President Obama and His Luddite View of Bank Teller Machines

President Obama's Luddite Economic Philosophy

June 18, 2011

This past Tuesday, June 14, 2011, U.S. President Barack Obama made, what is being hailed by conservatives as one of the dumbest economic comments ever when, during an interview with Ann Curry on the Today Show, he said:

“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. You see it when you go to a bank and you use an ATM, you don’t go to a bank teller, or you go to the airport and you’re using a kiosk instead of checking in at the gate.”

While I agree that the President’s statement sounds like something from an early nineteenth century Luddite rather than from the mouth of the twenty-first century leader of the world’s largest economy, I am forced to admit that at least part of the President’s statement has some truth to it.

In the President’s defense, it is true that the U.S., and world, economy for that matter, is undergoing a structural change.

It is also true that business is becoming more efficient and using fewer workers.

The current recession, coupled with the misguided policies of the President and the Reid-Pelosi Congress, have forced businesses to accelerate their efforts in the direction of becoming leaner and more efficient.

However, both the trend toward greater efficiency and the structural changes occurring in the economy have been ongoing for years before the recession.

What the President fails to understand is that the economy is dynamic and structural change is ongoing part of a dynamic and growing economy.

It is policies, like the ones he is enacting and trying to enact that are causing the fear and uncertainty that is making investors and business leaders hesitant to expand by hiring more people.


ATM at a Credit Union in suburban Tucson, Arizona
ATM at a Credit Union in suburban Tucson, Arizona | Source

President Obama's ATM Comment Was Pure Economic Nonsense

As to using bank ATM machines and airline ticket kiosks in airports as examples, this was pure nonsense on the part of the President.

If anything, there are more teller jobs and more airline customer service jobs now than before the advent of ATMs and airport ticket kiosks.

A June 16, 2011 posting, titled An ATM and kiosk industry response to President Obama, by Tom Harper on the ATM Marketplace blog easily refutes the President’s example using government statistics.

Anyone who is out and about in any city in the United States will have a difficult, if not impossible time, not seeing a bank or credit union building.

By simply visiting a grocery store, one usually encounters a bank branch inside the store as they push their grocery cart from one aisle to another and even these mini-branches are staffed by tellers.

Bank of America Branch in Casas Adobes, Arizona
Bank of America Branch in Casas Adobes, Arizona | Source

Harper, in his blog piece cites U.S. Bureau of Labor Statistics figures showing that bank teller jobs increased from 453,150 to 556,320 between 1999 and 2010.

This was an increase of 103,107 new jobs in an eleven year period that occurred some three decades following the introduction of ATMs in the United States in the late 1960s and early 1970s.

Citing FDIC (Federal Deposit Insurance Corporation) data, Harper writes that the number of bank branches in the United States grew from 81,444 in 1992 to 99,109 in 2010.

He goes on to cite FDIC data showing a growth in overall bank employment (and the FDIC data do not include credit unions which underwent major expansion in buildings, ATMs and employment during this period) from 1.8 million in 1992 to over 2 million in 2010.

This despite the fact that by 2010 the ranks of bank employees, along with workers in other industries, had been thinned considerably by the start of the recession in late 2007.

If Harper Had Looked Back Further, the Increase in Bank Tellers Would Have Been Mind-Bogling

Unfortunately, Tom Harper did not research back to the 1960s for his employment data.
The increase in the number of tellers and other employees in banks and other depository financial institutions between the late 1960s, just before the introduction of ATMs in the United States, and today would be incredible.

Finally, Harper also points out the fact that ATM machines and airport ticket kiosks don’t simply fall out of the sky and blanket the countryside like new fallen snow.
They also don’t automatically load and service themselves.

Instead, thousands of people are employed to manufacture and service them. While some of these are included among the 2 million bank employees, most of them are in addition to the two million currently employed directly by the financial industry.

This, Mr. President, is called progress and economic progress always leads to increased employment and incomes (as well as more tax revenues for the government)

In the 1960s, Luddites Predicted That Bank Branches and Teller Jobs Would Disappear

Of course President Obama, who was born in 1961, would have been a young child of about ten or twelve when ATMs started to become common in the early 1970s

Given the left leaning, Luddite thinkers that seem to have surrounded him throughout his life, the predictions of these people in that era could have sunk into his subconscious and surfaced during the Ann Curry interview.

Unfortunately for the President and his economic ideas, the predictions of the Luddites of the 1960s that the widespread use of ATMs would result in bank branches vanishing never came true. Instead bank branches, and the need for more tellers to staff them, multiplied like rabbits.

Of course, just as the introduction of ATMs didn’t lead to the elimination of bank branches and teller jobs, it also was not responsible for the phenomenal growth of bank branches and teller jobs.

