(Written by Rebecca Lipman. List compiled by Eben Esterhuizen, CFA)
It’s been a long time coming: Advanced technology and automation has dwarfed the need for human labour to an alarming degree. The economy shows signs of losing jobs to automation faster than it can create new ones. Can technological unemployment in the same period of record profits on Wall Street mean we’re facing a jobless recovery?
America’s high unemployment rate can largely be blamed on a faltering economy, but the situation has been undeniably exasperated by advancing technology that replaces the need for a human labour element.
Sure, technology has always displaced workers but to some degree it has also bred new jobs. For example, the rising popularity of the automobile displaced thousands of laborers hired by cities to clean up after horses’ messes on streets. But those jobs were gradually replaced with new ones such as gas station attendants and assembly workers at auto plants. One door closes, another one opens.
Now it seems the times are changing.
Two researchers at the Massachusetts Institute of Technology, Erik Brynjolfsson and Andrew P. McAfee of the M.I.T. centre for Digital Business, are the nation’s leading experts on technology and productivity. The pair’s newer studies on the matter show that the pace of automation and job displacement technology against job creation is larger than generally understood. And quite frankly, it has become worrisome. (via New York Times)
New York Times reports, “faster, cheaper computers and increasingly clever software, the authors say, are giving machines capabilities that were once thought to be distinctively human, like understanding speech, translating from one language to another and recognising patterns. So automation is rapidly moving beyond factories to jobs in call centres, marketing and sales — parts of the services sector, which provides most jobs in the economy.”
Key examples of technological leaps are I.B.M.’s computer Watson, which beat out two human “Jeopardy” champions. Apple’s new personal assistance app Siri is capable of understanding a wealth of human voice commands and interpreting more natural sentence compositions. Google’s robot-driven cars logged thousands of miles last Fall on American roads with only an occasional assist from human back-seat drivers.
The range of skills technology is capable of harnessing can only grow from here. But some are taking an alternative approach to the fast technological development and argue it frees up time for humans to do other important things. Some point out that when used effectively these advancements allow people to apply themselves more productively to their tasks.
Indeed, the S&P 500 index has reported both record profits this year and a higher productivity rate despite wide-scale layoffs and high unemployment – a testament to the value of the human labour-replacement tools at hand.
But the question remains: will it eventually lead to more job growth?
Interested in following this trend? Here are some of the companies that provide automation technologies.
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1. Agilent Technologies (A): The company provides bio-analytical and electronic measurement solutions to the communications, electronics, life sciences, and chemical analysis industries. Its products include laboratory automation and robotics, which have replaced scientists.
2. ABB (ABB): The company provides power and automation technologies for utility and industrial customers worldwide. The company’s Process Automation division offers integrated process control and instrumentation systems, plant electrification systems, information management systems, and industry-specific application knowledge for industries.
3. Actuant Corporation (ATU): Actuant Corporation manufactures industrial products and systems worldwide. Its Industrial segment involves in the design, manufacture, and distribution of hydraulic and mechanical tools to the maintenance, industrial, infrastructure, and production automation markets.
4. Emerson Electric Co. (EMR): The company operates as a diversified manufacturing and technology company, primarily involved in industrial automation. The stock has lost more than 10% over the last year.
5. Dover Corporation (DOV): Dover Corporation manufactures and sells industrial products and components. The company operates in four segments: Industrial Products, Engineered Systems, Fluid Management, and Electronic Technologies. The Industrial Products segment manufactures industrial automation tools.
6. Jack Henry & Associates, Inc. (JHA): The company provides integrated computer systems and services for in-house and outsourced data processing to commercial banks, credit unions, and other financial institutions primarily in the United States. It engages in processing transactions, automating business processes, and managing information services.
7. Interactive Intelligence, Inc. (INN): Interactive Intelligence, Inc. provides software application suites for voice over Internet protocol (VoIP) business communications to enterprises in the United States and internationally. The company offers software products and services for contact centre, enterprise IP telephony, multichannel contact management, and business process automation. In other words, the company provides products and services that automate customer service.
8. Responsys, Inc. (MKTG): The company provides on-demand software and professional services to enterprise and larger mid-market companies. Its Responsys Interact suite provides marketers a solution to create, execute, optimise, and automate marketing campaigns across email, mobile, social, and Web channels.
Interactive Chart: Press Play to see how analyst ratings have changed for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.