The rise of artificial intelligence (AI) and its applications in manufacturing have driven a palpable fear that mass job loss is on the horizon. We have to wonder: is the threat as real and as imminent as many think? Like many things, the answer is more nuanced than a simple yes or no.
A McKinsey Global Institute report predicts that automation could cause the loss of between 39 and 73 million jobs by 2030 in the U.S. alone. Clearly, the AI genie will not be put back into its bottle. However, this doesn’t mean that all jobs across all sectors will be affected evenly.
Generally, low-skill jobs are more susceptible to replacement by AI. This is especially true in industries like retail, which has worked to automate many aspects along the purchase journey, including processes designed to get packages into consumers’ hands faster.
Not the end of the world
Oddly enough, 73 million lost jobs doesn’t spell all doom and gloom. Yes, people will lose jobs — that is inevitable. Automation, however, will create many more.
Think about it: In many cases, automation creates leaner, more efficient operations. Efficiency facilitates new market opportunities and business growth, which in turn allow for expansion and job creation. And these new jobs aren’t the low-skill positions of their pre-automation predecessors. They’re operating new technology, supervising automated processes, and other higher-paying opportunities.
Amazon: Case in point
Consider the retail industry’s brick-and-mortar boom and bust and the rise of e-commerce. As stores shuttered, companies had to downsize the number of individuals they employed. Then, as e-commerce boomed, e-retailing companies were able to bring on more employees — often at higher salaries than in traditional retail.
Amazon’s expansion to the “once-thriving factory town” of Fall River, Mass., offers a prime example. The city, which boasted nearly 20,000 manufacturing jobs in 1991, saw that number dip below 4,000 by 2015 — in large part due to automation. The 2016 arrival of an Amazon fulfillment center was the single largest job-creation event in recent memory.
Employment at the Fall River center has crept above 2,000 in just over a year. And it’s apparent that number will keep rising and that humans won’t be phased out anytime soon. In fact, rather than replace human workers, Amazon’s technology helps each become more efficient. That stimulates Amazon’s growth and the need for more fulfillment centers and more talent to fill those jobs.
While the majority of the Fall River center’s jobs are not skilled and pay reflects that, other benefits such as overtime, tuition aid, and company shares make annual compensation comparable to or better than what local textile mills once paid. Fulfillment center jobs certainly pay above traditional retail and offer employees the opportunity to work with artificial intelligence — rather than in competition with it.
A double-edged sword
AI in the warehouse may stimulate job growth. But those most likely to lose their jobs to automation — low-skill workers — may not possess the transferable skills to be successful in the new wave of jobs created by technology. For example, would a former factory worker who put together boxes for fulfillment be hirable for a position operating custom box-cutting machinery?
Amazon, again, exemplifies a solution. The company offers its workers significant training and education to breach any skill gaps. Those who have never had experience in a warehouse or operating technology will need companies to invest in their training to ensure those who have lost their jobs to automation will have a place in the new economy.
This isn’t the first time we’ve encountered such an issue. Before ATMs were the ubiquitous cash-dispensing machines, many thought them the great disruptor of the banking industry. The bank teller’s role was sure to become obsolete.
What actually happened is that ATMs led to more efficiently run banks. While some jobs were lost, banks were actually able to open up more branch locations, which led to the creation of more jobs.
Will automation in the warehouse cause the same scenario to happen? Will organizations become more efficient, allowing them to grow and hire more workers at better, higher paying jobs? In many cases, it looks like it already has.