Chase Bank ATM inside supermarket in Casas Adobes, Arizona
Chase Bank ATM inside supermarket in Casas Adobes, Arizona | Source

Removal of Government Regulations Resulted in Vast Expanison in Teller and Airline Check In Jobs

The catalyst behind the vast expansion of both the banking industry and airline industry was the deregulation of both of these industries which began in the 1970s.

It was the removal of the massive regulations, most dating back to Franklin Roosevelt’s New Deal, which not only severely restricted what both industries could offer in terms of services to customers but also shielded local banks and airline routes from competition.

The result was a banking industry that catered mainly to business with loans and checking accounts but also offering some checking and passbook savings accounts to mostly affluent customers.

Checking accounts paid no interest, but usually came with fees while the Treasury Department’s Regulation Q made it illegal for banks to pay more than 5% on consumer passbook savings accounts.

This was well below the 20% plus annual inflation the nation endured thanks to the misguided economic polices of the Johnson and Carter Administrations.

Like banks, the airline industry was a government backed cartel in which individual airlines were protected from competition by government regulations which effectively divided up the small number of passengers, who could afford to fly, between them.

Given the relatively small, and mostly captive, customer base enjoyed by companies in these two industries there was little need for them to expand capacity by hiring additional employees or labor saving equipment.

Fry's Supermarket with Chase Bank Branch inside in suburban Tucson, AZ
Fry's Supermarket with Chase Bank Branch inside in suburban Tucson, AZ | Source

Competition Led to More Customers Which Led to the Creation of More Jobs

However, with deregulation came competition and with competition came lower prices and increased product and service offerings. Lower prices meant more customers and more customers meant that capacity had to increase.

This resulted in a vast expansion of banks and bank branches and the need for more tellers to work in them. For the airlines expansion meant more and bigger airplanes as well as more airlines.

With government monopolies, like state automobile license bureaus or medical services in nations with socialized medical services, an expansion in consumer demand results in making people wait in long lines.

Customers don’t like this and in a competitive free market the solution is not long lines but more customer service and convenience.

Hence the proliferation of bank branches and tellers to staff them, and a vast increase in ticket agents and other personnel at airport airline check in counters.

Of course there are limits to the amount of counter space at airports and banks as well as the number of people available to staff these counters even when they can be enlarged.

Chase Bank mini-branch office and ATM machine inside a Fry's Supermarket in Casas Adobes, Arizona
Chase Bank mini-branch office and ATM machine inside a Fry's Supermarket in Casas Adobes, Arizona | Source

Despite Massive Replacement of Farm Labor by Machines, Most of Us are Still Employed in Other Areas

Since at least the dawn of the Industrial Revolution, Luddites and their intellectual heirs have been warning about mass unemployment as machines replace humans in the workplace.

But consider this. At the time of the American Revolution over 90% of the American people were employed in agriculture. According to WikiPedia, as recently as 1870 we still had 70% to 80% of the population engaged in agriculture.

Today, less than 5% of the American population is employed in agriculture. Yet that tiny portion of the population, using labor saving machinery, not only grows enough food to feed this vast nation but also produces enough to make America a major agricultural exporter.

As for the other 95% of the population, despite warnings from the descendants of the Luddites and misguided government policies by Progressive politicians attempting to preserve agricultural jobs, free market led economic growth has produced an abundance of non-farm jobs to keep most of this 95+% employed.

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Comments 17 comments

stayingalivemoma profile image

stayingalivemoma 5 years ago from Tempe, Arizona

Even though I don't agree with some of your comments regarding President Obama, this hub is very insightful and well written. Thank you for a different point of view. voted up


ocbill profile image

ocbill 5 years ago from hopefully somewhere peaceful and nice

So, the argument is simply loss of jobs due to technology advances in a dynamic economy? He wants progress but claims ATMs are more harm than good. I remember speeches about the US is lagging more and more in technology globally. We need to build a faster train than China. Our infrastructure is becoming archaic. Let's do away with debit card terminals at Fry's, Albertsons or Publix too and start writing checks so another person can go through those. Technology builds jobs. His comment on ATMs sounds like it would come from Hugo Chavez or a Castro. In 18 months we'll see someone new.


drbj profile image

drbj 5 years ago from south Florida

Chuck - this was an intelligent examination of the subject of technology vs. lost jobs. Would that our president did the same.


Chuck profile image

Chuck 5 years ago from Tucson, Arizona Author

Thank you everyone for your great comments. The comments so far have made for a lively and interesting discussion.

Some, including Alexander Mark (and Alexander Mark, your estimate that there are 370,000 ATMS is probably at least close if not exact - I remember seeing an estimate of 400,000 on the ATM industry trade page, a page which I put a link to in my Links Capsule) have called for doing away with ATMs and replacing them with human tellers.

