What the story of ATMs and bank tellers reveals about the 'rise of the robots' and jobs

One thing automation alarmists sometimes miss is that the simplistic “machines steal jobs” story tells an incomplete tale. Take automatic teller machines. One might think the introduction of ATMs first in the 1970s eventually meant massive technological unemployment for bank tellers. Instead of depositing a check or withdrawing cash from a human, you could do it with an ATM card and a machine. (Or you could hack the ATM as seen in the 1990s film “Terminator: Judgment Day,” cleverly showing two different threats from smart machines.)

But that’s not what happened, as this chart from “Learning by Doing: The Real Connection between Innovation, Wages, and Wealth” by James Bessen shows:

"Learning by Doing"

“Learning by Doing.”

In a recent EconTalk podcast, Bessen tells what happened:

Basically starting in the mid-1990s, ATM machines came in in big numbers. We have, now, something like 400,000-some installed in the United States. And everybody assumed –including some of the bank managers, at first — that this was going to eliminate the teller job. And it didn’t. In fact, since 2000, not only have teller jobs increased, but they’ve been growing a bit faster than the labor force as a whole. That may eventually change. But the impact of the ATM machine was not to destroy tellers, actually it was to increase it.

What happened? Well, the average bank branch in an urban area required about 21 tellers. That was cut because of the ATM machine to about 13 tellers. But that meant it was cheaper to operate a branch. Well, banks wanted, in part because of deregulation but just for deregulation but just for basic marketing reasons, to increase the number of branch offices. And when it became cheaper to do so, demand for branch offices increased. And as a result, demand for bank tellers increased. And it increased enough to offset the labor-saving losses of jobs that would have otherwise occurred. So, again, it was one of these more dynamic things where the labor-saving technology actually created more jobs.

This is in fact a much more general pattern. We see a whole number of occupations where you might think that technology is going to destroy jobs because it’s taking over tasks; and the reverse happens. So, if you look, for instance, when they put in scanning technology into cash registers, the number of cashiers actually increased. When legal offices started using, beginning in the late 1990s, electronic discovery software for doing discovery of documents in lawsuits, the number of paralegals increased rather than decreased. …

And so, what’s happened is that cash-handling has obviously become less important for tellers. But their ability to market and their interpersonal skills in terms of dealing with bank clients has become more important. So the transition–what the ATM machine did was effectively change the job of the bank teller into one where they are more of a marketing person. They are part of what banks call the ‘customer relationship team.’ But it’s a different sort of skill. Maybe it’s a higher skill. There is some evidence that their wages have gone up. They are hiring more college graduates as bank tellers. And in a whole variety of ways we are seeing changes of this sort where the nature of occupations is getting up-skilled in some fashion. Often very specific skills related to the particular technology, the particular job. This is happening across the board. And that’s part of the challenge that technology is posing for us: How do we develop all of these new skills?

Indeed, as Bessen explains, the same thing was seen in the 19th century with the textile industry. Almost all of the work was automated, yet the number of weavers continued to grow for decades. More automation meant the price of cotton cloth fell, and people used more of it.

Now this doesn’t mean the numbers of bank tellers will continue to grow forever. Indeed, according to the Labor Department, employment of tellers is projected to decline 8% over the next decade. The number of bank branches is now declining rather than increasing “because of industry consolidation and technological change.” More from the Bureau of Labor Statistics:

The rise of online and mobile banking allows customers to handle many transactions traditionally performed by tellers, such as depositing checks. As more people use these tools, fewer bank customers will visit the teller window. This will result in decreased demand for tellers. Some banks also are developing systems that allow customers to interact with tellers through webcams at ATMs. This technology will allow tellers to service a greater number of customers from one location, reducing the number of tellers needed for each bank.

Even so, the decline is forecast at 8%, not 80%. How machines can complement what humans do and create increased demand should not be overlooked when evaluating the rise of the robots. Yet it seems like it often is.


This article originally appeared at: http://www.aei.org/publication/what-atms-bank-tellers-rise-robots-and-jobs/

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