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The Baxter robot at a Pennsylvania plant of K’Nex Brands LP.

Stephen F. Bevacqua

When K'Nex Brands LP recently brought some of its plastic toy production from China back to its home base in Pennsylvania, it was viewed as a victory for American manufacturing. President Barack Obama toured the factory in November and The Wall Street Journal later celebrated the company's success with the headline, "A Toy Maker Comes Home to U.S.A." But while employment at the K'Nex factory has risen with the "reshoring" from China, one new worker isn't being paid: the Baxter robot.

It's a cute-looking thing, as robots go, with human-like arms and facial expressions. It can work alongside people and is capable of learning simple, repetitive tasks, making it a welcome addition to small-scale manufacturing. But it also represents a new direction for robots, as their versatility and affordability pushes them deeper into the workforce. If low-cost China can't compete with a robot like Baxter, who can?

Mechanization has always raised concerns about the impact on human jobs. And while those concerns have been allayed with rising employment, as humans find new and more productive things to do, economists aren't so sure that the trend will continue as robots proliferate. There are signs that the labour market is already shifting. MIT's Erik Brynjolfsson and Andrew McAfee, authors of Race Against the Machine, point out that the digital era has had an unsettling impact as capital wins a bigger share of the economy: Corporate profits as a share of U.S. gross domestic product are at a 50-year high, while compensation to labour has fallen to a 50-year low. The average worker, they believe, is being left behind by new technologies.

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Paul Krugman, the Nobel Prize-winning economist and Princeton University professor, has picked up on this theme, arguing in The New York Times that technological disruption could be the reason why corporate profits are at record highs even as the U.S. economy continues to struggle.

No one wants to look like a modern-day Luddite, opposing the use of new technology, so robots are here to stay. But if low-skilled workers fail to find new jobs to replace the ones they lost to mechanization, their futures will look bleaker than ever. Robots may not take control of the economy, but robot owners will.


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