Seeing the things unseen–the case of the disappearing retail jobs

Henry Hazlitt said:

The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists of tracing the consequences of that policy not merely for one group but for all groups.

The drumbeat gets louder daily about Amazon crushing retailers, and it is no doubt true.  People love the convenience of a click and two days later, the item is on our doorstep.  So retail jobs are going away.  But does that make us worse off?  We’ve had economic Luddites worry about technology killing jobs forever, and yet the economy is continually transforming and creating new jobs.  So if the retailing jobs are going away, what is replacing them?  According to this piece reported in the NYT today–and this is no shock–the delivery and distribution systems necessary for online retailers like Amazon are growing faster, and offering positions with better pay than those jobs they’re replacing.

Economist Michael Mandel

has combed through the job statistics on a county-by-county basis and come to this counterintuitive view: From December 2007 to May 2017, by his count, the e-commerce industry has created 397,000 jobs in the United States, and this compares with the loss of 76,000 jobs in the traditional retail industry. And those jobs related to e-commerce, he says, pay about 30 percent more than the brick-and-mortar ones.

Now don’t be a worryin’ about the coming robot revolution taking your job.  You’ll get to make the robot.  And service the robot.  And design the new robot.  And you’ll make better pay.  There is always another side to look at, and economic history has shown that it is a better side that’s coming.

EDIT Update:  On point, I just saw this link from Diedre McCloskey, who also suggests we don’t fear the robots. HT to Cafe Hayek



8 thoughts on “Seeing the things unseen–the case of the disappearing retail jobs”

  1. Hi Jeff, interesting thoughts. I always appreciate insight on how technology impacts the economy.

    What impact do you think self-driving cars and AI will have in the future on these types of jobs? Or any jobs for that matter. Even as a software developer technology threatens my job, as AI is learning to write software by itself.

    1. No doubt many of those jobs will be destroyed as well, but as we’ve seen through history, there will be new jobs created. What those will be is hard to predict. So the best advice is to not get comfortable, to always be learning new things, with the goal of making yourself a better servant to others.

  2. Interesting article, Jeff. One question…

    “Now don’t be a worryin’ about the coming robot revolution taking your job. You’ll get to make the robot. And service the robot. And design the new robot. And you’ll make better pay. There is always another side to look at, and economic history has shown that it is a better side that’s coming.”

    What happens when robots and AI are sufficiently advanced where robots will make new robots and service robots? Or do you think that day will never come or that robot manufacturers will not seek to lower expenses by going in this direction?

    1. I think we will always be the ones which will come up with the new ideas. Not just to make a new robot, but what the new robot can do. The source of creativity is because we are Imago Dei. That will not be taken by a robot. So yes, everything can change with technology, but that will just free us to creatively solve other problems. In this I am very optimistic.

      1. Recent history begs to differ. Computers are being shown to have a lot of promise in “creative” solutions because they can find very efficient solutions in ways that aren’t obvious to a human.

  3. Jeff,
    I think we as humans give too much credit to the “fantastical idea”. If you ask physicist if we will be able to travel faster than light (FTL is a favorite with layman science fiction readers), he would laugh at you. I think the same can be said of AI, Neural networks and deep learning. We give all of these ideas super human powers. But if you talk to a Computer Scientist (my son in my case), they would say while these are great tools, in the end, we humans have to point them in the right direction.

    These tools don’t spontaneously choose the solve problems. They don’t even know what the right answer is. They just bracket the process until they arrive at a solution. We probably even told the machine what that solution was by the programming. We have to identify a task or problem for them to solve. Then the machine must be made, and programmed. They must be fed the data and finally, they do not know the “right answer”. It takes a human at the end to decide if the output is better and if not, reprogram to arrive at a new output. The machine simply does that part faster. When I was doing some of this, I always told my bosses (not computer literate) it was important to make sure the process is right, because computers are more than happy to do the process wrong, just faster.

    But even if this “computer does everything” world came true it would free us to do something else. Look at how many little shops and services are out there offering hand made this and hand made that. Have you priced a hand made kayak? I would be free to build cabinets or boats to sell. But don’t expect me to use hand saws when I can use a power tool.

    1. Actually a better analogy. Ask an algore about global warming and you get an answer out of Revelations along with “biblical” flooding. Ask a climatologist and you get a much more reasoned and nuanced answer. What gets the press coverage? The “fantastical idea”.

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