The Second Impact Is Deadly (to Jobs)

I heard the saying once that in a car crash, it isn't the first impact that kills you- it's the second - it's not when your car impacts an object, it's when you hit the inside of your car. 

I think that's a decent analogy right now as to what's going on with automation and technology in manufacturing more broadly- people are focusing on the primary impact of direct job replacement through automation, when really it's a secondary impact to the labor market that's deadly to the economy, not the arrival of the robots themselves. 

Allow me to explain this second impact: 

Right now, new efficiency in production makes it so that firm A can offer a product of equivalent market value to what firm B is offering, but at a fraction of the cost of goods for firm B.  The primary outcomes of this are that it will force firm B to either:

1) Pay it's people less to make up the difference in sales price for the item

2) Differentiate itself on some measure of quality that firm A doesn't offer, or 

3) Attempt to automate and copy firm A's efficiency

But typically you get all of the above in combination, not just one or the other. Now that's all fine and dandy for dealing with the competition between the two firms. But we have to look at the secondary effects on the labor market for the employees at both firms. The first impact is that fewer workers are needed at firm A to do the job, but the second impact is that the workers at both firms are now getting paid less, in order to compete with machines and computers for the same job that they previously only competed against other people for.

We are caught between technologies that are decreasing the need for work as automation in every kind of work is accelerating, and that trend is increasingly at odds with a humanity in need of gainful employment. This isn't isolated to just factory workers as most people would frame the dialog, but is equally true of office and clerical workers, merchants, sales professionals, agricultural workers, the construction industry, etc. As new tools enable firms with fewer and fewer people to adequately serve a market, it makes those firms individually more competitive and profitable for their owners.  But, as more people who are out of work are willing to contest the fewer jobs that exist, the pay level for all but the very best employees in a given field goes down- we have a glut of supply of "average" workers for "normal" jobs. The jobs that are seeing substantial compensation growth are the highly skilled technology jobs that are accelerating the automation process.

So, to put a twist on a venerable saying- "it's the knowledge economy, stupid" and if you wish to prosper, make sure what you do can't be replaced easily by a robot or computer, OR by the masses of other people lining up to do your job (who are willing to be paid less).