The new industrial revolution hits retail: prepare for mass firings.

Summary: The new industrial revolution will have its greatest effect on industries that have large imbalances. Like retail, after decades of overbuilding stores. Lots of jobs will be destroyed. Watch closely, other industries will be hit with similar shocks.

Hayley Petersen at Business Insider points to the next wave of the industrial revolution: “The retail apocalypse has officially descended on America” —

“Thousands of mall-based stores are shutting down in what’s fast becoming one of the biggest waves of retail closures in decades. More than 3,500 stores are expected to close in the next couple of months. Department stores like JCPenney, Macy’s, Sears, and Kmart are among the companies shutting down stores, along with middle-of-the-mall chains like Crocs, BCBG, Abercrombie & Fitch, and Guess.

“Some retailers are exiting the brick-and-mortar business altogether and trying to shift to an all-online model. For example, Bebe is closing all its stores — about 170 — to focus on increasing its online sales, according to a Bloomberg report. The Limited also recently shut down all 250 of its stores, but it still sells merchandise online. …Sears is shutting down about 10% of its Sears and Kmart locations, or 150 stores, and JCPenney is shutting down about 14% of its locations, or 138 stores. …

“The real-estate research firm Green Street Advisors estimates that about 30% of all malls fall under those classifications. That means that nearly a third of shopping malls are at risk of dying off as a result of store closures. According to many analysts, the retail apocalypse has been a long time coming in the US, where stores per capita far outnumber that of any other country.”

Petersen understates the situation for retail stories, overlooking the inevitable bankruptcies (Sears might be the next to go). As a modern business reporter, she mentions the effects on businesses but not the large-scale firings when those stores close. How many might lose their jobs?

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Good news: a new industrial revolution has begun!

Summary: For the next chapter of this series about good news, let’s look at the new industrial revolution. Our experience with the last industrial revolution shows us the potential and peril that lies ahead. It will be exciting. Let’s work to make it fun, not painful.

“For the world is changing: I feel it in the water, I feel it in the earth, and I smell it in the air.”
— Treebeard in Tolkien’s The Return of the King, end of the The Lord of the Rings trilogy.

The future

We so easily lose track of the fantastic progress humanity has made during the past two centuries — driven by the progress of science. But this progress slowed down after WWII. This history is the a key aspect of our time, yet it is unseen by most people.

To better understand our situation, look at Dodge City in 1877. Bat Masterson is sheriff, one of those maintaining some semblance of law in the Wild West. Life in Dodge is materially only slightly better than that in an English village of a century earlier. But social and technological evolution has accelerated to a dizzying pace, and Bat cannot imagine what lies ahead.

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Ignore the hype. There are few shortages of skilled workers in America.

Summary: The shortage of STEM workers is a zombie myth too politically useful to die. But here’s data that should kill it. Worse, it implies we might soon see a surplus of highly educated workers, undercutting the more education as a solution to automation story. We’ll need to consider more radical ideas.

“While there are over 500,000 computing jobs currently unfilled in the U.S., only 42,969 computer science students graduated from U.S. universities into the workforce last year.”

— “Computer Science in K-12 Classrooms” by the Computer Science Education Coalition, one of the many lobbying groups funded by corporations to ensure cheap labor. Median wages for people with PhDs in computer science were $121,300 in 2013, down 7% from 2008. There is no shortage, even in this hottest of fields.

Wages show the supply & demand for people with Ph.D.s.
Their wages are falling, so there is no shortage.

Data on PhD holders jobs and salaries, from WSJ

For years corporations and their paid propagandists at think-tanks have bombarded us with news about the shortage of workers in the STEM fields (Science, Technology, Engineering and Mathematics), which will cripple America in the 21st century. Looking to the future, we’re told growth in these fields would offset some of the massive unemployment from automation.

Oddly, despite the ludicrously high numbers of unfilled jobs reported, wages in these fields have not been rapidly rising (excerpt in a few hot specialties, as it takes time for students to graduate into them). Has the law of supply and demand been repealed? No, since not only is there no shortage, but even Ph.D.s in these fields are in excess supply and seeking employment in other fields, or at jobs in their field not requiring their level of training.

