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.
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.