the recovery began, businesses have spent just 2 percent more on hiring people, while at the same time spending 26 percent more on equipment. So why, at a time when corporate America is enjoying record profits have you been unable to convince businesses to hire more people, Mr. President?
OBAMA: Well, I don't think it's a matter of me being unable to convince them to hire more people. They're making decisions based on what they think will be good for their companies. A couple of things have happened. Look, we went through the worst crisis since the Great Depression. We are now in a process where the economy is growing again, and we've created 2 million jobs over the last 15 months. But it's not as fast as it needs to be to make up for all the jobs that were lost.
The other thing that happened, though, and this goes to the point you were just making, is there are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM; you don't go to a bank teller. Or you go to the airport, and you're using a kiosk instead of checking in at the gate. So all these things have created changes in the economy, and what we have to do now -- and that's what this job council is all about -- is identifying where the jobs for the future are going to be; how do we make sure that there's a match between what people are getting trained for and the jobs that exist; how do we make sure that capital is flowing into those places with the greatest opportunity. We are on the right track. The key is figuring out how do we accelerate it. [NBC, Today, 6/14/11]
Right-Wing Media Seize On ATM Remark To Attack Obama As "Completely And Utterly Ignorant About Job Creation"
Fox Nation: "Obama Blames ATMs For High Unemployment." A June 14 Fox Nation post embedded video of Obama's comments under the headline, "Obama Blames ATMs for High Unemployment." [Fox Nation, 6/14/11]
CNN's Erickson: "Barack Obama Thinks An ATM Ate Your Job." In a June 15 RedState post titled, "Barack Obama Thinks an ATM Ate Your Job," CNN contributor Erick Erickson wrote:
Yesterday, Barack Obama gave away the game. Without actually using the words, Barack Obama admitted he is completely and utterly ignorant about job creation and economics. In an interview with the Today Show, Barack Obama declared that the unemployment rate remains so high because of ATMS.
Sadly, many people will agree with him because they lack the vision to see the whole picture. They see less bank tellers and more ATMs -- much as Barack Obama does -- and presume this must mean higher unemployment. This myth, and it is a myth, is older than even the great lament that cars put blacksmiths on the unemployment line by getting rid of the need for horse shoes.
This left-wing populist thinking does not create jobs and often leads to dangerous policies that stifle the innovation that create the jobs that spring forth from the ATM's replacing the bank tellers. Barack Obama sees less tellers at the banks because of ATM's. But he does not see new IT workers at the bank to manage the ATM -- higher paid than the tellers. He does not see the computer programmers. He does not see the manufacturers of the machines and their component parts. [RedState, 6/15/11]
Malkin: "Obamanomics: Damn Those ATMs And Airport Kiosks!" In a June 15 blog post titled, "Obamanomics: Damn those ATMs and airport kiosks!" Michelle Malkin wrote:
Can he possibly be more out of touch?
These people have no clue about the nature of American ingenuity and small business creation/preservation.
Obamanomics perpetuates a Luddite view -- a stupidly static, anti-technology view -- of the economy that betrays hostility not only to real innovators in America, but to all of the individual consumers and employees who benefit from their advances.
ATMs and ticket kiosks are not the enemies of economic success. These are:
Limbaugh: Obama "Cited ATM Machines As A Reason For High Unemployment." During his June 14 radio program, Rush Limbaugh said:
There's a new reason for high unemployment as told by Obama. He had that interview with Ann Curry at the Today Show, and basically there's too much automation out there. He cited ATM machines as a reason for high unemployment. No, no. I kid you not. That's right! Obama explained to NBC News the reason that companies are not hiring is not because of his policies, it's because the economy is so automated. He said, "There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM; you don't go to a bank teller -- or you go to the airport and you're using a kiosk instead of checking in at the gate."
He actually said this.
We've lost two million jobs since the stimulus, and now today or yesterday we learned it's because of "automation." That's what he told Ann Curry. [Premiere Radio Networks, The Rush Limbaugh Show, 6/14/11]
But Economists Agree With Obama's Suggestion That Technology Advancements Have Displaced Workers
NFIB Economist: Shift To Automated Production "Displaces A Lot Of Workers At Once." In a June 9 New York Times article, National Federation of Independent Business (NFIB) chief economist William Dunkelberg cited the mechanization of farming as an example of mass worker displacement by automated production. From the Times:
Of course the shift to more automated production predates the Great Recession. And in the long run, better technology lowers prices, raises living standards and helps workers move into higher-paying jobs. This was the case with the mechanization of farming, which a century ago employed 41 percent of the American work force.