Worse, the data suggests that in the future we might have an oversuppy of highly educated workers (the large surplus of attorneys might be the exemplar of what’s to come).

What we see here is corporations using the news media and government to ensure an ample supply of cheap skilled workers. An entire movement has been built on this fake story.

Here’s the latest of the articles presenting the facts about higher education in the second decade of the 21st century.

Job-Seeking Ph.D. Holders Look to Life Outside School
by Douglas Belkin in the Wall Street Journal
“New doctorate holders are grappling with dwindling employment prospects.”

“…The percentage of new doctorate recipients without jobs or plans for further study climbed to 39% in 2014 from 31% in 2009, according to a National Science Foundation survey released in April. Median salaries for midcareer Ph.D.s working full time fell 6% between 2010 and 2013.

“The reason: supply and demand. Production of doctorates in the U.S. climbed 28% in the decade ending in 2014 to an all-time high of 54,070. That surge has come as more Americans see a postgraduate degree as a hedge against stagnating wages and unemployment in an economy demanding increasingly specific skills and expertise.

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Our scary future: sexbots are coming, powering the ‘sexodus’

Summary: The war of the sexes has begun a new chapter, with the development of tech sex (as far beyond today’s sex toys as a horse-drawn buggy is to a F-35). It’s too disturbing for most mainstream analysts to see, let alone discuss (other than to condemn). Brave readers will read this post and its pointers to the world of tomorrow. It’s a follow-up to my first post about sexbots: Tech creates a social revolution with unthinkable impacts that we prefer not to see.

Sexbot

The war of the sexes has entered a new era (again), as both imbalances build on both the demand and supply sides.

On one hand, the rewards for men playing the game are not what they were. To mention just two of the more obvious changes A new study in Journal of the AMA shows that 40% of American women are obese — and roughly half of marriages end in divorce, often catastrophically for men (loss of their child plus a decade or two of payments). Hence women’s magazines and websites overflow with whines about men’s “failure to commit” and the “peter pan syndrome”.

On the other side of the ledger, feminism has unleashed women’s hypergamy while men’s economic fortunes fade rapidly (e.g., women are increasingly dominating men at every level from high school diplomas to college and doctorate degrees) — leading to paradise for much-sought-after alpha males, and increasing numbers of celibate omegas.

Society would rebalance, somehow — eventually. But this instability creates an opening for technology to disrupt the game in ways we now can only imagine — with the allure of better drugs (much safer than heroin and booze), the high-voltage excitement of video games (in the near future evolving into virtual reality), and high-tech sex toys (and in the near future, sex bots). It’s the next phase of what British journalist Milo Yiannopoulos calls the “The Sexodus: Men Giving Up On Women And Checking Out Of Society.

“Social commentators, journalists, academics, scientists and young men themselves have all spotted the trend: among men of about 15 to 30 years old, ever-increasing numbers are checking out of society altogether, giving up on women, sex and relationships and retreating into pornography, sexual fetishes, chemical addictions, video games and, in some cases, boorish lad culture…”

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Look at the retail sector and see the power of the new industrial revolution

Summary: Economists and financial experts are baffled by events because their minds know only the past and so do not see the new industrial revolution at work, slowly in its early days. Look at the retail sector. What explains unusually high corporate profits, rapid growth in sales — along with slow growth in jobs and wages? Automation; better methods and new tech. These are just the first touches before we encounter the giant wave that lies ahead.

Retail Technology

In this eighth year of growth since the great recession (worst since the 1930s), many experts struggle to explain the US economy’s slow growth — its failure to take off and return to normal flight. The retail sector shows the slow growth, and a possible cause. For over two decades retail sales have been growing faster than retail jobs, and jobs faster than wages. These trends are accelerating. Here are the total changes for the retail sector from January 1992 (the earliest data) through March 2016.

  • Sales: up 167% ($4.7 trillion, 26% of GDP).
  • Jobs: up 24% (16 million, 7% of non-farm jobs).
  • Real wages: +0.9% (avg hourly wages of production & non-supervisory workers).

The obvious causes are better methods and new technology. The two are mutually re-enforcing, and still in the early stages. McDonald’s is automating order-taking, cutting costs and increasing customer satisfaction. Bossa Nova’s retail robots stock store’s shelves. And a thousand other innovations are made, large and small, every month.

