E-Commerce as a Jobs Engine? One Economist’s Unorthodox View(nytimes.com)
nytimes.com
E-Commerce as a Jobs Engine? One Economist’s Unorthodox View
https://www.nytimes.com/2017/07/10/business/dealbook/e-commerce-jobs-retailing.html
30 comments
There are lies, dammed lies and then there are statistics... If online is cheaper then online can not pay higher wages when selling the same volume of goods in the long run. It is that simple.
We are undergoing a huge change. It makes no sense whatsoever to look at distribution centers and retail stores and weight jobs against each other as we are in a transition period. A lot of retail these days is loosing money and the jobs in these businesses may go away. There is a glut in retail space (particularly in the US but also elsewhere) but asking rents take a while to go down. At the same time real estate in general still moving up or at least sideways. The new distribution centers may have a fair number of well paying jobs but how much of it is transitory too? At the moment this is where the investments flow but a lot may well be one-offs.
Retail is revolutionized. Online has reached a market share where there is material impact on brick-and-mortar stores and the ecosystem around them. Shop-floor salespeople and rents are for many products too expensive to compete with online on price. Companies are also moving more towards direct sales to customers cutting out middle layers to be able to control pricing better and protect the traditional shop - although that only works for products with clear USP. Traditional shop use has to change and provide more value than just transactional selling. Some are distributing directly and combine it with services (Apple) or are may be only showing stuff (Tesla). Showing tangible products is still important but unless it is so important that manufacturers are willing to pay for it then it won't happen anymore. I suspect a lot of space is going to be freed up the coming years and one can only hope new constructive uses will be found.
We are undergoing a huge change. It makes no sense whatsoever to look at distribution centers and retail stores and weight jobs against each other as we are in a transition period. A lot of retail these days is loosing money and the jobs in these businesses may go away. There is a glut in retail space (particularly in the US but also elsewhere) but asking rents take a while to go down. At the same time real estate in general still moving up or at least sideways. The new distribution centers may have a fair number of well paying jobs but how much of it is transitory too? At the moment this is where the investments flow but a lot may well be one-offs.
Retail is revolutionized. Online has reached a market share where there is material impact on brick-and-mortar stores and the ecosystem around them. Shop-floor salespeople and rents are for many products too expensive to compete with online on price. Companies are also moving more towards direct sales to customers cutting out middle layers to be able to control pricing better and protect the traditional shop - although that only works for products with clear USP. Traditional shop use has to change and provide more value than just transactional selling. Some are distributing directly and combine it with services (Apple) or are may be only showing stuff (Tesla). Showing tangible products is still important but unless it is so important that manufacturers are willing to pay for it then it won't happen anymore. I suspect a lot of space is going to be freed up the coming years and one can only hope new constructive uses will be found.
> If online is cheaper then online can not pay higher wages when selling the same volume of goods in the long run. It is that simple.
Real estate, profit, and salaries/bonuses to executives are all diminishing the wage/quantity of workers in retail and can more easily be cut in online markets where independent merchants need low capital. So independent merchants might be making more money from their own direct labor than the corresponding retail workers.
Real estate, profit, and salaries/bonuses to executives are all diminishing the wage/quantity of workers in retail and can more easily be cut in online markets where independent merchants need low capital. So independent merchants might be making more money from their own direct labor than the corresponding retail workers.
Independent merchants are hard to measure because they are captives of Amazon and eBay, and only the platforms really know what is up.
They rarely amount to much more than jobbers.
They rarely amount to much more than jobbers.
Good point. Another thing to consider is that a lot of excess consumption was fueled by home equity loans and credit card debt. In many ways that era is over, which is a double whammy for retail.
E-commerce has added 178,000 jobs since 2002 while department stores have lost 448,000 in the same period according to the US Bureau of Labor Statistics. I haven't read the paper the article is reference but it appears to be very liberal with how the author wants to define Ecomm jobs.
https://www.nytimes.com/interactive/2017/07/06/business/ecom...
The job parity isn't the same, I don't honestly believe the rhetoric of "other jobs will be created over time in new sectors." You can do so much more with less and it's only going to get worse for rural and suburban communities because it appears Ecomm is mostly growing in large metro areas.
https://www.nytimes.com/interactive/2017/07/06/business/ecom...
The job parity isn't the same, I don't honestly believe the rhetoric of "other jobs will be created over time in new sectors." You can do so much more with less and it's only going to get worse for rural and suburban communities because it appears Ecomm is mostly growing in large metro areas.
Neither have I read the referenced paper[1] yet, but in contrast to department stores shedding jobs e-commerce I offer these observations.
E-commerce has enabled many small 'boutique' or 'mom-and-pop' style shops to survive in locations without sufficient footfall.
