The Looming Employment Disaster

Street art in Larchmont, CA

Earlier this week the New York Post announced Amazon intends to open a new robotic supermarket staffed by only 3 employees (Amazon’s CEO Jeff Bezos has pushed back against this “job-killing” claim). This comes on the heels of other advances in robotics such as Starship Technologies beginning to conduct commercial drone deliveries in Virginia, Boston Dynamics’ “nightmare inducing” warehouse robot video leak, and Otto Motors’ driverless deliveries for Budweiser.

Firms such as Amazon and Starship Technologies do have some justification in pushing back against these “job-killing” claims, as they are creating high-paying, high-skilled jobs in the technology sector and, at least in the short-term, jobs in the manufacturing sector (fewer of these as they hit scale and the manufacturing too becomes robotically automated). Further, the argument for robotics looks very similar to arguments for free trade. Yes, these technological developments will cost some low-paying, low-skilled jobs, but with the loss of jobs will come incredible reductions in the costs of goods sold, essentially offsetting the job losses through consumer savings.

Still, those paying attention can see massive change is coming. Back in Oct. 2016 it was leaked that Amazon intends to open 2,000 grocery stores across the U.S. over the next 10 years. Whether or not the 3 employees per store figure is perfectly accurate, it is now a reference point, and indicates a workforce of only 6,000 employees across all those locations. Kroger today employs about 155 people per location, or 310,295 employees per an equivalent number of locations.

Amazon’s efficiency will force competing grocers to keep pace as these locations enter new markets, especially since they can already claim 50% of all U.S. consumers as a built in user base. According to FMI, grocery stores today employ 3,400,000 people across 38,015 locations. That’s 89 employees per store. Going from 89 to 3 would be a workforce reduction of 96.6%.

While this change will not happen overnight, it will be rapid and force millions of unskilled workers into unemployment. This says nothing of the emotional damage that’ll be done to those fired (as they are often lifelong employees) and to those doing the firing (many of the latter knowing that soon they’ll too be fired). Many supermarket chains will close entirely, and with the increasing use of VR for shopping and the coming Death of Brand Names due to the evolving supply chain, the days of shopping your local grocer (or retail store in general) may officially be over.

Innovation relentlessly presses on, job losses or no, and with these changes come many benefits, such as the fact the cost to entrepreneurs to start and operate a new business is now lower than at any point in history, a significant benefit to the economy that shouldn’t be understated. Further, everyone will soon be living inside Plato’s Cockpit anyway, and while there’s a cost to personally acquire the technologies needed to live in the Cockpit, once there life is free and the benefits unlimited.

Nevertheless, retail, other affected industries and the U.S. as a whole should be careful not to let the technological Fourth Industrial Revolution become a political revolt. The massive influx of unskilled workers into the nation’s already stagnant economy could easily spell disaster if the proper safety nets are not in place for them.

(Originally published on February 9th, 2017)