Now for the worse news. These numbers are for the legacy retail stores. The stores of the future are online. Since January 1992 their sales have risen 550%, but they have added only 30% more workers. They are slowly destroying much of the legacy retail industry. Eventually retail employment will tip over and shrink.

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Why a guaranteed minimum income won’t protect us from the automation wave

Summary: My post A guaranteed minimum income: faux solution for the new industrial revolution sparked discussions in the comments and on Twitter, with some powerful insights and incisive questions. Here are answers to a few of the questions raised.

Money from Uncle Sam

A guaranteed minimum income (GMI) is a powerful tool for fighting poverty. As such it has been implemented in many nations (in different forms) and proven to work. My previous post said that it would not work if expanded to offset the job destruction coming from the new industrial revolution. That is, it could provide subsistence level income to the unemployed (preventing mass poverty) — but little more, with ill effects.

  • Automation might lead to a massive increase in the number of people collecting subsistence-level GMI. While preventing suffering, it would help create a two-tier society of rich and proles — as the productivity gains from the new industrial revolution went to the owners of the machines. We could end up living in the world of 1800, a high-tech Pride & Prejudice.
  • Above subsistence-level GMI would reduce people’s willingness to work at many of the boring, dangerous, or unpleasant jobs that pay low wages — either destroying them or boosting their wages (and so accelerate their automation) — either way boosting the program’s cost.
  • It would be politically difficult to implement an above subsistence level GMI. There is support for fighting poverty, although the decades-long rollback of welfare in America shows the limits are quickly reached. But there is today little cultural basis for large redistributive income transfers.

Objections were raised to this analysis. A brief note follows about each of these complex issues, just sketches of an opinion.

  1. Can we afford a high GMI?
  2. The GMI is a transitional step, followed by more radical redistributive measures.
  3. Is a high GMI is politically feasible?
  4. How would a large class of idle people affect society?

(1) Can we afford a high GMI?

Let’s run the math. The Federal government spends $2.2 trillion on social security, Medicare, and welfare benefits. State and local governments spend $0.688 trillion ($489B on Medicaid and $199B on welfare). Total: $2.9 trillion. That’s paid for by taxes which are on the low end of the post-WWII range (lower than those of most of our peers), with a small deficit (~3-5%) — which also fund a monstrous military/intel budget ($800 – $1T, depending on definition — almost half of total world spending).

Assume the GMI replaces the existing welfare and social security system (probably more cheaply). Assume a high GMI with an average cost per household of $40 thousand/year. That assumes a higher benefit since a GMI would supplement, not replace, the wages for many (most?) people on it. On the other hand, the program would probably have to provide some form of medical care coverage. For comparison, the 40th percentile of household income is $41 thousand; a $15/hour wage at 40 hours/week yields $31 thousand/year.

Under these complex assumptions each trillion dollars spent brings very roughly another 25 million people on the GMI “dole”, equivalent to 16% of the current working population (151 million), with a loss of their income taxes. We probably can afford to spend an added trillion dollars per year if military spending is reduced and taxes are increased (current GDP is $18 trillion). That would take the percent of Americans employed very approximately down to near the 1960 low (note: the graph double counts the part-time reservists with jobs, roughly 800 thousand).

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A guaranteed minimum income: faux solution for the new industrial revolution

Summary: Solutions are proposed as the shockwave of the new industrial revolution becomes visible on the horizon. Naturally, we first get small and comfortable ones — such as a guaranteed minimum income, which guarantee high and growing levels of inequality. We might even implement these, leaving the resulting social turmoil for the next generation. First of 2 posts about the GMI.

Our future if we distribute technology’s gains via welfare.
Well-fed, well-dressed menials bow before the aristocrats.

Servants Bowing to their betters
Photo by ullstein bild via Getty Images.

First, the new industrial revolution was debunked. When it become too obvious to ignore, the coming destruction of jobs was denied. Now that too has become obvious — so attention turns to easy solutions. Most commonly recommended is a guaranteed minimum income — a greatly expanded welfare system. For example…

Productivity has risen, but the gains went to profits (not workers ), then flowed through to the top few percent of households, leaving little for the rest.

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