Cashierless Checkouts — Another Shot Across the Bow of Middle Class Jobs?
On January 22nd, 2018, Amazon opened its first Amazon Go store, featuring cashierless checkout technology. To shop, you simply scan your phone, gather your groceries, and walk out. Amazon records your interactions with its products and sends you a receipt. With its first Amazon Go store being a huge success, Amazon is now considering opening 3,000 of these cashierless stores around the country by 2021.
The cashierless checkout technology is no longer just a possibility. It’s a reality and it’s happening now. While this technology provides business efficiency for Amazon, it comes with major socio-economic consequences — not all beneficial.
Repercussions of Cashierless Technology
First and foremost, if cashierless technology becomes widespread, nearly 3.5 million full-time cashier jobs will be lost, according to Slate, an online publication. At the current national minimum wage of $7.25 per hour, this would be roughly $51 billion of annual income lost, in theory. This could be $51 billion saved annually for superstore conglomerates like Walmart, Target, and Amazon. However, it would be at the expense of the American middle class.
Could cashierless technology be a $51 billion expense to the American middle class?
Obviously, implementation of cashierless technology would lead to the unemployment of America’s cashiers. If no jobs are available for these displaced cashiers, the widespread adoption of cashierless technology will create a socioeconomic rift. While the companies implementing the cashierless technology will become wealthier and more efficient, unemployment will skyrocket, sending many of the displaced cashiers into poverty.
Gianna Perini, an Amazon executive who heads the Amazon Go project, asserts that the displaced cashiers will be absorbed into other parts of the company. Former cashiers could go into stocking, customer assistance, or other similar jobs. However, with these jobs already filled before the cashiers are unemployed, it’s unlikely that the market can absorb the oversaturating effect cashierless technology will have.
Another possibility is that cashierless technology and other similar automation will eliminate low skill, low wage jobs altogether. Hypothetically, former cashiers can learn the skills to become software engineers, manufacturers, and designers to produce these new machines. This switch, though, is not seamless. It requires education, money, and time.
The widespread implementation of cashierless technology will undoubtedly result in temporary, frictional unemployment for America’s middle class.
If Cashiers Become Skilled Workers, Will They Be Affordable?
Suppose all the old cashiers become software engineers, manufacturers, and designers. As all of these displaced cashiers re-enter the workforce after acquiring new skills, though, will companies like Amazon, Walmart, and Target be able to afford the increased wages of all these skilled laborers?
In this scenario, the best outcome would be an equilibrium similar to the cashier’s initial employment. Stores would have to increase their prices in order to afford the more skilled labor force. The increase in prices would reduce the newly skilled laborers’ wages relative to the new cost of living. In other words, because living is more expensive, the new skilled workers’ improved wages are simply an updated minimum wage. They will be no better off, even with their new and enhanced skill set.
In the worst outcome, stores will realize they cannot afford these now skilled displaced cashiers and refuse to hire them. This drives unemployment up, pushing the old Amazon cashiers into poverty. This would create a massive rift in the socioeconomic status; those associated with the superstores would be rich, and the displaced cashiers would be impoverished.
Bottom Line
While this is a very pessimistic view of the results of cashierless and automated technologies, it is still realistic and feasible.
Innovation simply for the sake of innovation could possibly be detrimental to the current American middle class.
Who knows, though? Perhaps the outcome will be far better than we can imagine.
