Amazon Go Is Not Something to Fear, American Worker
Amazon Go, the global retailer’s experimental cashier-free convenience store, opened last week to enormous fanfare. At its heart was a promise to eliminate everyone’s least-favorite part of the shopping experience: checking out. With ceiling-mounted sensors and cameras backed by what one presumes is impressive artificial intelligence, Amazon is able to track every interaction a customer has with a product.
It knows when a product is picked up. It knows when a product is put back. It knows when you walk out of the store with it. It registers you on the way in and bills you on the way out.
That’s great for everyone except the 2.3 percent of all U.S. employees who are cashiers. Rendering all those folks instantly obsolete threatens to throw 3.5 million folks onto the unemployment rolls. All else held equal, that would drive the unemployment rate up to 6.3 percent and erase four years of hard-fought labor-market improvement.
In reality, it would take years to replace all the cashiers with electronic tracking devices. Nonetheless, for those worried about the future of American workers, Amazon Go is a matter of concern.
Maybe too much. Although Amazon’s stores will eliminate some positions, they will create others. Think of higher demand for the engineers and computer scientists who design such systems and for the technicians who install and repair them. Higher-skilled occupations tend to be higher paying, so it can be argued that trading cashiers for technicians is a win for U.S. workers.
It's true that cashier jobs are essential to people in desperate need of work and to those new to the workforce.
Still, economists are quick to point out that innovation frees up companies to create new jobs. For some retailers, it would translate into cost reductions and lower prices. For others, it might result in more high-end services like in-store bakeries or wine-tasting bars. By eliminating the checkout queue, Amazon can help turn grocery shopping into an entertainment experience reminiscent of open-air shopping in Europe.
And there’s a deeper reason to be optimistic. Unemployment is closing in on its late-1990s lows and wages are beginning to pick up after half a generation of economic drudgery punctuated by the recession of 2000 and the global financial crisis that began in 2007. Finally employers, including retailers, are raising their starting salaries, especially at the bottom end.
That’s created some inflation fears as more employers chase fewer available employees. But that’s another problem that Amazon Go can help solve, by restarting the productivity growth that technological innovation provides.
Productivity growth was sluggish throughout the recovery from the Great Recession and some economists have argued that this is why the recovery itself has been so low. The reverse is also possible: that a slow recovery was dampening the demand for productivity-enhancing technology. Why should companies find ways to economize on workers when there were so many people willing to work for meager salaries?
Now the labor market is nearing full employment. Inflation has remained low, but innovation-enhancing pricing pressure is finally rising.
This changes the game for workers and will generate opportunities they haven’t seen in decades. Some of those may come in the form of new grocery paradigms like Amazon Go. Some will come in the form of acceleration of sectors like warehousing and health care. And some of it, as in the 1990s, will come from sectors that we now can scarcely imagine.
It’s a different environment for workers, and the future is bright.
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Jonathan Landman at firstname.lastname@example.org