As I see it there are two problems here. First, we help some unemployed people find work which is good but this would be done by eliminating the jobs of those who work manufacturing and maintaining ATM machines. This is not only not fair - helping one group by hurting another - but would not help the unemployment situation either since we would still have about the same number of people unemployed - they would just be different people.

The second problem is that, if you visit a bank, especially during times of high use such as lunch hours or Friday evening, you will see that most or all of the teller windows are manned by a teller. Since we are using all of the available teller windows during busy times, the only way to increase the number of tellers during busy times when they are needed would be to build more bank branches. This is not only an expensive undertaking but the landscape is already littered with bank branches - they are as common as fast food restaurants.

Since there is no room for additional tellers during times they are needed the only way, short of building more branch offices, would be to employ them during slow times, including opening banks 24/7 when they are now closed, and staffing the empty teller windows that way. This would also be a waste of resources as banks would be offering the additional teller services when most people are not patronizing the bank.

This is very much like a story told about the late economist, Milton Friedman. It seems that Friedman was invited to address some sort of an international conference of business and government leaders being held in some Southeast Asian nation in the 1970s.

His hosts from the government picked him up at his hotel and accompanied him in a limousine to the conference hall.

Enroute they passed a large construction site with hundreds of workers using picks and shovels to build a new highway. The bureaucrat accompanying Friedman proudly pointed to the project which he felt showed his country's progress.

Friedman replied saying that they could complete the project and reap its benefits much faster if they replaced the picks and shovels with heavy equipment.

The bureaucrat immediately disagreed explaining that the real purpose was to create jobs not the road, for which there was no real need.

Friedman replied saying that if that was the case they should take away the picks and shovels and give the workers spoons to dig with as that would take longer and create the need for many more workers.


bobmnu profile image

bobmnu 5 years ago from Cumberland

There are success stories of small vs big. In one community Walmart moved into a town with two hardware stores. One tried to compete with walmart and lost. The other complemented Walmart and increased business with less work. Walmart sells hunting and fishing gear so he sold top quality hunting and fishing gear, he did the same thing with tools. In other communities stores have sprung up selling major appliances, specialized food (organic, meat markets). In several communities upgrade clothing stores have been started. Many Walmarts have strip malls located next to them with small business. Walmart brings in people who would not come just for the small business that opened next to the giant.


Alexander Mark profile image

Alexander Mark 5 years ago from beautiful, rainy, green Portland, Oregon

I love a free market economy too, but it is hard to bring about healthy change when large corporations and perhaps even the FDA (I have no direct proof) are working against it. I would shop at a farmer's market, but it would waste a lot of gas and take up a substantial amount of time to get there. If everything was localized, life would be simpler.

Would you agree that small businesses are competing against giant corporations? We need a friendlier free market economy, but it always comes down to a larger entity beating out the little guy and absorbing them if they're big enough.

I'm not against the principles of what you believe in, but I believe the way it is all implemented needs a LOT of work.


bobmnu profile image

bobmnu 5 years ago from Cumberland

That is the beauty of a free market economy, people can choose where to live and what to buy. If I buy food at the ABC Mega Mart and don't like the quality I can shoup at a different store. If I want fresh produce I can visit the Farmers Marker. If I want cheep food I can buy from ABC Mega Mart.


Alexander Mark profile image

Alexander Mark 5 years ago from beautiful, rainy, green Portland, Oregon

You're totally right about that bobmnu, I feel the ideal for most people is to live a less industrialized lifestyle and the kind of change I am promoting wouldn't happen overnight and not everyone wants it.

I am not proposing farms to feed metropolis inhabitants, we would be better off living in a small community next to the food supply where we can directly affect change to the farm if the food becomes substandard, which right now, it mostly is.


bobmnu profile image

bobmnu 5 years ago from Cumberland

My father told of his working days in the Booking Department of a large bank. The department employed 10 people to sort checks. The Bank invested in a check shorting machine that could do the work of 10 people in less than an hour. The bank started to encourage people to use check instead of cash. Checks were easier than carrying large amounts of cash, could be sent safely through the mail and made recording keeping easier. What happened was the department increased in size to over 30 people. The check sorting machine was doing what no person or group of people could do, make life easier for the people and more efficient for the Bank.

If you look at history you will see many time when automation came into play people who lost their jobs either changed, retrained or lost their job, but automation almost always increased demand and more jobs over time. Look at the auto industry - early on each car was made by hand by a group of men. It took a long time and was expensive. When they brought in automation, the assembly line, the price went down and the demand went up. the result more people employed in the auto industry and related industry.

Alexander some questions, How many city farms will it take to feed New York City or Boston? Will you be able to get fresh fruit and vegetables year round? The reason we have large farms is so that people will have food year round and fresh fruit grown in Florida can be eaten by the people of New York and Boston even in the coldest parts of winter.


breakfastpop profile image

breakfastpop 5 years ago

Gee and here all I along I thought this mess was all Bush's fault! I have to go now. I am going to my bank to kick that ATM.


chspublish profile image

chspublish 5 years ago from Ireland

Very well put points and well worth the read.


