Job losses are not at the robotic automation companies but at the companies they are killing

The Washington Post notes that robotic warehouse automation at an eCommerce company meant more jobs with a third shift at a company called Boxed. They happily note that the robotic warehouse ecommerce company is hiring. The job losses are at the companies the ecommerce companies are killing.

Michael Mandel, an economist at the Progressive Policy Institute, calculates that the number of e-commerce and warehousing jobs has leapt by 400,000 in the past decade, easily offsetting the loss of 140,000 brick-and-mortar retail jobs. Amazon accounts for much of the additional employment. Yet it’s also at the vanguard of automation. Since 2014, Amazon has deployed 100,000 robots in 25 warehouses worldwide. At the same time, it’s nearly tripled its hourly workforce, from roughly 45,000 to nearly 125,000.

Its use of robotics has shaved the operating costs for a warehouse by about 20 percent, according to a report by Deutsche Bank. Such savings, in turn, have lowered the cost for Amazon to open new facilities—and hire more workers.

It would seem though that if Amazon and the like swallow retail then going from $200,000-400,000 of sales per employee to $1.4 million in sales per employee will mean job losses. It will just take a while. Other retailers get less profitable per employee and then they go out of business and there will be less hiring at the ecommerce companies overall.

The National Retail Foundation expected that online retail would grow 8-12% in 2017, up to three times higher than the growth rate of the wider industry. This suggests e-commerce sales are poised to fall between $427 billion and $443 billion, based on Census Bureau data. That’s right on target with BI Intelligence’s $436 billion US e-commerce estimate. For context, brick-and-mortar retail, which still comprises the vast majority of sales, is expected to grow at just 2.8%, slower than the average rate of growth for the overall industry.

Between 2001 and 2016, jobs at traditional department stores fell 46%, according to Labor Department data.

By Ocotber 2017, there have been more store closings announced in 2017 than any other year on record. Since January 1, retailers have announced plans to shutter more than 6,700 stores in the U.S., according to Fung Global Retail & Technology, a retail think tank. That beats the previous all-time high of 6,163 store closings, which hit in 2008 amid the financial meltdown, according to Credit Suisse (CS).

Dollar General makes $350,000 in sales per employee.

Payless Shoesources makes $235000 in sales per employee.

Radio shack had about $127000 in sales per employee.

Amazon makes $1.38 million per employee.

13 thoughts on “Job losses are not at the robotic automation companies but at the companies they are killing”

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    • Do comment spam scam artists count as “new jobs created”?

      Possibly under the heading of couch-tard, which is listed in the final graph as being the 4th fastest growing category.

      Reply
    • Basic Income is premised on complete denial of Moral Hazard. If everyone’s getting free money, then who’s going to make the robots work?

      Reply
      • Not if it is universal.

        Moral Hazard arises when one party has an unfair advantage over another. If you believed what you were saying you would be against people being able to leave their kids an inheritance or the government stepping in to bail out the banks like they did during the GFC when 10’s of million of people could have lost their homes and jobs.

        Automation has already suppressed wages in the West – for decades, our economies are stagnating and underemployment is a major issue. We need to increase demand – a UBI is the simplest and fairest way of doing it. That said I would rather see a Universal Dividend paid to people.

        Access to capital should be a right under capitalism. Millions of people trapped in poverty are already paying the price of that particular Moral Hazard.

        Reply
        • Demand should not be artificially stoked, and should be based on the fundamental concept of earnings. When an economy becomes completely decoupled from basic concepts like earning, then it will go off the rails.

          Reply
          • Demand should not be artificially stoked, and should be based on the fundamental concept of earnings. When an economy becomes completely decoupled from basic concepts like earning, then it will go off the rails.

            This is a totally dishonest argument to make. Our entire economy is ‘artificial’. Stimulus packages have been around for millennia in one form or another(New Deals, tax cuts, subsidies, automatic stabalizers etc.). You’re just ideologically opposed to anything that increases the roll of the state – to which end you’ll make any spurious case.

        • Moral hazard is not about fairness/unfairness, nor particularly about advantage over others. If everyone in the country were given free fire insurance, there’d still be moral hazard that they would be more careless with fire than they would if they knew their fire insurance cost would go up if they burn their house down.

          Two timely examples: Disaster aid/insurance for people who build and re-build (and re-re-build) in frequently flooded areas; and no-penalty health insurance for people who wait until they get sick (“pre-existing conditions”) to buy health insurance. (Not blaming them – in fact until the rules are changed, I’d recommend every healthy young person not eligible for free insurance just pay the $500 ‘penalty/tax’ until they get sick.)

          For universal basic income, the potential hazard would be that not enough people work to sustain/advance that society. If robots can do ALL the work – or if there remain sufficient incentives to attract sufficient workers for remaining human jobs – then there really isn’t a ‘hazard’ of laziness. There might be hazard of bored or jealous or vain (‘I earned everything I’ve got on my own, anyone who doesn’t is a parasite’) humans causing chaos.

          Reply
    • Came across a good article on medium –

      No. It is a crappy article…just like most others in Medium that author posts.

      In this case, all his ‘chart’ shows is your typical downturn patterns of collapsing employment & availability of capital equipment. Also, the chart doesn’t say ‘robotic rigs’…just rigs.

      Yet, this agenda-pushing libtard is hoping people don’t notice such things.

      Yes, they are switching over to robotic rigs. But the true story of productivity gains in fracking involve a whole lot of other factors that have contributed more.

      Reply
  2. Well done story. Somewhere in the range of $500,000+ sales per employee the old adage that more jobs are created by automation than are destroyed is no longer true.For a while it was true locally when one ignored the global jobs lost by bring back jobs from closing sweat shops.
    Automation is not a negative. Society must ultimately deal with shifting automation income and wealth and the resulting social issues. Similarly society cannot ultimately ignore anthropomorphic climate change, no matter how easy denial is for protecting investments. IMO.

    Reply
  3. No sit Serlock! This is probably the dumbest title I’ve seen here (although surprisingly free of typos).

    Ps: this WordPress commenting system is terrible, please bring back Disqus or SolidOpinion

    Reply
    • No sit Serlock! This is probably the dumbest title I’ve seen here (although surprisingly free of typos).

      Oh…NBF has had others like this. Approx once or twice a year, on average. I just don’t know what Brian is thinking sometimes.

      Reply

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