Nicholle and I have two incomes, two kids, and no time. Not surprisingly we heavily utilize ecommerce sites: Old Navy for clothes, Zappos for shoes, and Amazon for everything (Amazon Prime rocks). We sometimes buy our groceries online, but not that often since delivery windows suck.
Having heard alot about rising unemployment, I mused that ecommerce sites are presumably more efficient with human resources than traditional retail. In other words, we might be exacerbating unemployment via ecommerce.
It turns out Amazon has about 21,000 employees and generates about $19B in revenue. Contrast with Wal Mart, with has about 2,100,000 employees and generates about $400B in revenue. Clearly, Amazon is more efficient per employee. There are probably lots of reasons for this (e.g., different inventories), but blindly extrapolating Amazon could scale to handle Wal Mart's business using only 20% of the employees. That's about 1.5 million people out of work.
Another classic example of automation replacing many low paying less interesting jobs (retail service) with a smaller number of higher paying more interesting jobs (retail site programming), as predicted by Kurt Vonnegut.
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It's probably not a very big percentage, but some of those 1.5 million displaced workers will be servicing some busy FedEx delivery routes.
ReplyDeleteInteresting point. Fedex has 94,700 employees and $38B in revenue. If Amazon is 10% of Fedex business, then (Amazon + Fedex/10) has 30K employees and $22B in revenue, so scaling up gets you 600K employees.
ReplyDeleteIn other words, shipping would employ another 100K employees at Wal Mart scale, but would still leave 1.4 million people out of work.
Unemployment shouldn't be exacerbated unless the savings from more efficient work cannot be reinvested. The capital is going to be reinvested somewhere, which will necessarily create jobs. It isn't like e-commerce is a new shock to the system- and it was taking off over the past 15 years when we have had historically low unemployment.
ReplyDeleteSo it seems like unemployment will be ok. That is unless you create a bunch of locks on capital that siphons it into inefficient industries to sustain them, and create disincentives to entrepreneurship. But I see no evidence of that happening in the near future.
devhyfes,
ReplyDeleteI'm for efficiency, it is the only sustainable (not population growth) based way of growing the economy. I also agree that capital is freed up for another purpose. However, I don't agree that this alternate purpose will be equivalent with respect to the labor market.
Since 1968 the US has become a less equal society according to Gini coefficient; this suggests efficiency improvements are not distributed equally. I believe either through civil unrest or a sense of morality we will arrive at a society that distributes the excess created by innovation in a fair fashion.
Perhaps it is too late to post a response, but the Gini coefficient is bunk.
ReplyDeleteFirst, the numbers just don't describe what we want them to. If we reached a utopia where income mobility were supremely easy- where a high-school drop-out earning $10,000/yr could be earning $250,000 by the time he was 40, we'd be pretty happy about the straights of our country, but the Gini would look horrible.
Finally, the numbers don't jive with reality. Do we really think Mexico has been going in a good direction over the past ten years, even as its Gini index has improved? (Has the threat of civil unrest really gotten better?)