The combination of small business bricks and mortar engendering trust with e-commerce supplementing footfall and enabling the tourist dollar to be spent after the holiday has helped many small town artisan and craft stores.
[1] 1st Q 2017 ecommerce US census report https://www.census.gov/retail/mrts/www/data/pdf/ec_current.p...
E-commerce has enabled many small 'boutique' or 'mom-and-pop' style shops to survive in locations without sufficient footfall.
The combination of small business bricks and mortar engendering trust with e-commerce supplementing footfall and enabling the tourist dollar to be spent after the holiday has helped many small town artisan and craft stores.
[1] 1st Q 2017 ecommerce US census report https://www.census.gov/retail/mrts/www/data/pdf/ec_current.p...
>The job parity isn't the same, I don't honestly believe the rhetoric of "other jobs will be created over time in new sectors." You can do so much more with less and it's only going to get worse for rural and suburban communities because it appears Ecomm is mostly growing in large metro areas.
History shows other jobs are always created as we create better tools. If you think ecommerce or any other new trend is going to be different, the onus is on you to provide evidence.
History shows other jobs are always created as we create better tools. If you think ecommerce or any other new trend is going to be different, the onus is on you to provide evidence.
[deleted]
I'm skeptical. As pointed out in the article, automation at fulfillment centers will ramp up quickly. Warehouses are pretty easy to make into "clean" environments, and automating them should be a lot easier than, say, driverless cars or fruit picking.
That said, one thing that makes sense to me is warehouse workers are a highly efficient use of labor, and as such it makes sense that it pays better than retail. Pretty much all of their time is spent doing something in service to a customer, while in retail there is a ton of standing around doing nothing, or worse, pestering customers with lots of "Can I help you with anything?"
That said, one thing that makes sense to me is warehouse workers are a highly efficient use of labor, and as such it makes sense that it pays better than retail. Pretty much all of their time is spent doing something in service to a customer, while in retail there is a ton of standing around doing nothing, or worse, pestering customers with lots of "Can I help you with anything?"
Automation at fulfilment centres will drive down prices, which will increase the volume of goods ordered online. Given labour is the only major scarce input to production for most categories of goods, the decrease in prices (and by extension, the increase in number of goods shipped) should be roughly proportional to the decrease in labour hours needed per good, resulting in no net change in labour utilisation.
[deleted]
Another factor he fails to account for is that big eCommerce companies are willing to operate at a hefty loss for the moment in pursuit of market share.
The only real progress brought on by technology so far (in terms of human happiness) is in medicine.
Other than that it has mostly served to give people options that they don't really need.
If technology is not freeing up people from their jobs, then I think it isn't delivering the real progress that humanity needs.
Personally, I feel that the jobs have gotten worse especially in the last 5 years. I used to be an all rounder software engineer and these days I find myself more and more being either a front-end developer or a back end developer depending on the company... And the job is becoming increasingly tedious; that's why I change jobs every 6 to 12 months. I get paid more but the job gets more boring.
Most people in the West shouldn't need to work but instead of coming up with UBI and taxing rich shareholders more, the government prefers to invent increasingly narrow and meaningless jobs to keep the masses busy.
I think that's why Bitcoin is so valuable, everything in our system has become so extremely inefficient and low in value that now the only thing required for something to actually have value is the fact that it can get people's attention.
If something can get people's attention and keep them busy, then wealthy people and big companies will poor some of their infinite money in it.
Other than that it has mostly served to give people options that they don't really need.
If technology is not freeing up people from their jobs, then I think it isn't delivering the real progress that humanity needs.
Personally, I feel that the jobs have gotten worse especially in the last 5 years. I used to be an all rounder software engineer and these days I find myself more and more being either a front-end developer or a back end developer depending on the company... And the job is becoming increasingly tedious; that's why I change jobs every 6 to 12 months. I get paid more but the job gets more boring.
Most people in the West shouldn't need to work but instead of coming up with UBI and taxing rich shareholders more, the government prefers to invent increasingly narrow and meaningless jobs to keep the masses busy.
I think that's why Bitcoin is so valuable, everything in our system has become so extremely inefficient and low in value that now the only thing required for something to actually have value is the fact that it can get people's attention.
If something can get people's attention and keep them busy, then wealthy people and big companies will poor some of their infinite money in it.
Most people in the West shouldn't need to work but instead of coming up with UBI and taxing rich shareholders more, the government prefers to invent increasingly narrow and meaningless jobs to keep the masses busy.
Reminds me of David Graeber On the Phenomenon of Bullshit Jobs. It strikes a similar chord [1]
[1]http://strikemag.org/bullshit-jobs/ (need to click 'here' to access)
Reminds me of David Graeber On the Phenomenon of Bullshit Jobs. It strikes a similar chord [1]
[1]http://strikemag.org/bullshit-jobs/ (need to click 'here' to access)
> the government prefers to invent increasingly narrow and meaningless jobs to keep the masses busy.
