What Happens When Service Jobs Dwindle?
July 8, 2017 at 3:16 a.m.
By Gary [email protected]
I tend to embrace it. From smartphones to flat-screen TVs, technology has made the world an amazing place.
When I play golf, I look at my phone to find out how far I am – within inches – from the front, center or back of the green.
I use the internet routinely to do research for this column. It’s far easier today to find information than ever before in my lifetime.
There are endless examples of how life has been made easier by technology.
I get that. But at the same time, I see things driven by technology that are troubling.
When Amazon announced it was buying Whole Foods, I wondered what that would mean. It seems Amazon was more interested in Whole Foods real estate than its brand.
I think Amazon likes the fact that it now has 460 new warehouses (Whole Foods stores) from which it can ship stuff – food or otherwise.
And while food may be a little cheaper in the long run because of Amazon’s penchant for automation, what will be the price of that cheaper food?
I can tell you without a doubt, the cost will be jobs.
Amazon’s computer-driven focus on efficiency surely has the potential to make food more affordable by cutting costs.
But let’s be honest. When you talk about cutting costs, you’re talking about cutting people – at both ends of the spectrum, retail and wholesale.
Amazon is pretty ruthless to its suppliers, demanding low prices – which suppliers reluctantly provide just to be part of Amazon’s network of millions of “prime” members.
Whole Foods prided itself on marketing products grown by small, organic farmers. That’s over.
No way guys like that can compete with the big boys whose products will appear on Amazon’s shelves.
Clerks?
Forget about it.
Amazon already is touting a grocery store concept – Amazon Go – that has no people. Just the shopper, the goods and a bunch of self-serve checkout lanes.
And this is only the beginning.
Why even bother to go to the store? Just yell, “Hey Siri!” (or Hey Alexa!) Then, “Send last week’s grocery list to Amazon, minus the tomatoes and eggs.”
A half hour later, the stuff is delivered to your home. Right now, it will be delivered by a human, but in the not-too-distant future, it will likely be delivered by a drone.
That’s why Amazon purchased Whole Foods. It wasn’t about food. The goal was to get a distribution point for consumer goods within a half hour of the most potential customers possible, and then to deliver the goods as efficently as possible – read that, with the fewest number of human beings.
My sense is that this is not a good time be a Whole Foods employee.
And it’s not just Amazon. Automation is everywhere.
There already are robots flipping hamburgers. And self-service checkouts are becoming more prevalent.
There has been lots of talk about the loss of manufacturing jobs in the U.S. – with good reason.
According to a recent article in the Harvard Busines Review, in the early 20th century, manufacturing grew from the local mom-and-pop model to large-scale, mass production facilities. By 1950, the manufacturing sector employed 34 percent of all workers in the United States.
“By 2003, manufacturing accounted for just 12 percent of U.S. jobs. In the three years from 2000 to 2003, more than 2 million U.S. manufacturing jobs were lost to offshore outsourcing and global competition,” the article states.
These days, service jobs are subject to a similar fate.
Citing an ongoing research project at the Center for Management in the Information Economy at UCLA, the article says roughly 10 million service jobs could be lost to outsourcing, offshoring or automation.
From the Harvard Business Review:
The primary change driver behind the service revolution is technology. ... Think of technology as creating an information assembly line — information today can be standardized, built to order, assembled from components, picked, packed, stored, and shipped, all using processes resembling manufacturing’s. Industrialized information becomes steadily more efficient, less expensive, and more highly automated. The costs of logistics and storage are minimal; only labor and intellectual property matter.
Sounds a lot like Amazon’s business model, doesn’t it?
Again, I am not averse to technology, but I wonder how all this will play out. Service jobs account for a huge majority of jobs in the U.S. – accounting for around 80 percent of private-sector employment.
If those jobs go away, what will all these people do?
A revolution of sorts is coming; call it the industrial revolution of the service industry, if you will.
I walk into local retail store X to look at product Y. I look it over. I try it out. I try it on. Whatever.
I look at the price. Let’s say it’s $159.99. I do the math on my phone and figure that at the checkout, after state sales tax, my cost is $171.19.
I fire up my eBay app.
I search for product Y. There it is listed for 139 bucks. Brand new in the box. Free shipping. No sales tax. If I press the “Buy it now” button and then the “Confirm payment” button, within 30 seconds product Y is on its way to my doorstep for $32.19 less.
I’ve resisted the urge to do that several times, opting to keep my business local. But I wonder, how many other people do that? I’m afraid technology is going to spell doom for lots of local retail businesses, and the resulting job losses will not be pretty.
At some point down the road, we’ll figure out how to cope with the changes that technology is bringing to the service job sector.
