ATMs and unemployment – Why Obama has a point

ATMs have been around since the early 1970s but US banks still employ hundreds of thousands of human tellers. So why is Obama blaming ATMs for persistently high levels of unemployment?

From 1972 to 1980 American banks put on an additional 245,000 human bank tellers — an 85 per cent increase. According to Bureau of Labor Statistics analyst Carol Boyd Leon: "the appearance of automatic teller machines served to lengthen banking hours without eliminating job opportunities for bank tellers." Not surprisingly, when President Obama appeared to blame ATMs for America’s persistently high unemployment, critics scoffed. "Next he’ll be suggesting ATMs and check-in kiosks be prohibited to create jobs", said Catallaxy commenter David Leyonhjelm.

Will Wilkinson thinks the president picked a bad example pointing out that the Bureau of Labour Statistics expects the number of bank tellers to grow rather than shrink over the next several years. But none of this shows that ATMs have no effect on the employment of tellers. In fact automated teller machines have had a huge impact on demand for the kind of work tellers do. As Timothy Noah writes:

Today, the job category "bank teller" is one of the nation’s slowest-growing occupations. The Bureau of Labor Statistics projects a paltry 6 percent growth rate during the next decade. The job now pays slightly less than it did in 1970, averaging about $25,000 a year.

So not only do tellers earn less than they used to, banks have reduced their average hours of work. In the mid 1980s almost all bank tellers were full-time. But by the early 1990s 60 per cent were part-time. It’s harder to earn a good living as a bank teller than it was in the 1970s.

Bank tellers are a good example of how technological change is polarising the labour market. Economists David Autor, Frank Levy and Richard Murnane argue that computers have made some skills less valuable and others more valuable. In a 2000 paper they write:

… computer capital (1) substitutes for a limited and well-defined set of human activities, those involving routine (repetitive) cognitive and manual tasks; and (2) complements a second set of activities, those involving non-routine problem solving and interactive tasks. Under the assumption that routine and non-routine tasks are imperfect substitutes, the task framework implies measurable changes in the task content of employment.

ATMs and internet banking are a substitute for many of the tasks performed by tellers. They can dispense cash, make transfers and accept deposits. In the same way self check outs in supermarkets can substitute for many of the tasks performed by cashiers. For other tasks, computers make highly paid workers like lawyers and medical specialists more productive. Databases and diagnostic equipment complement their skills rather than replacing them.

People whose skills can be easily replaced by computers have seen their wages and hours of work decline. However there are many tasks that are easy for human beings to do that cannot readily be automated. Cleaners, security guards and cafe workers are examples. Because most people have (or can easily acquire) the skills to do these jobs, they are generally considered less-skilled.

As the Economist magazine explained last year, computers tend to reduce demand for workers with intermediate levels of education while increasing demand for those with higher levels of education. In their 2004 book The New Division of Labor, Frank Levy and Richard Murnane write:

Who will have the skills to do the good jobs in an economy filled with computers? Those who do not will be at the bottom of an increasingly unequal income distribution — the working poor. The disappearance of clerical and blue-collar jobs from the lower middle of the pay distribution illustrates this pattern of limited job options. People with sufficient workplace skills can move from these jobs into one of the expanding sets of higher-wage jobs. People who lack the right skills drop down to compete for unskilled work at declining wages (p 6).

The recession is likely to accelerate changes in the US labour market. As Will Wilkinson writes, it may be that during the recovery "many firms chose to invest in updated technology that further increased the productivity of skilled workers they did not dismiss rather than re-hiring workers whose skills are less augmented by better tech." So some workers displaced during the recession will will fall from the lower middle class into the ranks of the working poor as they are forced to move to less skilled occupations.

So when Obama says: "There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers", he may be right. Technological change may make society wealthier as a whole. But that doesn’t mean there won’t be losers as well as winners.

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5 Responses to ATMs and unemployment – Why Obama has a point

  1. Patrick says:

    Amen to that, a point Obama seemed determined to ignore when he ‘rescued’ the UAW rather than just spend billions retraining and relocating the already-redundant workforce.

    Also, what most people don’t seem to realise is that the computers are coming for the more skilled of us as well – a lot of highly skilled jobs involve, when you Taylorise them, quite a few pieces of far less skilled tasks and the computers are coming for them, as is taylorisation in general.

    Computers aren’t just replacing the less skilled they are now redefining what skill is.

  2. Incurious and Unread (aka Dave) says:


    I think your distinction between “skilled and “unskilled” in the post is fundamentally incorrect. I cannot see how a bank clerk – doing basic tasks like dispensing cash – is any more skilled or unskilled than a cleaner. The key distinction is between mental tasks and physical tasks: a computer can easily undertake low-skill mental tasks (cash dispensing) but not low-skill physical tasks (cleaner).

    This fact, by itself, should mean that cleaners are better paid than bank clerks. I suspect the main reason why they are not (in immigrant societies like Australia and the US) is that cleaners, unlike bank clerks, do not need to be fluent in English.

  3. Patrick says:

    Are languages a skill? I think they are!

  4. Labor Outsider says:

    Actually, here on the east coast of the US, it is almost impossible to find a cleaner for less than $20 an hour, way above the minimum wage.

    Indeed, the deconstruction of the term skilled and unskilled is exactly what David Autor and his colleagues have been doing for the past few years. They have a bunch of papers out showing that workers in what used to be thought of as skilled jobs, but are actually quite mechanical and thus computerised or outsourced to other countries, have done quite badly in the US labour market over the past two decades. However, people in occupation such as cleaning have done reasonably well because their jobs can’t be easily mechanised and the work is complementary to the good labour market performance of those skilled workers whose jobs are not easily mechanised (the so-called symbolic analysts).

  5. Incurious and Unread (aka Dave) says:


    I agree. “Deconstruction of the term skilled and unskilled” is what I had in the back of my mind, but I couldn’t have described it so concisely.

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