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Amazon Go Store Is a Microcosm of the Debate on Automation and Jobs

Ryan Bourne

The irony was not lost on Twitter. Pictures circulated this week
of shoppers queuing to enter the brand new “Amazon Go”
store in Seattle, the whole purpose of which is to eliminate
checkout lines.

The futuristic grocery store trialled by the web giant is packed
with hundreds of cameras and tracking devices, so customers can
saunter in while logged into an app, pick up the goods they want
and simply walk out.

Payment for items is automatically deducted from their account
upon exit — there is no need to deal with a human employee at
all. Robotics, artificial intelligence and sophisticated video
equipment are taking this Amazon store much closer to being

Inevitably, such a technological trial attracts interest. But
the broader societal impacts concern policymakers. Amazon
Go’s launch is really a microcosm of the debate about
automation and its effect on labour markets. Last year a report by
Cornerstone Capital estimated 7.5m retail jobs could be on the
chopping board in the US alone due to these technologies, with 3.5m
cashiers most directly affected.

The question “where will
the jobs come from” has echoed through time as new technologies
have changed the nature of work and the structure of the

Where retail leads, other sectors will surely follow. Pessimists
project millions of jobs being rendered obsolete, in turn creating
significant structural unemployment. Radical policy
“solutions”, from having the government guarantee
everyone a “basic income”, or even a job, have been
suggested. At the very least, the consensus is the state should
“do more” to prevent or alleviate the problem.

Technologies will no doubt transform workplaces over the coming
decades, but commentators are surely over-reacting. In
technological terms, Amazon Go is really just the next long-term
leap from the widespread roll-out of self-checkouts and the
proliferation of online shopping.

Consumers increasingly value convenience, and the supermarket
sector is ultra-competitive, pressuring retailers to cut costs.
Amazon’s efforts are entrepreneurialism – testing whether
there are yet enough customers out there who want to browse
in-store but who are significantly worried about wasting vast
amounts of time in a queue to justify the investment.

The truth is that fears about automation have hung over the
integration of machines in the workplace since the industrial
revolution. The idea that “this time is different” due
to the more sophisticated nature of machines is widely assumed. But
so far these fears show up everywhere but in the data.

UK unemployment levels are at a four-decade low of 4.3pc. The
employment rate, at 75.3pc, is the highest recorded since it
started being measured in 1971. US labour market participation
rates have been scarred somewhat by the crisis, but there
unemployment is low at 4.1pc too.

Maybe the pace of change will create big problems in future, but
currently market economies with flexible labour markets appear
adept at creating new opportunities as technology proliferates.

And this is unsurprising, for change is often gradual. When we
hear stories about Amazon Go we jump to thinking about a state
where all stores adopt the same technology. Reality is messier.

For now, the upfront cost of installing the technologies is
prohibitively expensive for most retailers, and assistance from
in-house staff is still demanded by many. Change will be gradual
rather than a “big bang”. Ironically, what really could
accelerate this trend would be significant increases in the minimum
wage (an implicit subsidy to automation) as demanded by Left-wing

None of this is to say that automation will not cause problems
for some workers. All economic change, whether through altered
trade or migration patterns, or in this case technological
advances, will lead to direct job losses.

As the experience of mining in the UK showed through the
Seventies and Eighties, some of those individuals affected will
find it very difficult to secure new gainful employment, perhaps
due to low levels of transferable skills.

But far too much is put on this downside and the
“seen”, when the unseen benefits are much more
significant. Let’s suppose that Amazon Go’s model
becomes economic and is the default for the grocery sector. Yes,
far fewer cashiers will be employed, and store assistants too will
likely be replaced by machine technology.

But that does not mean there will be no employees. The
development, maintenance and oversight of the new technology will
require a smaller number of highly skilled staff, who will likely
be much better paid than existing employees.

More importantly, the “unseen” effect is that the
gains in efficiency in the grocery sector will filter through into
the wider economy. Not having to designate significant amounts of
stores to checkouts will enable more efficient use of space.
Customers will benefit from saving time without queuing, which they
can use to pursue other leisure activities or working. In the
longer term, the labour-saving nature of the technology is likely
to mean reduced costs too, filtering through to lower prices than
otherwise for consumers, given the competitive nature of the

Such savings in time or money will be used by consumers for
other demands, in turn creating new jobs in other sectors.

There’s good evidence already that occupations entailing
personal human services (think personal trainers and social care)
are in increasing demand, especially with an ageing population. But
predicting exactly what people will do is to assume that labour
markets can be planned or projected.

The question “where will the jobs come from” has
echoed through time as new technologies have changed the nature of
work and the structure of the economy.

But while recessions come and go, bringing with them temporary
upheaval, there is little evidence that technology has ever
significantly raised the unemployment rate, despite the widespread
fear it will do so. While commentators fear the upheaval, the most
likely outcome of new ventures like Amazon Go is higher standards
of living, and changed patterns of demand.

Ryan Bourne
holds the R Evan Scharf Chair for the Public Understanding of
Economics at the Cato Institute