ATMs, bank tellers, and the automation paradox
Religion & Liberty Online

ATMs, bank tellers, and the automation paradox

In September 1969 the Chemical Bank branch in Rockville Center, New York opened the first automatic teller machines. The first ATM was only able to give out cash, but by 1971 the machine could handle multiple functions, including providing customers’ account balances. The machine could do the job that was once reserved for human tellers. Over the next three decades, the number of ATMs increased exponentially. Today there are about 400,000 ATMs across America.

You can probably imagine what happened to bank teller jobs, can’t you? Their numbers increased.

What? That’s not what you expected? You thought the increase in ATMs would reduce the need for human tellers? As James Bessen explains,

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.

While technology can and does destroy some jobs (such as in agriculture), this automation paradox—that labor-saving technology can create more jobs than it destroys—recurs often in the history of technology. And overall, as Christopher Mims notes, society as a whole come out ahead:

It’s true that technology alters the quality, as well as the quantity, of jobs. Ian Stewart, chief U.K. economist at Deloitte LLP in the U.K., co-wrote a paper last year that used census data as far back as the late 1700s to examine the changing nature of jobs in the U.K., cradle of the industrial revolution.

The authors found big increases in both low-paying and high-paying jobs. There are more barbers and barkeepers. But there also are more accountants and nurses, reflecting the rising complexity of the modern economy.

Paradoxically, says Mr. Stewart, many of the fields most transformed by technology have produced the biggest increases in employment, from medicine to management consulting. “What we saw was that machines and people were highly complementary,” he says.

What this means for America is that technology will likely make us all better off while making may others worse off—at least temporarily. We need to find creative ways to retrain workers for new opportunities. But just as importantly, we need to be realistic about what jobs have been permanently eliminated (such as farm labor) and which will be enhanced by technology (such as bank tellers).

Joe Carter

Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).