U.S. Employers Pick Machines Over Manpower

Rather than hiring more workers as the U.S. economy lumbers back to life, timid employers are replacing human labor with machinery wherever they can as the costs of employee compensation have risen while the price of foreign-produced automated equipment has dropped.

Some economists say companies are loath to hire because the recovery is so slow, a problem that would be eased by increased demand for goods and services. With no increase expected any time soon, this is crippling news for millions of unemployed or underemployed Americans. –ARK

The New York 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.

… Indeed, equipment and software prices have dipped 2.4 percent since the recovery began, thanks largely to foreign manufacturing. Labor costs, on the other hand, have risen 6.7 percent, according to the Labor Department. The rising compensation costs are driven in large part by costlier health care benefits, so those lucky workers who do have jobs do not exactly feel richer.

… To add insult to injury, much of the equipment used to replace American workers is made by workers abroad, meaning that capital spending is going overseas. Of the four pieces of equipment Vista bought last year, one was made domestically. The others came from Israel, Switzerland and Germany.

Read more