Steve Benen has the monthly jobs report for August. Job numbers fall short of expectations in August:
The Bureau of Labor Statistics reported this morning that the U.S. economy added 156,000 jobs in August, which is down from June and July totals, and fell short of expectations. The unemployment rate, while still low, inched up a little to 4.4%.
In fact, overall, this is not a heartening set of data. The revisions for June and July were both lower, and combined they show a net loss of about 41,000 jobs. (In case you’re curious, the BLS report explained at the outset, “Hurricane Harvey had no discernible effect on the employment and unemployment data for August.”)
All told, if current averages keep up, we’re on track to see the U.S. economy add about 2.1 million jobs this calendar year, which isn’t bad, but which would fall short of last year’s totals. In the first eight months of last year, 1.55 million jobs were created, while in the first eight months of this year, the total is 1.4 million.
Here’s another chart, this one showing monthly job losses/gains in just the private sector since the start of the Great Recession.
One of the numbers that jumps out is retail trade, which added only 800 jobs in August. This reflects the massive transformation of the retail sector underway from automation and computerization, especially e-commerce.
Here is something to consider from Axios.com. Expert doubles down: robots still threaten 47% of U.S. jobs:
A leading authority on robotization has doubled down on his most controversial forecast — that automation threatens 47% of American jobs. And he belittles critics who say technological upheaval seems scary but always generates sufficient new work.
Why it matters: In a new report by Citi, Carl Frey, a professor at Oxford University, also forecasts the demise of American retail work. If he is right, it is an outcome that will reach further than the decimation of manufacturing because it will involve a different, large set of cities.
Frey writes in the Citi report:
- Retail work is likely to vanish in the coming decades, leading to a long, unknowable period of adjustment before retail workers find new employment.
- “Groups that have lost out to automation since the computer revolution are still struggling to find new and better-paid jobs,” and retail workers will find it just as hard “to find solid footing in the labor market.”
More than anyone, Frey and artificial intelligence expert Michael Osborne ignited the current fear of a robot apocalypse with a joint 2013 paper that introduced their famous 47% forecast. Critics have attacked the core of their work. The most frequent pitch I receive is from PR agents offering yet another expert rejecting robot-induced mass unemployment. Their scorn has two main assertions:
- The theory of “technological unemployment,” conceived by John Maynard Keynes in the 1930s, has been proven wrong. Keynes said tech was advancing so fast that the economy would fail to replace jobs that were destroyed. But, just as they have been through repeated technological disruptions since the start of the Industrial Age in the early 19th century, Keynes’ fears of mass joblessness were not borne out.
- The robot age will turn out the same — normal economic churn will replace destroyed jobs with mostly unforeseeable new ones.
In the Citi report, Frey quotes his critics and rejects their arguments. He writes:
- Keynes was not wrong about the destruction of jobs, which happened, but about the number of jobs that would arise to replace them.
- This time, the scale on which jobs will be replaced — whether this technological upheaval will turn out the same as the past — is ultimately unknowable at this stage.
- “What we do know is that the potential scope of automation has expanded rapidly and that many of today’s jobs will change or disappear.”
- And the robust spread of automation suggests that “historical rates of productivity growth are likely to be a poor guide to the future.”
- Despite appearances, brick-and-mortar still accounts for the overwhelming percentage of sales — 92%, according to Citi. But e-commerce is up from a 2% share a decade ago, and the number is rising by 20% a year.
- The cost of automation is falling, making retailers more willing to use it to lay off more costly workers.
- 80% of the jobs in transportation, warehousing and logistics are vulnerable to automation.
- 63% of sales jobs are vulnerable.
- The average number of robots in fulfillment centers like Amazon warehouses was 461 in 2013. But now it is 3,200.
- “The disruption is very much at its infancy,” Martin Wilkie, the lead author of the report, tells Axios. He said that, in the coming decades, “the premise is that stores are bypassed in their entirety.”
E-commerce’s reach is patchy across the globe:
- In big U.S. and European cities, it’s possible to order and receive a product in one or two hours.
- In Brazil, the average promised delivery time is 9 days.
- South Koreans do 10% of their grocery purchases on-line, along with 7.2% in Japan and 5.3% in France.
- The U.S. is among the lowest, with only 1.4%.
This may soon change with e-commerce giant Amazon’s purchase of Whole Foods, which has already caused panic among major grocers. Amazon Cuts Whole Foods Prices as Much as 43% on First Day:
Amazon.com Inc. spent its first day as the owner of a brick-and-mortar grocery chain cutting prices at Whole Foods Market as much as 43 percent.
In a sign of how the retailer is changing, the Amazon Echo, a voice-activated electronic assistant, was also for sale, for $99.99 — a sharp pivot into electronics for a company known for kale and quinoa. The Echo Dot, a smaller version, was advertised for $44.99.
The tech giant’s $13.7 billion purchase of Whole Foods has sent shock waves through the already changing $800 billion supermarket industry.
The wedding between Amazon and the upscale grocery promises to upend the way customers shop for groceries. Cutting prices at the chain with such an entrenched reputation for high cost that its nickname is Whole Paycheck is a sign that Amazon is serious about taking on competitors such as Wal-Mart Stores Inc., Kroger Co. and Costco Wholesale Corp.
“Price was the largest barrier to Whole Foods’ customers,” said Mark Baum, a senior vice president at the Food Marketing Institute, an industry group. “Amazon has demonstrated that it is willing to invest to dominate the categories that it decides to compete in. Food retailers of all sizes need to look really hard at their pricing strategies, and maybe find some funding sources to build a war chest.”
Some rivals have already reacted to the kickoff of what could become a new era of selling food in the U.S.
Wal-Mart, the world’s biggest retailer, has already invested billions into lowering prices across the board over the past year or so, and has revamped the produce section at its U.S stores, improving sight lines, adding more fresh-cut fruits and even creating a sweeter bespoke cantaloupe. That, along with an aggressive rollout of curbside grocery order pickup, helped the company record its best food sales growth in five years in its most recent quarter.
Costco, meanwhile, has a full slate of organic items that are priced about 30 percent cheaper than the same products at Whole Foods, according to Sanford Bernstein. It’s able to price lower thanks to a business model that charges membership fees, focuses on selling a limited assortment of bulk-sized goods and features a treasure-hunt experience in the stores.
Maarten van Tartwijk, a spokesman for Ahold Delhaize, the Dutch retailer that owns the Stop & Shop chain in the U.S., said the company has invested heavily in its online operation. And Germany-based retailers Aldi Stores Ltd. and Lidl, touting lower prices, continue to expand in the U.S.
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After falling 37 percent this year on disappointing sales and investor concern over the Amazon-Whole Foods union, Kroger stayed essentially unchanged on Monday in New York.
Sprouts Farmers Market Inc., an upscale grocer that competes with Whole Foods and is cited by analysts as a possible consolidation target, decreased about 10 percent. Shares of Wal-Mart fell 0.8 percent and Target Corp. was down about 1 percent. Costco increased less than 1 percent. Amazon shares rose 0.08 percent.
“Goodbye, Whole Foods as we know it,” Karen Short, an analyst at Barclays Capital Inc. in New York, said in a note. “The conventional supermarket has not evolved much in decades. But Amazon will likely drive drastically different shopping behavior in grocery. The survival of the fittest has begun.”
The “mom & pop” corner grocer that many of you may have been familiar with? Yeah, they may soon be history, like the horse and buggy.