Even if one considers all public sector jobs and public sector jobs involved in areas like compliance and tax to be "narrow and meaningless", I don't think you can blame governments for the more recent growth in salespeople, management consultants, web-front-end-library-stitcher-togetherers or social media managers...
Even if one considers all public sector jobs and public sector jobs involved in areas like compliance and tax to be "narrow and meaningless", I don't think you can blame governments for the more recent growth in salespeople, management consultants, web-front-end-library-stitcher-togetherers or social media managers...
Probably a better way to figure out the real employment numbers behind eCommerce is to trace the economy behind an average persons yearly consumption with and without Ecommerce. If the average person is spending more with eCommerce then you're going to have more employment due to the bigger economy behind it. (Assume $1000 spent by the average person in both cases result in equal employment.)
You can then trace second order effects by comparing where the employment is occurring and in what industries.
You can then trace second order effects by comparing where the employment is occurring and in what industries.
Sounds like he's not comparing like with like: he's taking the greater reach of the tech industry and comparing them with a more restricted reading of the previous industry.
That isn't even the worst thing with this reading: we know that the availability of decent jobs is going down. If, as he says, e-commerce is pushing them up, he needs to demonstrate a previously unidentified force that is large than the development of e-commerce pushing in the opposite direction. I find it highly likely that such a force exists.
That isn't even the worst thing with this reading: we know that the availability of decent jobs is going down. If, as he says, e-commerce is pushing them up, he needs to demonstrate a previously unidentified force that is large than the development of e-commerce pushing in the opposite direction. I find it highly likely that such a force exists.
Key point near the end of the article:
> To Mr. Mandel, it’s not that e-commerce jobs are directly replacing traditional retail jobs. Rather, he describes a world in which some of what he calls “unpaid household labor” that we all do when we drive to the mall, park, shop and bring the goods home has been transferred into the labor market.
So sure, if you only look at the paid jobs, under an e-commerce regime we have fewer paid jobs than under big box retail. But if you factor the previously unpaid labor, we're netting more jobs.
> To Mr. Mandel, it’s not that e-commerce jobs are directly replacing traditional retail jobs. Rather, he describes a world in which some of what he calls “unpaid household labor” that we all do when we drive to the mall, park, shop and bring the goods home has been transferred into the labor market.
So sure, if you only look at the paid jobs, under an e-commerce regime we have fewer paid jobs than under big box retail. But if you factor the previously unpaid labor, we're netting more jobs.
Americans never bought into eCommerce.
Just like US lagged with smartphone and mobile internet adoption, until Apple came with its smartphone, US will be off reach for the industry until eCommerce will get its "iphone moment"
Just like US lagged with smartphone and mobile internet adoption, until Apple came with its smartphone, US will be off reach for the industry until eCommerce will get its "iphone moment"
Two out of three US households have Amazon Prime [0]. So I'm not sure what you mean by the US never buying into e-commerce (or what an "iphone moment" would mean in this context).
[0] https://www.forbes.com/sites/shephyken/2017/06/17/sixty-four...
[0] https://www.forbes.com/sites/shephyken/2017/06/17/sixty-four...
Compare how much average American spends online vs average Chinese or Russian.
The old infrastructure is still in place and has advantages in some cases. Those countries never built the same level of retail infrastructure, so it makes sense they would buy more online. Similar trajectory happened here with landline usage vs cell phones, credit cards vs phone payments, cars and road infrastructure vs transit. We will see it with other disruptive technologies going forward as well. We will probably be among the last to transition the majority of our vehicles to electric because of huge existing infrastructure in gasoline distribution. If self-driving cars become reality, transitioning parking lots, parking garages, traffic lights, etc. will take some time while cities that will be built after that disruption can avoid that infrastructure cost.
XiaomiFan(2)
I worked at CompUSA in the mid 90s, which was a big box format computer store similar in size to a Bed Bath and Beyond or Staples. We had like 75-100 employees, 5-7 were salaried, and only 15-25 were full time. Most part-timers worked 25-28 hours a week. (They wanted to avoid state health insurance requirements which kicked in at 30)
I don't think that Amazon is replacing those manhours 1:1. I'd guess that they need 1/5 of the manhours. Most of the supporting people (UPS, FedEx, LTL freight, soda machine guy, cleaners) are a wash between retail and ecommerce.
The retail->logistics displacement hurts a lot of marginal workers like kids, single mothers and others. It also creates a permanent underclass of temp workers who as contractors will always be treated worse than employees. There isn't much of that in retail.