Robots Aren’t Out to Get Your Retail Job

Doom and gloom sells. For example, writing for The Atlantic, Derek Thompson paints a gloomy picture of retail employment:

Department stores, including Macy’s and JC Penney, have shed nearly 100,000 jobs since October—more than the total number of coal miners or steel workers currently employed in the U.S. Even America’s richest areas are getting hit: Employment in New York City clothing stores has fallen three years in a row, the longest period of decline on record, going back to the early 1990s.

Thompson cites the Federal Reserve Bank of St. Louis’s excellent Federal Reserve Economic Data (FRED) database to back up his stats. But a wider look at the employment figures supplied and compiled by the government shows a more complicated picture than Thompson suggests. Retail employment for furniture and home improvement stores, for instance, is up nearly 10 percent since the low point of the “Great Recession” in 2010. The food and beverage market is also chugging along, with employment growth exceeding 10 percent and the sector sustaining 100,000 more jobs than its previous peak in 2000.

Employment in “general merchandise stores” (think big department stores and discount stores alike) is up 3 to 5 percent since the miserable start of the decade. Clothing store employment is more volatile than anything else, seeing essentially no growth since the start of the decade and something like just 2 percent growth over the past twenty years.

These figures are a bit of a Rorschach test, and it’s easy to come away from looking at these figures and say that traditional retail employment does not define current (or future) economic growth in America. But it doesn’t suggest that brick-and-mortar retail is having a meltdown either, as Thompson opines. According to some leading theories and intuition about automation, brick-and-mortar retail should be having a meltdown. But the food and beverage market provides an interesting case study as to why that isn’t the case.

In 2009, Forbes contributor Courtney Boyd Myers observed that, “Self-checkout counters at the grocery store, complete with laser scanners to read bar codes, are starting to replace human cashiers.” But this hasn’t really happened; “expert” predictions are almost always overstated. A weighted survey conducted by CivicScience last year found that, even amongst millennials, a majority of respondents either preferred to interact with a cashier or had no preference between a cashier and a self-checkout machine. Meanwhile, store staff must repeatedly be summoned to deal with the all-too-familiar “unexpected item in bagging area,” pricing adjustments, and age verification. And then there’s theft, which is likely more than twice as common (as a percentage of grocery stock losses) with self-checkout versus theft via a traditional cashier experience.

Even if self-checkout machines can’t fully replace the human workforce, there’s always the prospect of grocery/beverage shopping going fully online. Maybe in a few years, most of us will be ordering foodstuffs the way we order lots of other goods: through the internet. If anyone were up for that task, it would surely be Amazon, which delivers most things quickly and intact. Yet, AmazonFresh’s rollout wasn’t exactly successful, as consumers complained about items being damaged, incomplete, or having lost their freshness. Services such as AmazonFresh and Peapod tend to be quite costly too, for all of that uncertainty, so it’s not too surprising that online shopping accounts for less than 5 percent of grocery sales. However, these new services provide new job opportunities for people that did not exist just 10 years ago, whether it be in inventory, warehouse management, or delivery.

Automation and a greater reliance on the internet are, of course, great things and their use is on a steady upward march. “Experts” and pundits, however, often misunderstand how automation affects the interaction between labor and capital (i.e. machines). Plenty of shoppers love self-checkout machines, but successful interactions with these machines requires plenty of supervision (both for helping consumers and deterring theft). Going the logistical route via online grocery shopping is also very labor-intensive, from route optimization to delivery handling after that last-mile is driven. And, some consumers (including millennials!) enjoy that good-ol’-fashioned outing and human interaction.

The lesson here is…don’t panic. There’s a brave, new, and exciting world out there. But workers, retail and otherwise, are and will continue to be a key part of that world.

Ross Marchand is a Catalyst Policy Fellow and the director of policy for the Taxpayers Protection Alliance. He focuses on a range of issues, ranging from health-care reform to internet regulation to Postal Service-related issues. Ross is an alumnus of the Mercatus Center MA Fellowship at George Mason University, where he received his MA in economics in 2016. He has interned for the Texas Public Policy Foundation and the American Legislative Exchange Council, analyzing and blogging on a variety of public policy issues.
Catalyst articles by Ross Marchand