Yesterday, I reported that the rust belt may be turning into the robot belt, as new data from the Brookings Institution indicates that companies in the Midwest and upper South are employing the most industrial robots. But even without this new data from Brookings, it’s become clear that companies can’t open a new factory in the Midwest without facing questions about how much of the labor will be allocated to robots.
Dave Hansen, a Democratic member of the Wisconsin State Senate, published an op-ed last week in Madison’s Capital Times newspaper questioning whether his fellow lawmakers are adequately preparing for the potential economic effects of automation. The op-ed comes as lawmakers in the state are considering a $3 billion dollar tax subsidies package for Taiwan-based manufacturer Foxconn, which plans to build a factory in the southeastern portion of the state. Hansen writes:
In my initial response to the news I urged my colleagues to proceed with caution. Not only is this an incredibly expensive offer (it could cost the average family in Wisconsin $1,200 and take 25 years or more before state taxpayers break even!) but it could set a precedent with how we approach future economic development at a time when more and more industries are moving to automation as a way to reduce labor costs.
Foxconn is at the forefront of this effort with its publicly stated goal of fully automating its manufacturing process to the greatest extent possible. They’ve already begun by laying off 60,000 workers in China who were earning $3.25 an hour and replacing them with robots.
This begs the question: If they are laying off workers to save $3.25 an hour, why are they willing to pay their workforce here in Wisconsin what appears to be five to seven times that amount?
Mark Muro, the author of the Brookings report, told me that he believes there are a couple of steps cities and state leaders should take to make sure their local economy is equipped to thrive in an increasingly automated world. First, they should identify what “human work” will continue to be needed in their region and offer local workforce training that is specifically tailored to help workers develop the skills needed to excel at that type of work. Second, they should be prepared for their local economy to experience disruption, and to identify how to best help workers whose roles may change due to automation…