Retail serfs to vanish, all thanks to automation

Oxford doomsayers sees bleak future for those employed in retail, transport, warehousing, and logistics

About 80 per cent of jobs in retail transportation, warehousing and logistics and 63 per cent of jobs in sales are at risk of disappearing, thanks to increasingly capable automated systems.

This bleak news – for workers, though not necessarily for employers – comes from Oxford researchers Carl Benedikt Frey, co-director for the Oxford Martin Programme on Technology and Employment, and post-doctoral researcher Chinchih Chen, in a report titled "Technology at Work v3.0: Automating e-Commerce from Click to Pick to Door."

In 2013, Frey, along with co-author Michael Osborne, predicted that over the next two decades 47 per cent of US jobs could be lost to automation. The higher figures for transportation and sales reflect greater vulnerability for these sectors.

Frey's 2013 paper poured fuel on a perennial debate about whether technological change will create more jobs than it destroys. There continue to be arguments for both scenarios.

Robert Atkinson, president and founder of the Information Technology and Innovation Foundation, has gone so far as to bet that by June of 2025 the rates of labor force participation and of unemployment in the US will be above 60 per cent and below 7.5 per cent, respectively.

Forrester, meanwhile, has suggested automation and related technology by 2025 will eliminate 16 per cent of jobs while creating 9 per cent more jobs, a net loss.

In a report last year, the Obama administration wisely avoided forecasting a net gain or loss of jobs and merely acknowledged some jobs would be created and some would disappear.

While the jobs that will be created may not be evident until they're posted by employers, the jobs that will vanish should be more obvious – they're the ones already being described in programming code because they're not that complicated.

"Retail is one industry in which employment is likely to vanish, as it has done in manufacturing, mining and agriculture," said Frey in the report.

The researchers contend that growth in online shopping is the primary driver of warehouse automation, and that ongoing broadband and mobile device penetration will accelerate the trend.

You only need to look at Amazon Go, the e-commerce giant's depopulated retail prototype, to understand where this is headed: walk-in vending machines, with few if any low-skill cashier or stock clerk positions.

This shift will contribute to the ongoing decline in urban retail and mall footprints, space likely to be filled by the e-commerce firms looking for warehouse space and distribution nodes in and around densely populated urban areas, provided municipal zoning regulations adapt.

The report describes a growing need for on-demand warehousing, to allow small- and mid-size e-commerce firms to compete with large players like Amazon that have established logistical operations.

Frey and Chen acknowledge that technology has some positive effects on employment. They note that in January, Amazon said it would add 100,000 warehouse jobs in the US by 2018.

But they also point out that these jobs aren't the same as they used to be: They require more skill and training. More than half of the jobs being created in Amazon's automated warehouses require a university degree, they claim.

They also cite a report from The Economist that suggests retailing will lose three times as many jobs as Amazon is expected to create by July 2018, if current trends continue.

And this is at a point when robots that can pick and sort goods on a level that's comparable to a human employee. There may be even less of a need for people if the machines significantly surpass the value people bring to warehouse work.

The researchers say that transportation-related and sales-related jobs, which are highly susceptible to automation, constitute a large share of the American workforce – 5.1 per cent and 6.1 per cent of total employment in the US respectively.

They conclude on a grim note. "The prediction of President Obama, that, 'The next wave of economic dislocations won’t come from overseas, it will come from the relentless pace of automation that makes a lot of good, middle-class jobs obsolete,' is thus likely to be proven accurate." ®

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