After robots take over a factory...

Most Pillowtex workers jobless months after layoff

Here in North Carolina last year, we lost a major employer -- a textile factory run by Pillowtex. The mill employed nearly 5,000 people. The closing of Pillowtex was the largest mass layoff in North Carolina history. Although these jobs were lost to textile competition from China rather than directly to robots and automation, the effect is exactly the same. A large block of employees lost their jobs. Therefore, this mass layoff lets us ask and answer an important question about what will happen as robots begin to take over very large blocks of jobs in the U.S. economy.

The question is simple: When an industry rapidly automates and dumps thousands of workers onto the unemployment roles in today's economy, what will happen? How long will it take for the economy to absorb the unemployed workers?

Here's what the article has to say:According to the conventional wisdom, the economy will create new jobs for all of the people unemployed by automation, robots and off-shoring. Also, our current economy is "booming" according to the White House. Yet here we find that only 400 out of 4,300 unemployed workers, or 9.3%, have found work after 7 months. At that rate, it will take 5 years or so for the economy to absorb this block of workers.

This paragraph from the article is telling:There just are not that many jobs available.

The article also indicates that the jobs these workers end up taking are worse than the jobs they lost. For example, many try (unsuccessfully) to apply at a place like Wal-Mart. Wal-Mart jobs "pay less and offer fewer benefits than jobs at the mill." The Pillowtex factory offered "good jobs". For example, one employee profiled in the article was making $500 a week (approximately $12.50/hour or $26,000 per year gross) and now receives $184 per week (approximately $9,600 per year gross) in unemployment benefits. Those benefits are obviously quite meager (well below the poverty level) and run out after a year. If it takes the economy 5 years to absorb several thousand unemployed workers, what exactly are these workers going to do after the year of benefits expire?

Now imagine what will happen as robots reach critical mass, and multiple industries are experiencing mass layoffs at approximately the same time. For example, the airlines automate and lay off tens of thousands of pilots and air traffic controllers. Simultaneously the construction industry starts to automate and lays off hundreds of thousands of roofers, painters, brick layers and carpenters. Simultaneously the retail industry begins the mass installation of automated checkout lines, kiosks and stocking robots, laying off millions of employees. Simultaneously the fast food industry starts introducing completely robotic restaurants, laying off millions more. And so on. This will all start at approximately the same time, beginning in 2015 or 2020.

As those millions of displaced employees flow into unemployment offices, they will face the same situation these Pillowtex workers face, except there will be 10 million of them instead of 5,000. As their benefits run out, will they end up in Terrafoam?

See Robotic Nation for details.

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