A Sea Change For Retail in America

Last Friday, the March jobs report was released and it was abysmal.  Only 98,000 jobs were created even though the unemployment rate fell to 4.5%. Dragging that job's number down was the fact that 30,000 retail jobs were lost in that month.  Thus, in the last two months, 60,000 workers in retail have been let go.

The reality is that traditional brick-and-mortar stores are dying, while digital commerce takes a bigger and bigger slice of America's spending money.  Payless, the discount shoe company, just filed for bankruptcy protection and is now closing 400 stores.  J. C. Penney's will close 138 stores.  Macy's 68.  Sears and Kmart 150.  And, the list just goes on and on.  In fact, over the last 3 years, thousands of retail stores have been shuttered.

Now, I know I've written about this before in this blog, but 60,000 jobs lost in just two months is rather dramatic.  Many of these jobs were non-college or non-high school degree level work.   Many minimum wage.  These workers already have difficulty finding jobs.  For example, the unemployment rate for people without a high school diploma is 7.4%.  High school but no college is 5.2%.  Compare that to the current overall unemployment rate of 4.5% or the rate of 2.6% for those with a bachelor's degree or higher. 

If this trend continues and accelerates, we are going to have a serious employment problem with possibly a permanent underclass of unemployable low-skilled workers.  Something that I don't think Trump understands when he says he will be the job's President.  Retail purchases on the Internet are a form of job replacing automation and the key to Amazon's success and profitability.  Certainly, this is a sea change that should worry all of us.

References:

March Employment Report: https://www.bls.gov/news.release/pdf/empsit.pdf

Today’s Jobs Report Masks a Huge Employment Problem: http://fortune.com/2017/04/07/bls-todays-jobs-report-employment-problem/

60,000 Retail Jobs Lost in Past Two Months, According to Latest Employment Report: http://ktla.com/2017/04/07/60000-retail-jobs-lost-in-past-two-months-according-to-latest-jobs-report/

These major retailers are closing nearly 3,000 stores this year: http://clark.com/shopping-retail/major-retailers-closing-2017/

March 2016: Number of store closures already set to outpace last year: http://nypost.com/2016/03/19/number-of-store-closures-already-set-to-outpace-last-year/

The Minimum Wage Protestors Are Too Naive To See What Is Already Happening To Their Jobs

Just last Saturday, CNBC posted a story entitled: "Hiring R2D2 to protect your mall or campus—all for $6.25 per hour".   In that article, it showed a robot that was capable of making security rounds at an hourly depreciated and operational cost that is a full dollar below the minimum wage.

Additionally, these robots won't need vacation time or a matching pay in to Social Security and Medicare; and, for sure, won't cost the company a single cent in providing mandated healthcare under ObamaCare or the fine that would be imposed for not providing it.

Then, just before Thanksgiving, Amazon announced the deployment of 15,000 robots of its own to streamline its picking, packing and shipping in their warehouse operations.

Saving approximately 20% in labor costs, the little orange robot is designed to bring a storage rack of goods to a human so they can pick the product off the rack and then package it for shipping.  No longer would real people have to roam a large warehouse in search of product that needed to be shipped; and, then, return to a shipping point to pack it and complete the process.

Earlier this year, in a joint effort between Adept Technologies and SwissLog, a labor saving hospital robot was announced that could shuttle specimens and, I would think, medications throughout a hospital autonomously.

Of course, one has to ask, why couldn't a robot like this also deliver food to a restaurant table in the not too distant future.

The simple fact is, that already, robotic workers are cheaper than paying the current minimum wage at $7.25 an hour plus benefits for a human worker doing the same job.  And, don't think that ObamaCare and the employer mandates won't also be at the heart of this trend of replacing humans. So, what do you think will happen if Obama and the Democrats get their way and the minimum wage is set 40% higher at $10.10, or if the short-sighted $15 minimum wage protesters got their wish?

The high cost of union labor has driven much of American manufacturing jobs overseas in the last 5 decades. Now, labor's wish for a higher minimum wage is sure to banish the existence of most of those  jobs through robotics.  It's a matter of simple economics, and right now, there are at least 50 companies (link below) chomping at the bit to have their robot technologies added to our everyday lives.

References:

Hiring R2D2 to protect your mall or campus—all for $6.25 per hour: http://www.cnbc.com/id/102240810

Amazon's new robot army is ready to ship: http://www.sacbee.com/news/business/article4216163.html

Florida Hospital Orlando to automate laboratory transport with Swisslog autonomous mobile robot: http://www.prweb.com/releases/2011/4/prweb8336301.htm

Robotic Business News: 50 Robot Producing Companies: http://www.roboticsbusinessreview.com/companies/category/top_50/list