The labor economist David Autor opens a recent TED talk with a startling fact: in the 45 years since the introduction of the Automatic Teller Machine, bank teller jobs have roughly doubled, from a quarter of a million to half a million. Since 2000, financial institutions have created 100,000 new bank teller jobs.
James Bessen, a lawyer and economist at Boston University, has documented this counter-intuitive development in the banking industry and uses it to tell a larger story that automation often creates more jobs even as it makes people more productive and reduces the cost of providing products and services.
Banks needed to hire more, not fewer, bank tellers because automating the routine tasks of handling cash, making deposits and checking balances made its much cheaper to open branch banks. The number of branches increased by about 40%. There were fewer tellers in each of these branches – the number of tellers per branch fell by about a third - but lots of new bank tellers were needed to provide services in all these new branches. Employment in the industry soared and the cost of providing banking services diminished.
The nature of the work changed too. The new ATMs made it unnecessary for people to provide routine services. They were designed to save labor costs. But if bank tellers weren’t handling routine transactions, what were they doing? It turns out that they moved on to tasks that machines were not able to perform – creating relationships with customers, solving their financial problems, introducing them to new products such as CDs, credit cards and loans.
The new bank jobs involved tasks that were more cognitively demanding and involved greater social skills than the routine cash-handling tasks required in the old teller jobs. Automating the routine tasks didn’t mean the jobs went away. It meant that the tellers were free to emphasize the other aspects of the job – providing personalized service and financial guidance – that had been overshadowed by the need to simply process transactions. The new tasks were more important to the functioning of the bank and more economically valuable.
The ATM story embodies a fundamental economic principle of automation. When new technology makes it cheaper to produce something, the price goes down and people tend to buy more of it. Often this means that more workers will be required to increase production to meet this new demand. And the new jobs will typically be higher skill jobs that are more rewarding and better paying. Productivity increases need not be the enemy of jobs, but the creator enabler of more and better employment.