Labor Shortage Points Employers to Automation

From oil fields to warehouses, businesses are using advanced software, robots and AI to address hiring challenges.

May 21, 2021

Robot in Store

COLUMBUS, Ohio—The United States is churning out about the same goods and services as it did in pre-pandemic times but with 8.2 million fewer workers. The continued labor crunch has sent employers to try robots, artificial intelligence and advanced software to fill jobs, the Washington Post reports. President Biden’s infrastructure plan is also expected to encourage U.S. investment in up-to-date factories, which could accelerate automation, according to Bank of America.

Huntington Bancshares has received dozens of calls from businesses asking to finance equipment purchases, according to CEO Stephen Steinour. “Universally, they talk about inability to get adequate labor, very high turnover and clear wage inflation at the low end. A consequence of that will be more investment by many of them into automation,” he said.

Automated systems have advanced largely because of improvements to optics, sensors and wireless communications, becoming even more capable of deboning chickens, handling chemicals and understanding human voices. This greater automation has been a lifesaver for U.S. companies struggling to keep up with demand and a disrupted workforce because of the pandemic. “During the pandemic, firms became more productive and learned to do more with less,” said Patrick Harker, president of the Federal Reserve Bank of Philadelphia.

During the first quarter of 2021, companies shelled out 16.7% more on equipment, according to the U.S. Department of Commerce. Last fall, a survey by the McKinsey Global Institute found three-fourths of companies indicated their investment in new technologies would accelerate through to 2024, driven by a less-than-rosy outlook on hiring. “We don’t have employment getting back on the pre-COVID trajectory, ever,” said Gregory Daco, chief U.S. economist for Oxford Economics.

While long feared to be the catalyst for lost jobs, automation isn’t putting people out of work, policymakers say. Rather, it’s letting companies with chronic open positions keep turning out products and services.

“You don’t fire workers and hire a robot. That happens exactly no times,” said David Autor, an economics professor at the Massachusetts Institute of Technology.

In Asia, many convenience store retailers and foodservice operators have already turned to robots for a boost, such as FamilyMart and Yakiniku no Watami. To learn more about why retailers are turning to technology and the benefits AI and other forms of technology provide, read “Making Retail Smarter” and “Robots Deliver” in NACS Magazine.