Where will the jobs come from?

T here is talk recently of whether we are experiencing a “retail apocalypse.” Reports are coming in regularly about one or another major retailer closing hundreds of stores, or shutting down entirely.

The switch to online retail rather than brick and mortar stores is a part of this trend. And that can be expected to continue. Malls across the country are emptying out, with some closing down. What was once not only a shopping, but a social experience, has petered out.

It’s hard to say how concerned we should be. The downward trend of retail may be overblown. Indeed, as one store closes, often another opens.

Manufacturing is another story. President Trump was elected in part due to promises that he’d renegotiate trade agreements to better benefit American workers. For Midwesterners who still haven’t forgiven President Clinton for NAFTA, this resonated.

Economists are skeptical and it isn’t in particular because of Trump. He’s hardly the first politician to make unrealistic promises; that can be said of just about every president. But one thing that may surprise people is that manufacturing has already come back somewhat. The United States still has a fairly strong manufacturing sector.

What we do not have is a manufacturing sector that creates a lot of jobs. Automation has killed far more jobs than any trade agreement.

Economists often dismiss worry about disappearing jobs due to changes in technology. They even have a term for it: creative destruction. Some jobs are lost, but the increased efficiency lowers prices and new ones are born. There are numerous examples of this: we have far fewer bank tellers since ATMS were invented and I have yet to meet a cobbler.

But I wonder now if we could be entering an era of such rapid automation, the economy will not be able to adapt. The devastation of the manufacturing sector over the past 40 years was incredibly disruptive, especially to the Midwest. But, automation is about to enter other sectors in ways we haven’t seen before.

We already see self-checkout areas in grocery and retail stores, and disappearing cashier jobs. Fast food companies are experimenting with this as well.

The biggest change could be coming in the transportation sector. Self-driving cars aren’t science fiction; they are here. In the next 20 years, they will likely replace many of the vehicles on the market. This will impact every job involved in transportation, from taxi drivers to truckers to delivery drivers. Most of those jobs may soon be gone. Services like Uber and Lyft, which have disrupted taxi markets, will continue to do so, but without drivers. It will just be an empty car that picks you up.

It isn’t just the low or semi-skilled jobs that are going away. Many professionals are seeing their jobs disappear as well. Middlemen type jobs, such as insurance agents, have been diminishing for some time. But, we’re also seeing automation cut into areas like health care, legal services, education, law enforcement, journalism, and financial services.

It doesn’t matter what you do these days, you cannot assume your job is safe from the bots.

This is reflected in the numbers. Unemployment is very low right now. But even as the economy has recovered over the past few years, not all the jobs have come back. The labor force participation rate, a better measure than unemployment, has been slower to recover. Part of this is due to retirement of baby boomers, a trend that will continue, but even if you focus on only those of prime working age (defined as 15-64) the rate hit a peak of just over 78 percent in the late 1990s and after some recovery, remains about five percentage points lower today.

Possibly, this could be a good thing. Especially in the case of jobs that are tedious or hazardous, it would benefit society tremendously if we humans could avoid having to do them. And what’s wrong with more leisure time or spending our time on things that benefit humankind, like arts, creativity, and raising the next generation? Perhaps we could all work fewer hours or maybe some of us don’t need to work at all.

But, here’s the thing Henry Ford learned years ago. In order to purchase all these goods and services that will now be easier to obtain, people need income from somewhere. If not from jobs, then from where? If from jobs, what will they be?