Automation in Logistics and the Future of Work

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Several recent studies have suggested that nearly half of all jobs are susceptible to automation in the next 20 years. Robots and artificial intelligence are poised to displace jobs in various industries, and the logistics industry is highly vulnerable to job loss. Recently, notable tech leaders have made statements in regards to how to deal with automation displacing jobs. Bill Gates has argued for a robot tax to recapture money that displaced workers would have paid as income tax. Elon Musk advocates for a universal basic income, where every citizen receives a standard amount of money each month to cover basic expenses. Others have recommended using taxpayer and / or corporate money to fund training for emerging engineering jobs.

Bill Gates, via Quartz, speaking to the pace of automation and impact on jobs:

You ought to be willing to raise the tax level and even slow down the speed” of automation, Gates argues. That’s because the technology and business cases for replacing humans in a wide range of jobs are arriving simultaneously, and it’s important to be able to manage that displacement. “You cross the threshold of job replacement of certain activities all sort of at once,” Gates says, citing warehouse work and driving as some of the job categories that in the next 20 years will have robots doing them.

The Bull Case for Automation and Jobs

New technologies have traditionally created new jobs even as old ones were destroyed. A good example is the ATM, introduced in the 1970’s. At the time, it would have been reasonable to assume that bank teller jobs would be all but obliterated as withdrawals and deposits could be done with a plastic card and a machine as opposed to a human teller. But, that is not what happened, and in fact more bank teller jobs were added.

James Bessen, on his EconTalk Podcast:

Basically starting in the mid-1990s, ATM machines came in in big numbers. We have, now, something like 400,000-some installed in the United States. And everybody assumed –including some of the bank managers, at first — that this was going to eliminate the teller job. And it didn’t. In fact, since 2000, not only have teller jobs increased, but they’ve been growing a bit faster than the labor force as a whole. That may eventually change. But the impact of the ATM machine was not to destroy tellers, actually it was to increase it.

What happened? Well, the average bank branch in an urban area required about 21 tellers. That was cut because of the ATM machine to about 13 tellers. But that meant it was cheaper to operate a branch. Well, banks wanted, in part because of deregulation but not just for deregulation but just for basic marketing reasons, to increase the number of branch offices. And when it became cheaper to do so, demand for branch offices increased. And as a result, demand for bank tellers increased. And it increased enough to offset the labor-saving losses of jobs that would have otherwise occurred. So, again, it was one of these more dynamic things where the labor-saving technology actually created more jobs.

Historically technological innovations like the ATM, the automobile, the printing press, and the mobile phone have eliminated process inefficiencies, upended old ways of doing business, increased productivity, created entirely new types of jobs, and played a role in ushering in economic transformations. Viewing the ‘rise of the machines’ solely through the lens of eliminating existing jobs paints an incomplete picture and ignores the potential benefits that have historically come to fruition with previous large scale technological advancements.

Automation in Logistics is Inevitable

There is no doubt that the Logistics industry is in the midst of a revolution as the convergence of online shopping, robots, artificial intelligence, and self-driving vehicles are bringing about transformative technological advancements. The potential of these innovations is hard to overstate and there is no doubt that these advancements will improve efficiency and reduce labor costs. It is also clear that existing logistics jobs will be replaced by machines. Two common professions in logistics - truck drivers and warehouse workers are especially vulnerable to job displacement.

There's about 1 million truck drivers in the U.S. and it is one of the most common jobs in the country.

 Source: NPR

Source: NPR

Self-driving technology is improving by the day - Otto, the startup acquired by Uber, recently completed the first autonomous commercial delivery. Self-driving trials are being piloted in the U.S., Europe, and Asia and many believe that Level 4 autonomous cars will be ready by 2021.

There's also around 429K warehouse workers in the U.S. Amazon, amongst others, are rapidly expanding automation and it's easy to imagine a not too distant future where the bulk of warehouse work is automated. A recent report from Tractica, a market intelligence firm, forecasts that demand for robots in warehouses will increase by a factor of 15 over the next 4 years.

Handle, a Boston Dynamics robot, looks keen to pick some orders:

As Bill Gates mentioned in the above quote, it's important to note that these technologies are advancing rapidly and arriving at the same time which is slightly different than previous large scale technological advancements. It may prove difficult for many workers to transition from one career to the next when automation spreads across multiple industries simultaneously.

As a technology optimist, I strongly feel that new industries, new businesses, and new jobs will be created out of this automation boom. The true breakthroughs will come from innovative people who build first with these emerging technologies in mind. My primary concern is how the job displacement is managed and how much time elapses between job displacement and the training and skills needed for the new jobs. We need to face the facts that the nature of work will change and many professionals will be deskilled and displaced.

Tech leaders, large companies that will benefit from automation, and governments need to be actively discussing automation and the future of employment. I don't know if a robot tax, a universal basic income, training programs, or a combination of these approaches are the answer - but I do know that policies are needed to support the transition to a robot workforce and facilitate the development of new skills for the displaced human workers.

I cover forward-looking topics that are relevant for everyone that will be part of the future logistics industry. You can read more articles here or sign-up for a free monthly newsletter here.