"We don't have 11 million unemployed farmers today because over time farmers and their children transitioned into different sectors," says William C. Dunkelberg, chief economist at the National Federation of Independent Business. "We don't usually have this kind of shock, though, that displaces a lot of workers at once."
Better technologies may eventually offer better job opportunities, but only if people can upgrade their skills quickly enough to qualify. That is hard to do in the short run, especially when so many displaced workers need to be retrained at once. [The New York Times, 6/9/11]
Harvard Economist: "If You're Doing Something That Can Be Written Down In A Programmatic, Algorithmic Manner, You're Going To Be Substituted For Quickly." The Times further reported:
Usually economists cheer on capital spending, and have supported Congress's tax breaks for capital investment, like bonus depreciation, which lets companies expense the full cost of purchases immediately instead of waiting several years. That is because capital and labor can be complementary: a business that buys a new truck often hires a new driver, too.
But with the rising costs of hiring, companies like Vista are finding ways to use capital to replace workers whose jobs are relatively routine.
"If you're doing something that can be written down in a programmatic, algorithmic manner, you're going to be substituted for quickly," said Claudia Goldin, an economist at Harvard. [The New York Times, 6/9/11]
Barclays Economist: "Firms Are Just Responding To Incentives. ... And Capital Has Gotten Much Cheaper Relative To Labor." The Times further reported that chief United States economist at Barclays Capital Dean Maki stated, "Firms are just responding to incentives. ... And capital has gotten much cheaper relative to labor." From the Times:
Two years into the recovery, hiring is still painfully slow. The economy is producing as much as it was before the downturn, but with seven million fewer jobs. Since the recovery began, businesses' spending on employees has grown 2 percent as equipment and software spending has swelled 26 percent, according to the Commerce Department. A capital rebound that sharp and a labor rebound that slow have been recorded only once before -- after the 1982 recession.
With equipment prices dropping, and tax incentives to subsidize capital investments, these trends seem likely to continue.
"Firms are just responding to incentives," said Dean Maki, chief United States economist at Barclays Capital. "And capital has gotten much cheaper relative to labor." [The New York Times, 6/9/11]
NY Times: MIT Economics Professor Said That "Jobs In The Middle Are Being Lost To Automation And Outsourcing, And Now Job Growth At The Top Is Slowing Because Of Automation." From a March 4 Times article:
David H. Autor, an economics professor at the Massachusetts Institute of Technology, says the United States economy is being "hollowed out." New jobs, he says, are coming at the bottom of the economic pyramid, jobs in the middle are being lost to automation and outsourcing, and now job growth at the top is slowing because of automation.
"There is no reason to think that technology creates unemployment," Professor Autor said. "Over the long run we find things for people to do. The harder question is, does changing technology always lead to better jobs? The answer is no."
Automation of higher-level jobs is accelerating because of progress in computer science and linguistics. Only recently have researchers been able to test and refine algorithms on vast data samples, including a huge trove of e-mail from the Enron Corporation. [The New York Times, 3/4/11]
Vista Technologies Managing Director: "You Don't Have To Train Machines." The June 9 Times article further quoted Dan Mishek, managing director of Vista Technologies, as saying that hiring employees "has some hidden costs, as well as the expenses of salary and benefits" and that "you don't have to train machines." From the Times:
Hiring has some hidden costs, as well as the expenses of salary and benefits, Mr. Mishek added.
"I dread the process we have to go through when we want to bring somebody on," he said. "When we have a job posting these days, we get a flurry of résumés from people who aren't qualified at all: people with misspellings on their résumés, who have never been in the industry and want a career move from real estate or something. It's a huge distraction to sort through all those."
Culling the résumés takes three days. Then he must make time to interview applicants, and spend $150 for each drug test.
Once a worker is hired, that person must complete a federally mandated safety program, which Vista pays an outside contractor a flat fee of $7,000 annually to handle. Finally, Vista's best employees spend several months training the new hire, reducing their own productivity.
"You don't have to train machines," Mr. Mishek observes. [The New York Times, 6/9/11]