Amazon just released their line-free concept store called Amazon Go. It looks like the store operates by running some RFID app on your phone which communicates with the products in the store so that when you add items to your grocery bag and leave the store, your phone registers those items as purchased and sends you a nice bill. No lines, no cashier’s, no waiting for that ridiculous person that keeps f’ing up the self-serve checkout.
It’s about damned time.
Only a company like Amazon could (or would) do something like this. This company seems determined to change every aspect of the way we interact with the world of commerce. Schumpeter would be proud.
Not everyone is excited about Amazon’s vision of the future. According to the Bureau of Labor Statistics, there were 856,850 grocery store cashiers working in May of 2015. That’s 856,850 that now need to be worried about their jobs. But this is development in the world of technology and entrepreneurship brings back into light a common argument by those who wish to “protect jobs”: the Luddite Fallacy.
The Luddites were English textile workers who destroyed power looms for fear that the new technology would ruin their ability to earn a living. The fallacy is the assumption that the technological replacement of jobs leads to long-term unemployment. I’ll grant that short-term unemployment may be experienced. But long-term? No. While technology will destroy old jobs, it invariably creates new industries and new jobs. Furthermore, technology tends to help drive down prices benefiting all consumers. Firing 856,850 cashiers at a median annual wage of $21,730 would save U.S. consumers $18,619,350,500 per year!
“But what about the people losing their jobs? These people have families and…” yadda yadda yadda. These are the Luddites talking. They would rather stifle the growth and development of humankind rather than end a few entry-level jobs. They were around when Ford was putting horse drawn carriage makers out of business. They’ll be around forever.
The correct question to be asking is, “what new jobs will be created, and how do we prepare the workforce for these jobs?” Some people are going to get burned. That’s life. But you take the next step and move forward. If Amazon Go went National tomorrow, most cashiers would be fine. Most would find a way to continue up the skill and income ladder. However, there are some who wouldn’t be okay: the types of adults who are happy with the level of employment that a cashier position provides. Since jobs of this skill level, in general, are being automated away, this portion of the population will ultimately lose.
There is another group that loses. Young workers who need entry-level jobs to develop a work history and record of employment will no longer have grocery store cashiering as an option. This is a serious issue. Not the lack of grocery jobs per se, but the lack of jobs on the first rung of the economic ladder, where most people start their employment journey.
I worked for a local fence company as my first job at $4/hour. I took care of the lawn, cleaned up the supply yard, cut pipe, and various other jobs that even a 12-year-old couldn’t mess up. My second job was working at McDonald’s at $6/hour. Skip ahead twenty years and I’ve earned a Masters of Science in Finance and manage over $300 million for a financial planning practice. It’s been a long climb, which still continues today. It involved the occasional switching of ladders entirely and required me to start many rungs lower than the one I departed. But it all started with my first job. The slow and steady removal of these entry-level positions will profoundly affect job market dynamics.
While I’m excited about what the future has in store, I sometimes worry about the ability of young Americans to gain entry-level employment. As minimum wage rises higher, pushing younger and less-skilled workers out of the workforce, we will need to be creative in the ways that we train new workers. Innovation will keep moving the world forward. Hopefully the young and low-skilled won’t be left behind.