RFID, Productivity and Workers

By Mark Roberti

Some view the big productivity gains RFID technology can bring as a threat to workers' jobs and wages, but the reality is complex.

In my Wall Street Journal op-ed piece two weeks ago, I cited several examples of companies that are using radio frequency identification technology to dramatically improve productivity (see How Tiny Wireless Tech Makes Workers More Productive). That, to me, is a good thing, but some commenters on the story felt differently.

Here's one example: "Just as bar codes increased efficiency and reduced employment, so will RFID. Increased productivity equals fewer people to do the same job."

It might seem counterintuitive, but history has shown us that increases in productivity bring more jobs and higher wages. Let's look at the automobile industry to illustrate why.

In 1908, a Ford Model T cost $825, or roughly $21,000 in today's dollars. Ford Motor Co. produced 12,000 units that year. The company moved to a new plant in 1910, and new production machinery and processes boosted worker productivity eight-fold by 1914 (the time amount of required to produce a single car was reduced from 12.5 hours to about 90 minutes). Ford produced 300,000 cars that year, more than 500,000 in 1916 and more than 1.3 million in 1922.

By 1924, the cost of a Model T had fallen to $260, or approximately $3,000 in today's dollars. But as productivity improved and prices fell, Ford didn't eliminate personnel—instead, it hired more. By the 1930s, one plant employed more than 100,000 workers. Greater productivity allowed Ford to lower prices and sell more vehicles, and the company required additional workers to make more cars. Ford famously offered $5 a day—double the rate of other factory workers in those days.

You might say that those days were different, that they were the early days of the Industrial Revolution and massive new markets were emerging for all kinds of items being produced in brand-new factories. And that is true. RFID might not lead to entirely new markets opening up, but I think the point is that greater productivity increases wages and produces new jobs.

Take Macy's, one of the examples I cited in my Wall Street Journal article. The fact that the retailer can have now a single store associate inventory 7,000 items per hour, versus only a few hundred with bar codes, does not mean it will lay off workers. Rather, it means those workers will become more productive. And if Macy's can sell more items because it can now efficiently replenish and ensure that goods are on the shelves when customers want to buy them, the company should boost profits, enabling it to potentially pay higher wages.

RFID might also create new jobs. Macy's might, for example, hire additional workers to ship items directly from the store, or to pull products from shelves so that they are ready for customers to pick up in stores, as part of the retailer's omnichannel strategy.

New technology might eliminate some jobs. Ford put all buggy manufacturers out of business, and RFID has had an impact on, for example, the number of people employed to collect tolls on the world's roads. But if history is any example, far more jobs will be created than will be lost.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.