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Automation May Be Creating Jobs—in Retail, at Least

September 6, 2017

Since 2007, 140,000 brick-and-mortar retail jobs have vanished in America. Meanwhile, according to the Bureau of Labor Statistics defintions, e-commerce has created just 126,000 over the same perioud. The takeaway, it seems: automation, here in the form of the software and robots that power online retail, is eating jobs.

But according to a new analysis by the Progressive Policy Institute, those figures miss the point. If you actually include all the fulfillment-center jobs that e-tail has created, which wouldn't have otherwise needed to exist, the figure rises from 126,000 to 400,000, far outweighing physical-store losses. And those fulfillment-center jobs also pay on average 31 percent more than brick-and-mortar store jobs would in the same county.

The Wall Street Journal has a nice piece based on the new report, which tries to get to the bottom of a thorny question: if e-commerce firms like Amazon have made their employees more productive through use of automation, how come they've also increased the total number of retail jobs and even managed to pay people better? Here's its best stab:

E-commerce doesn’t simply sell the same product as a store at a lower price. It enables customers to peruse a vast array of products and select precisely the one they want and have it delivered in a day or two, saving the time, cost, and inconvenience of visiting multiple stores ... E-commerce results in people consuming more retail services, once you adjust for this improved quality, than in the pre-online era.

But the newspaper gets a little carried away with itself. It chooses to generalize from the retail example described here, to suggest that "evidence of the feared apocalypse remains elusive" and that the effects of automation are "consistently positive."

Not quite so fast. Things are likely to play out slightly differently this time around compared with the Industrial Revolution, as the arrival of artificial intelligence allows robots to bite off far larger chunks of human labor than machines did in the past. That's not necessarily a bad thing, of course, and the effects could still be positive—but there's a very real danger of exacerbating inequalities in the labor market if things are left unchecked.

As we’ve explained before, we will need to make careful and considered policy decisions to ensure that everyone benefits from automation.

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