No lines. No checkout. New jobs.

AmazonGo tests the flexibility for America’s second largest profession.

For consumers, early tech adopters, and downtown Seattle employees, it’s been an exciting couple weeks of news in the world of computer automation. It may not have been such an exciting time for the 3.5 million people whose jobs this news affects. While there is a bright side, the cashiers and drivers of America are officially in a race against the clock to gain some labor force flexibility and trade up their jobs.

In the news:

  • On December 5th, Amazon announced a grocery store that will remove checkout lines and cashiers.
  • On December 13th, Uber announced that their driverless cars, tested in Pittsburgh, would launch in San Francisco.
  • On December 7th, Amazon landed their first fully automated drone package delivery in the UK.

Given the rapid rate of expansion these two companies are known for, it will not be long until these services are rolled out everywhere and gain significant market share.

In 2012, there were nearly 0 Uber drivers. 4 years later, after doubling every 6 months, the number of Uber drivers greatly outnumbers taxi drivers in the US.

Chart from Forbes http://www.forbes.com/sites/briansolomon/2015/05/01/the-numbers-behind-ubers-exploding-driver-force/#6ebc12984901

Amazon’s grocery delivery platform Fresh launched first outside of hometown Seattle in 2013. Three years later it is in over 20 cities and covers a quarter of the US population. (1)

If driverless taxis and non-checkout grocery grow at the same rate as these other platforms, human Uber drivers and cashiers will be outnumbered by computers by 2019, and relatively extinct by 2024. This assumes a normal startup growth on an exponential growth curve (starting at 0 and doubling about every 2 months). However, the infrastructure already exists for Amazon and Uber to jump over the startup curve.

  • AmazonFresh already has distribution and warehouses in over 20 cities and the AmazonGo stores only need to buy a store front in order to roll out. For example, the Seattle AmazonGo store which did not exist June of 2016, will be live in January 2017.
  • The technology Uber uses for driverless cars can be put on any of the current 20K car fleet currently in San Francisco, if current drivers would sell their vehicle to Uber.

The good news

The list of consumer benefits from these emerging technologies goes on and on: more convenience, higher safety, cost reduction, American economic improvement, etc. On top of this, the jobs being replaced by computers are some of the lowest paying in the country and the number of open jobs in the US outnumber the potential job loss 2:1. Some economic data from the Bureau of Labor Statistics (BLS):

  • Cashier is the #2 largest profession in the US = 3.4M people (2.1% of total labor).
  • Cashiers make an average of $12.88 / hour. This is half of the national average hourly wage rate of $25.27 / hour.
  • Average salary of the 5.6M open jobs in the US = $20.70

The good news is that as long as 60% of the displaced cashiers and uber drivers pick up one of these open jobs, the American economy stays whole from a $ standpoint. The great news is that even if 100% of displaced workers pick up another open job, there will still be 2.1M higher paying jobs left over.

Below are the top 5 jobs currently open in the US.

data from BLS https://www.bls.gov/web/empsit/ceseeb3a.htm

Call to action for Cashiers/Drivers of America:

Over the next 3 years, these professions and employees will undergo a test of economic flexibility. Recent history would suggest that these changes will take a significant amount of money out of the US economy and hurt small communities. When similar automation happened in the auto industry, full states were left with labor-less “rust belt” economies which took over a decade to turn around (Michigan, Ohio, and Pennsylvania). For reference, the number of individuals in auto manufacturing jobs is currently 2.2M, which is significantly down for all-time highs around 4M. These numbers look eerily similar to the number of cashiers in the US and what could happen if the job market cannot “flex”

The Test: Can 3 out of 5 cashiers and uber drivers gain enough training, education, or other human capital in required to maintain full labor-force participation in the next 3 years.

References

  1. https://www.bloomberg.com/gadfly/articles/2016-04-08/amazon-fresh-prime-now-aim-to-kill-your-local-grocer

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Miami University Alum. Microsoft - Finance & Accounting.

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David Hall

David Hall

Miami University Alum. Microsoft - Finance & Accounting.

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