But in the meantime, there might be some tough times.
I tend to embrace it. From smartphones to flat-screen TVs, technology has made the world an amazing place.
When I play golf, I look at my phone to find out how far I am – within inches – from the front, center or back of the green.
I use the internet routinely to do research for this column. It’s far easier today to find information than ever before in my lifetime.
There are endless examples of how life has been made easier by technology.
I get that. But at the same time, I see things driven by technology that are troubling.
When Amazon announced it was buying Whole Foods, I wondered what that would mean. It seems Amazon was more interested in Whole Foods real estate than its brand.
I think Amazon likes the fact that it now has 460 new warehouses (Whole Foods stores) from which it can ship stuff – food or otherwise.
And while food may be a little cheaper in the long run because of Amazon’s penchant for automation, what will be the price of that cheaper food?
I can tell you without a doubt, the cost will be jobs.
Amazon’s computer-driven focus on efficiency surely has the potential to make food more affordable by cutting costs.
But let’s be honest. When you talk about cutting costs, you’re talking about cutting people – at both ends of the spectrum, retail and wholesale.
Amazon is pretty ruthless to its suppliers, demanding low prices – which suppliers reluctantly provide just to be part of Amazon’s network of millions of “prime” members.
Whole Foods prided itself on marketing products grown by small, organic farmers. That’s over.
No way guys like that can compete with the big boys whose products will appear on Amazon’s shelves.
Clerks?
Forget about it.
Amazon already is touting a grocery store concept – Amazon Go – that has no people. Just the shopper, the goods and a bunch of self-serve checkout lanes.
And this is only the beginning.
Why even bother to go to the store? Just yell, “Hey Siri!” (or Hey Alexa!) Then, “Send last week’s grocery list to Amazon, minus the tomatoes and eggs.”
A half hour later, the stuff is delivered to your home. Right now, it will be delivered by a human, but in the not-too-distant future, it will likely be delivered by a drone.
That’s why Amazon purchased Whole Foods. It wasn’t about food. The goal was to get a distribution point for consumer goods within a half hour of the most potential customers possible, and then to deliver the goods as efficently as possible – read that, with the fewest number of human beings.
My sense is that this is not a good time be a Whole Foods employee.
And it’s not just Amazon. Automation is everywhere.
There already are robots flipping hamburgers. And self-service checkouts are becoming more prevalent.
There has been lots of talk about the loss of manufacturing jobs in the U.S. – with good reason.
According to a recent article in the Harvard Busines Review, in the early 20th century, manufacturing grew from the local mom-and-pop model to large-scale, mass production facilities. By 1950, the manufacturing sector employed 34 percent of all workers in the United States.
“By 2003, manufacturing accounted for just 12 percent of U.S. jobs. In the three years from 2000 to 2003, more than 2 million U.S. manufacturing jobs were lost to offshore outsourcing and global competition,” the article states.
These days, service jobs are subject to a similar fate.
Citing an ongoing research project at the Center for Management in the Information Economy at UCLA, the article says roughly 10 million service jobs could be lost to outsourcing, offshoring or automation.
From the Harvard Business Review:
The primary change driver behind the service revolution is technology. ... Think of technology as creating an information assembly line — information today can be standardized, built to order, assembled from components, picked, packed, stored, and shipped, all using processes resembling manufacturing’s. Industrialized information becomes steadily more efficient, less expensive, and more highly automated. The costs of logistics and storage are minimal; only labor and intellectual property matter.
Sounds a lot like Amazon’s business model, doesn’t it?
Again, I am not averse to technology, but I wonder how all this will play out. Service jobs account for a huge majority of jobs in the U.S. – accounting for around 80 percent of private-sector employment.
If those jobs go away, what will all these people do?
A revolution of sorts is coming; call it the industrial revolution of the service industry, if you will.
I walk into local retail store X to look at product Y. I look it over. I try it out. I try it on. Whatever.
I look at the price. Let’s say it’s $159.99. I do the math on my phone and figure that at the checkout, after state sales tax, my cost is $171.19.
I fire up my eBay app.
I search for product Y. There it is listed for 139 bucks. Brand new in the box. Free shipping. No sales tax. If I press the “Buy it now” button and then the “Confirm payment” button, within 30 seconds product Y is on its way to my doorstep for $32.19 less.
I’ve resisted the urge to do that several times, opting to keep my business local. But I wonder, how many other people do that? I’m afraid technology is going to spell doom for lots of local retail businesses, and the resulting job losses will not be pretty.
At some point down the road, we’ll figure out how to cope with the changes that technology is bringing to the service job sector.
But in the meantime, there might be some tough times.
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