Business

One Stat Shows America’s Shift From Manufacturing Cars To Manufacturing Nerds

[Photo: DAVID MCNEW/AFP/Getty Images]

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Eric Lieberman Deputy Editor

The U.S. automobile manufacturing industry has taken a backseat to Silicon Valley, as the top three tech companies had almost the same revenues in 2014 as the Detroit’s Big Three did in 1990, according to a McKinsey Global Institute report.

The American automakers — General Motors, Ford, and Chrysler — needed 1.2 million people to produce revenues of $250 million. In contrast, the biggest corporations in Silicon Valley, the colloquial term for the region and people within the tech hub in the larger San Francisco area, had nominal revenues of $247 billion with only 137,000 employees.

The massive profitability and efficiency of the tech behemoths’ yield further signals that the tide for jobs is shifting from more traditional industries, like automobile manufacturing, to software development and advanced technology in general. Even as it relates to manufacturing, the labor has shifted from actually building cars, to building and programming robots who build the cars.

“Employment effects of robots are most pronounced in manufacturing, and in particular, in industries most exposed to robots; in routine manual, blue collar, assembly and related occupations; and for workers with less than college education,” reads another study from the National Bureau of Economic Research (NBER) published in March.

Tech companies, though, are contributing to the productivity of vehicle manufacturing through automation.

Ryan Hagemann, director of technology policy at the think tank the Niskanen Center, says he finds the NBER’s findings relatively surprising, while adding that the analysis doesn’t appear to factor in all of the potential effects of advanced technology.

“We’re more likely to see humans working with and not competing against robots in many of the industry jobs imperiled by automation,” Hagemman explained to The Daily Caller News Foundation. “Because the authors’ model treats the labor market as one of competition between human labor and automated labor, it doesn’t seem to account for potential productivity gains through cooperation between the two.”

While they may not be adding jobs to the direct manufacturing process, tech corporations can increase jobs in other areas. But the amount of people needed to do such jobs appears limited, at least relatively to the automobile industry.

“Missing from our study is any technological response to the changes in factor prices resulting from the introduction of robots (e.g., the creation of new labor-intensive tasks as in Acemoglu and Restrepo, 2016),” the NBER study’s conclusion reads. (RELATED: Google Exec: I Am A ‘Job Elimination Denier’ When It Comes To Robots)

“Nonetheless … we believe as well that the negative effects we estimate are both interesting and perhaps somewhat surprising, especially because they indicate a very limited set of offsetting employment increases in other industries and occupations.”

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