The Job Market at Mid-Century

It is that time of year when students are celebrating high school graduations and college commencements.  Many are looking for jobs and I am starting to get some resumes from students looking for a little help. Students graduating this month are likely to expect that they will still be employed for at least the next 30 years. I am not so certain they will.

I also needed to buy a graduation present or two. I would usually go to the mall, but this year I opted to buy the presents online.  While I appreciate the convenience, I also appreciate what my decision means to the job market.

On-line shopping is one of those fundamental shifts in the way we do business.  By mid-century and likely before there will be no need for consumers to come face to face with a clerk or salesperson for most of the items they buy every week.  Those jobs will disappear and the retail space that those businesses occupy will have to be repurposed.     

Malls were no different than the Roman Forum in the first century or the bazaar in Istanbul in the Middle Ages. They were an “old” model that always had the customers physically coming to the sellers, originally to inspect the goods, exchange payment and cart the goods away. Into the mid-1990s retail malls were a gathering place and an iconic cultural symbol.  Just twenty years later hundreds of malls are closing or filing for bankruptcy every year. 

Amazon has proved that it can favorably compete with brick and mortar stores. The simple fact is that the stores will always require higher costs for labor and overhead.  Given Amazon’s growth and profitability, only those retail stores that provide a personal service (like barbers) are likely to survive. Even those may become “we bring it to you” mobile enterprises.

Amazon has already deployed robots in its warehouse and distribution center operations.  Based upon technology that is in the market today or about to be introduced, Amazon will likely become a series of fully automated distribution centers. Robots will take goods manufactured elsewhere from shipping containers delivered to the loading dock, move them, store them, sort them, package them and ship them out to consumers.  All of the billing and record keeping will be done automatically.  All the trucks will be become autonomous with no drivers. 

Jobs at all levels are being turned over to robots.  I believe that before mid-century people who call themselves truck drivers or bus drivers will disappear.  Longshoreman are not needed if pallets or containers can be on-loaded and off-loaded without them.  Retail clerks will disappear. 

If you call a large company for customer service today, you are likely to speak with a machine.  Bank tellers and customer facing bank officers are already on the way out.  Billions of dollars worth of investment portfolios are selected by “robo-advisors”.

The lectures on supply and demand that I gave to my Economics classes can be had today on-line from the author of the textbook I used or a professor at Harvard or the London School of Economics who is much more qualified than I to teach the course.  Why do we need high schools or colleges (buildings or teachers) when virtually any subject can be taught on line?

This trend of reducing the amount any company will spend on human labor will certainly continue.  There is nothing new about technology changing the world. New technology is often disruptive to any legacy industry and the people who work in it.  

There has always been a mantra that says that new technologies, especially disruptive technologies that obliterate jobs in some industries “always” create new jobs in new industries.  I think that mantra needs to be examined.  I am not certain that “always” includes the next 30 years.

For example, I do not believe that by mid-century the internal combustion engine will be the primary source of power for the transport of goods and people.  I expect that all vehicles will have electric engines, powered to some extent by solar panels on the roof or another non-fossil fuel source.   Alternative sources of energy like solar will continue to get cheaper and cheaper and electric engines will dominate.  

In the normal course jobs can be expected to be lost in the oilfields and replaced by jobs in the solar industries.  But will they? We are at the cusp of an era when a great many jobs that go back to antiquity will be turned over to machines that can “think” about what they are doing.  

Something as basic as farming will be turned over to machines that will plant and grow corn, harvest it, ship it to factories that will process it into cornflakes, re-package it and ship it to consumers all without human labor.  Even the graphic design and color of the packaging may be determined by analytics and algorithms without human participation.  

Today you can construct a house with a 3D printer. By mid-century machines may be printing thousands of new homes every hour. 3D printers print a lot of other things as well. It is impossible to imagine how this technology may develop in the next 30 years, but I do not think it far-fetched to consider factories full of 3D printers printing out more 3D printers.  

All of this is very deflationary and potentially very disruptive. 

If all this comes to pass a lot of people who are employed today may find their jobs automated by mid-century and potentially much sooner.  Which raises the question that the Economics teacher in me needs to ask: if we un-employ tens of millions of people, who will be able to afford to buy the cornflakes or the homes? 

In theory as the costs come down, prices for cornflakes and the many other things that adopt this technology should also come down.  But you still need to have job in order to buy anything. If all these jobs do disappear, exactly what will people do to earn a living?

What I find interesting is that a lot of people seem to think that the skill students graduating today need to have to earn a living is to know how to write computer code.  If anything, that recommendation points out another macroeconomic trend, globalization that is also disruptive and also deflationary.  Code itself will become more and more commoditized and coders in Mumbai and a dozen other developing markets will ultimately produce most of the code at a much cheaper price than coders in Silicon Valley, Seattle or Boston because their overhead and cost of living is significantly cheaper.

I have seen studies that suggest as many as one-half of the jobs that people are doing today may be automated by mid-century. If that is even close to being true, buckle up, it is going to be a bumpy ride.  I can state without reservation that this year’s graduating classes, next year’s and the one a year after are not preparing for this change in the job market in any way. I doubt that anyone knows where to begin.

Leave a Reply