Warehouse Automation Causes Employment to Increase?

This article was published by The McAlvany Intelligence Advisor on Friday, August 4, 2017:

The crux of the anti-capitalist cabal’s complaint about the robotic revolution taking place all across the country is this: since robots can do anything that a human can do, everyone’s job is on the chopping block. So how do they explain the simple bald fact that warehousing jobs – where much of the robotic revolution is taking place – have increased? A year ago there were 867,300 people employed in warehousing. Today that number is approaching 950,000. And Apple is looking to add thousands more. How is that possible?

Part of the answer of course is the enormous growth in online sales, which hit $390 billion last year, nearly twice as much as in 2011. But part of the answer is that as warehouse operators are cutting costs, prices to the consumer have been dropping as well. And this is allowing Economic Law No. 1 to kick in: when the price of something is reduced, more is demanded.

Robots are attacking frontally the three biggest costs in warehousing: labor, time, and real estate. The new robots take up less space: robots that are 28 inches wide are forcing 10 to 12-foot wide aisles originally designed for humans to shrink, allowing for more product to be stored. Some of them move at 25 miles an hour, faster than the fastest human can run. They rely on sensors so sophisticated that each knows where the others are so they avoid crashes. As a result existing warehouses are much more efficient, and new ones are being built smaller at much lower costs. Symbotic’s Rick Cohen says his ARs (autonomous robots) are allowing food retailers and wholesalers to cut their distribution center labor costs by a jaw-dropping 80 percent, while operating in warehouses that are 25 to 40 percent smaller.

The revolution is occurring so rapidly that Cohen’s prediction that it would take five years for roving robots to transform warehousing was off by four years! By July not only have those robots been developed and installed, they are revolutionizing warehouse operations for Saks Fifth Avenue’s owner Hudson’s Bay Company and Chinese online-retail giant JD.com Inc. The software has become so sophisticated that robots not only can find, select, grab, and move gadgets, toys, and other consumer products, they do so twice as fast as human workers.

The next generation of robots is already here: “collaborative” robots. They work alongside warehouse workers, telling them where products are located, boosting worker productivity without breaking the bank. Others are designed to fetch the products and bring them to the worker’s table. These CRs are small and relatively cheap – tens of thousands of dollars compared to miles of conveyor belts and other automated systems that run into the tens of millions of dollars. At a semi-conductor warehouse in Livermore, California, for example, using robots from Fetch Robotics, it can handle 30 to 50 percent more items in about half the time as before their arrival.

So far, nearly a million people have watched SAM, the Semi-Automated Mason, on YouTube. SAM can lay 3,000 bricks in a day while the most skilled mason might be able to lay 700. The math is persuasive: the cost for SAM to lay a single brick is 4.5 cents while the cost for a human mason is 32 cents.

What most are missing, however, is not that SAM is putting those masons out of work but instead he is making them more efficient! They spend their time loading bricks onto SAM’s platform, they keep the cement hopper full, and they do the cleanup afterwards.

Still the question arises: what will all those allegedly being put out of work do to keep bread on the table? Jerry Kaplan, writing in the Wall Street Journal, has the answer: those displaced will find other, higher-paying jobs as a result of the continuing and accelerating robotic revolution:

Robots aren’t mechanical people. They are a new wave of automation, and, like previous waves, they reduce the need for human labor [the average warehouse worker can walk up to 20 miles and lift 50,000 pounds during a single shift].

In doing so, they make the remaining workers more productive and their companies more profitable. These profits then find their way into the pockets of employees, stockholders, and consumers through lower prices.

Kaplan says nothing about AI software development and management, robot repair, warehouse design, and administration that go along with the improved productivity robots are providing. He implies that lower prices will drive demand ever higher, providing improved standards of living. Even two college professors, doing a study for a recent European Central Bank conference, concluded that, after looking at data from 19 countries from 1970 to 2007, “country-level employment generally grows as aggregate productivity rises.”

The anti-capitalist cabal’s response is, to put it gently, muted.

Sources:

The Wall Street Journal: A Robot Can Be a Warehouse Worker’s Best Friend

YouTube: Meet SAM, the bricklaying robot

ZeroHedge.com: Meet SAM, Brick Laying Robot That Does The Work Of 6 Humans

The Wall Street Journal: Fully Autonomous Robots: The Warehouse Workers of the Near Future

The Wall Street Journal: Next Leap for Robots: Picking Out and Boxing Your Online Order

Jerry Kaplan: Don’t Fear the Robots

Symbotic website

IBTimes: Amazon Hiring For 100K New Jobs, Trump Tries To Take Credit Again