Are ATMs Killing the Economy?

President Obama's remark about bank tellers sparks a debate

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How can record corporate profits be explained when so many are still jobless? When queried on the Today show on Tuesday, the president opted for a technology-blaming analogy. He noted that "You see it when you go to a bank and you use an ATM, you don't go to a bank teller, or you go to the airport and you're using a kiosk instead of checking in at the gate." The remark, as The Economist's Will Wilkinson observed, immediately incited right wing bloggers to link "gleefully" to debunkings of the notion that technological advances--by way of streamlining efficiency--destroy jobs. A lively debate ensued, and for the sake of clarity we've grouped the more thoughtful responses to the president's analogy below.

But before we get to the arguments, here's a couple patterns we noticed from those we read: The common refrain of the "don't blame ATM's" bunch is that technology doesn't kill jobs but allows workers to be more productive. The "blame" crew may agree with this but would counter by saying that the rapid advance of technology is killing jobs faster than it can create them. To which the "don't blame" group would note: if ATM's killed jobs, why are there more bank teller jobs than ever? Now nto the specifics.

Go Ahead and Blame the ATM

  •  Companies are spending on equipment, not workers That's the lead of The New York Times report that prompted the Today show interviewer Ann Curry to question the president. Here's the crux of the article:

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...With equipment prices dropping, and tax incentives to subsidize capital investments, these trends seem likely to continue.

  • 'I’ve been making a variation of this argument for fifteen years' blogs James Joyner at Outside the Beltway. Technology, he writes, has "created jobs designing, manufacturing, selling, and servicing the machines but they’re not being done by the same type of workers." And you can go ahead and add gas station attendants and jr. executive's secretaries to the list of jobs that won't be coming back. He writes:

Our economy adapts to all these changes over time, creating all manner of jobs that didn’t exist previously. Most of them are more pleasant than the ones they replace. But they tend to require more training–and more intelligence. But it may be that the pace of creative destruction is faster than it’s ever been and that people are being displaced faster than we can create new jobs for them.

  • Obama was right, but the ATM was a bad example figured Dan Amira at New York magazine's Daily Intel:

ATMs were probably a bad example, since they were ubiquitous for a long, long time before the current unemployment quagmire was set in motion. But there's no doubt that human employees are increasingly being replaced by machines, which don't need health insurance or pensions and never send passive-aggressive e-mails. It's been the story of industrialization for more than a century, and the incentives for using technology over sentient beings have only grown since the recession.

Leave the ATMs Alone

  • 'I wouldn't blame ATMs on our jobless recovery' wrote Will Wilkinson at The Economist, who hedges with this observation that the ranks of unskilled labor aren't likely to swell anytime soon:

...the ranks of the unemployed are filled with wannabe workers whose labour is at present worth less to employers than the cost of employing them. This puts Mr Obama in a politically perilous position. We can expect rising aggregate demand to make it pay for some firms to once again employ some significant number of relatively low-productivity workers, but we probably can't reasonably expect the unemployment rate to return to its pre-recession level, at least not in the absence of politically unlikely employment subsidies or government make-work schemes.

  • Blaming ATM's is just an evasion of responsibility writes John Hayward in a lengthy post at the conservative website Human Events. Here's the crux of his argument:

To put it simply, if automation “wipes out” a number of jobs, and a given company cannot find new purposes for its displaced workers, some of them will create new businesses in pursuit of new opportunities.  A huge economy brimming with resources and consumers provides plenty of opportunity.  This natural flow is interrupted, and the overflow of unemployment results, when forming new business ventures and hiring employees becomes too difficult.  High labor costs and regulations create such barriers.  Introduce high licensing fees for lemonade stands, and there will be fewer lemonade stands.

  • Obama's idea isn't without merit blogs syndicated conservative columnist Jonah Goldberg at National Review. But here's the caveat:

Aside from the myriad ways in which ATMs boost efficiency, liquidity, consumer spending...I’m not sure you can even blame a drop in bank teller jobs on bank machines....The number of bank branches has soared in recent years. Those branches need human tellers (and bank machines). That’s why the BLS predicted that teller jobs would grow about 6% from 2008 to 2018 (it predicted other banking jobs would grow as well). That estimate may be lower now because of the recession, but that’s the recession’s fault — i.e. in Obama’s political wheelhouse — and not because of the “structural” issues Obama’s trying to pass the blame off to.

This article is from the archive of our partner The Wire.