Should Whole Foods Employees Fear Amazon?

Employees at Whole Foods Market have expressed concerns over Amazon’s proposed acquisition of the grocery chain. Whole Foods is known for its inclusive decision making, good pay, and benefits. Grocery store employees expressed their fears to Reuters that Amazon’s profit-driven business model and inclination for automation may result in layoffs.

Bloomberg reports, via an anonymous source, that Amazon plans to implement technology to eliminate cashiers in order to cut costs. An Amazon spokesman disputes that report saying there are “no plans to use no-checkout technology to automate the jobs of cashiers at Whole Foods and no job reductions are planned.”

Asking whether or not Amazon currently plans to automate the checkout line is shortsighted, because that change is coming in the future at grocery stores (I almost always choose the self-checkout line at my local Safeway), fast-food restaurants, and retail establishments. The better question is how this will ultimately effect workers? Obviously, in the short-term, workers will be displaced and need to find new employment. Worker displacement comes with hardships.

The solution to minimizing the negative impact on workers from automation is better education, skills development, and the removal of arbitrary restrictions on work and entrepreneurship. President Trump’s focus on loosening regulatory burdens on industry so that they can offer apprenticeships more easily may be a good start. Another avenue is for states to eliminate inane licensing requirements, like Florida requiring a total of eight years of training and school to practice as an interior designer or needing a license to be a fortune teller before you can receive compensation in Massachusetts. Generally, deregulation of the labor market and eliminating government wage mandates would help.

A key to combat worker displacement from automation is to remove obstacles to work and for individuals to invest in themselves.

Beyond that, the future of automation and technological advances in the workplace is not all doom and gloom. A PricewaterhouseCoopers report explains how automation will increase productivity, which is desperately needed. In turn:

This will generate extra incomes, initially for the owners of the intellectual and financial capital behind the new technologies, but feeding into the wider economy as this income is spent or invested in other areas. This additional demand will generate increased jobs and incomes in sectors that are less automatable, including healthcare and other personal services where robots may not be able to totally replace, as opposed to complement and enhance, workers with the human touch for the foreseeable future.

The PwC analysis goes on to show that historically automation, with its increases in productivity, will ultimately lead to similar levels of human employment, albeit in different industries and job types.

Ben Evans, who works at a venture capital firm, illustrates how automation of one sector of the economy may play out. An industry that will soon become automated—likely in the next 20-30 years—is driving. That will eventually destroy transportation jobs. Mr. Evans examines the impact of driverless vehicles on the trucking industry:

The average age of a long-haul driver is now 49, and around 90 thousand leave the industry every year, half though retirement. The industry thinks it has a shortage of around 50,000 drivers, and growing – people are leaving faster than they can be replaced. Truck driving can be an unhealthy, uncomfortable job with a difficult lifestyle. Hence, on these numbers, over half the current driver base will have left in ten years, around the time that most people think full, level 5 autonomy might be working. In the short term, level 4 autonomy makes truck-driving more attractive, since you can rest in the back of the truck until you’re needed instead of having to stop at mandated times. But on a 20-30 year view, which is really the timeline to think about this transition, effectively all current truck drivers will have quit anyway – you won’t replace them, but you won’t necessarily put anyone directly out of work – until you start looking at truck stops, which takes us right back to the convenience store discussion at the beginning of this piece. And meanwhile, truck-stop operators are already starting to think about the fundamentally different trucking patterns that might come from a shift in the logistics industry away from serving traditional retail and towards serving ecommerce (i.e Amazon).

As explained above, yes, trucking jobs will go the way of the dodo bird, or the bowling alley pinsetter or lamp lighter, but it will come with the saving of many lives and few workers that actually lose their job.

So why does technological advancement face such public scorn? In all likelihood, it is a lack of imagination. Most likely, the jobs of tomorrow are ones that no one could imagine today. For example, this year marks the 10th anniversary of the iPhone. Before its creation, it would be hard to fathom that the app economy would support nearly 2 million jobs, according to a report by economist Michael Mandel.

Yes, individuals will lose their jobs to automation, but increases in productivity will boost demand that will, ultimately, require more human workers. Further, breakthrough innovation is always around the corner they may end up supporting millions of jobs.

So should Whole Foods employees fear Amazon? Maybe in the short-term, but with proper public policy reforms that allows innovators to come up with the next big idea and that tears down obstacles to work, those who want work should be able to find it.