Alexander Mark profile image

Alexander Mark 5 years ago from beautiful, rainy, green Portland, Oregon

There are 370000 ATMs in the us according to this article on msnbc: http://t.co/mTi3N2D (I don't know how reliable this number is since I found the article through Google, but it serves as a good reference). I swear I'm not a liberal but my liberal tendencies are going to show in a minute. So let's consider the growth in employment if all the ATMS were removed and assume that most ATMs could be replaced with 1 employee (per shift) that runs the vacuum tube money delivery system. There is no way that we'll ever need as many ATM maintenance and money loading people because you don't have someone sitting by the machine all day (that person probably services 5 to 10 machines a day max). I didn't research that number but it is safe to say that an ATM is way more efficient at cutting costs in labor.

Using your own argument in this area, think of all the jobs that would be created if we replaced ATMs with people (1.5 people per machine to cover bank hours). Those people would now have employment who, because they are working with others, will be getting sick. This means greater staffing in hospitals, more medicine production and so on. The real trick is that banks will naturally pass those costs on to the consumer, who now have to find a way to make a little more money. I am not sure if the numbers will ever prove which is better, but ATMs are more efficient and do eliminate jobs (lower paying jobs).

Being a sci-fi writer, I like to think that robots ought to enhance our lives, but their greatest benefit is to cut costs in labor. The classic science fiction utopia would be a world where robots do all the work and we sit around while they bring us our drinks. Then we'll become like those space-farers in WALLE. But in reality, robots are most widely used in the pursuit of profit and they reduce the number of lower paying jobs available to the blue collar set.

I kind of agree with Obama on this one. but not entirely because he is proposing that we move backward as a civilization (the liberal dream of returning to tribalism - I don't think so). What we need to do, if we need to do anything at all, is to use technology in a way that enhances everyone's lives. Personally, I prefer to go to the self checkout line at the grocery store, but the store doesn't pass the savings they get from the self checkout to me, and I have to bag my own groceries! So normally I try to use the human checkout if the line isn't too long or I'm feeling too lazy to bag my own food.

I enjoyed reading your statistics about employment vs machines replacing ag jobs, but I have a beef (pardon the loose pun) with that too. Industrialized farming has brought us unripe vegetables and cattle fed on corn, and canned food that is very unhealthy for us. Although I am against tribalism, we will be better served if humans grew the food and tended to it personally (I mean that it should be a community project with minimal machinery - not everyone is a farmer) - and we could only achieve a healthier lifestyle if we lived in smaller communities where our actions more directly affect others - for example: if Bob who runs the local city farm along with local laborers who live in the town that the farm feeds, starts using unhealthy practices to pump up production and the local consumer notices. They have direct access to pushing Bob for change because they know Bob, and the local council can take action. Or, because the locals know how to farm, they build another farm which can compete with Bob.

When it comes to big ag corporations, they are protected from direct community involvement, the fight is too big for little people and if by chance we could force grocery stores to force industrial farms to give us truly ripe tomatoes, they'll be trying to slip other deficient foods past us while we win the battle for the tomatoes.

I hope that makes sense :-)

I don't mean to be contrarian, I just feel we can't assume all progress is good without limits. Thanks for a thought provoking hub!


Paradise7 profile image

Paradise7 5 years ago from Upstate New York

Well, that set the record straight!! Sometimes our President makes some off-the-cuff remarks that should be better researched. He really should know better than to take a stance, even a minor one, without doing his homework, first. It adversely affects his credibility.


Sinea Pies profile image

Sinea Pies 5 years ago from Northeastern United States

You are so right! I happened to be at the bank one day when they were emptying the outside depository (not the ATM but still a similar concept) It took 2 people to do it for security purposes. MORE employees, not less.


Goodpal profile image

Goodpal 5 years ago

The real issue is not the ATM machine or whether it take away jobs - the truth is every mechanization does. This is not a great time for American economy when it is trying to limp back to normal. Obama's comments should be seen in that context.

Businesses always prefer to have a lean workforce and employ technology even if there is not much cost advantage as compared to having the work done by people. They certainly have the freedom to do what they want. Their only concern is to maximize their monetary profit and not the unemployment rate. However, at the same time if someone is worried about high unemployment under present economic situation, it is not unjust either.


tmheffernan profile image

tmheffernan 5 years ago from Middle East

It just proves that there are two sides to every story, yes technology is great but it does add to the unemployment rate to some extent.


Cardisa profile image

Cardisa 5 years ago from Jamaica

Good morning Chuck.

It seems that your President often 'put his foot in his mouth' so to speak.

However, I must agree with him. While technology is good and of course important, it does replace human resources and this increases unemployment.

Nicely written article.

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