The Boy Who Cried Robot: A World Without Work

[Razgovory]

Great in the future we will all live in bins.

[jimmy olsen]

Ten percent of jobs are at grave risk, and these are the folks who are already low skilled and vulnerable. Now tell me Minsky, how are we reasonably going to put these folks back to work?

https://www.nytimes.com/2017/04/15/business/retail-industry.html?_r=3&mtrref=www.slate.com&gwh=8EA726AEAAF566F0266F99B5341F9364&gwt=pay

Is American Retail at a Historic Tipping Point?
By MICHAEL CORKERYAPRIL 15, 2017

Along the cobblestone streets of SoHo, Chanel handbags and Arc'teryx jackets are displayed in shops like museum pieces, harking back to the height of the neighborhood's trendiness. But rents there are softening, and the number of vacant storefronts is rising.

Today, some of the most sought-after real estate by retailers is not in SoHo, but five miles away in Red Hook, a gritty Brooklyn enclave with a shipbuilding past. E-commerce merchants are vying to lease part of a huge warehouse space, spanning 11 acres, that would allow them to deliver goods the same day they're ordered online.

The profound reordering of New York's shopping scene reflects a broad restructuring in the American retail industry.

E-commerce players, led by the industry giant Amazon, have made it so easy and fast for people to shop online that traditional retailers, shackled by fading real estate and a culture of selling in stores, are struggling to compete. This shift has been building gradually for years. But economists, retail workers and real estate investors say it appears that it has sped up in recent months.

Between 2010 and 2014, e-commerce grew by an average of $30 billion annually. Over the past three years, average annual growth has increased to $40 billion.

"That is the tipping point, right there," said Barbara Denham, a senior economist at Reis, a real estate data and analytics firm. "It's like the Doppler effect. The change is coming at you so fast, it feels like it is accelerating."

This transformation is hollowing out suburban shopping malls, bankrupting longtime brands and leading to staggering job losses.

More workers in general merchandise stores have been laid off since October, about 89,000 Americans. That is more than all of the people employed in the United States coal industry, which President Trump championed during the campaign as a prime example of the workers who have been left behind in the economic recovery.

The job losses in retail could have unexpected social and political consequences, as huge numbers of low-wage retail employees become economically unhinged, just as manufacturing workers did in recent decades. About one out of every 10 Americans works in retail.

"There is a sea change happening in the retail industry," said Mark Cohen, a former executive at Sears, who now runs the retail studies program at Columbia Business School. "And that is bringing a sea change in employment."

Store closures, meanwhile, are on pace this year to eclipse the number of stores that closed in the depths of the Great Recession of 2008. Back then Americans, mired in foreclosures and investment losses, retrenched away from buying stuff.

The current torrent of closures comes as consumer confidence is strong and unemployment is low, suggesting that a permanent restructuring is underway, rather than a dip in the normal business cycle. In short, traditional retail may never recover.

The reordering should come as no surprise to anyone who has enjoyed the instant gratification of receiving that book or garden hose within 24 hours of ordering it. Or to anyone who has encountered the tired-looking mannequins and haggard sales associates at many department stores.

Modern-day retail is becoming unrecognizable from the glory era of the department store in the years after World War II. In that period, newly built highways shuttling people to and from the suburbs eventually gave rise to shopping malls — big, convenient, climate-controlled monuments to consumerism with lots of parking.

Over time, malls grew to be the size of indoor cities. Minnesota's Mall of America opened in 1992 with a footprint so large that it could fit nine Yankee Stadiums inside.

Now, many of these once celebrated malls are emptying out or being turned into trampoline parks and community colleges. "The retail industry built too much space," said Bruce Batkin, chief executive of Terra Capital Partners, a commercial real estate lender.

Last week, Mr. Batkin got a call from a landlord looking to refinance his shopping center with a 10-year loan. Mr. Batkin passed on the deal because it was too difficult to predict what might happen to occupancy in the property 10 years from now.

"Things are changing so fast in retail that a year needs to be measured in dog years," he said.

Still, there are many investors who are not giving up on the notion that online retail and traditional stores can coexist and even thrive together. Retailers have hoped that their traditional stores, by offering catchy displays and top-notice service, can lure shoppers away from their screens. Some of the best evidence that brick-and-mortar retail is still viable may be Amazon's experimentation with operating physical stores of its own.

In reality, however, some workers say that they will often spend time helping out a customer on the shop floor, only to have that person leave the store and order a product online. That often hits salespeople in the wallet: Many are paid on commission, but only on sales they complete in person in the store.

At Bloomingdale's, employees who are members of the Retail, Wholesale and Department Store Union are arguing that the company should improve how sales staff are compensated for helping facilitate e-commerce business — like helping customers pick up goods in the store that were ordered online.

"You want an in-store experience that will make customers want to come into the store," the union president, Stuart Appelbaum, said. "That requires highly motivated employees."

A Bloomingdale's spokeswoman said the company is negotiating with the union over a new contract in "good faith" and was taking steps to invest in its work force..

The retail industry has always had its ups and downs. Workers frequently hop from one store to another, as styles and brands fall out of fashion. But even to many experienced retail workers, who are used to losing their jobs based on the seasons, this downturn feels different.

Hilda Awuor, 27, lost her job at the Saks Fifth Avenue store in Lower Manhattan last month. After bouncing between jobs in different clothing stores, she said she is now done with retail and is trying to find a different career entirely.

"I really like helping customers create a new style," said Ms. Awuor, who was paid $16 an hour. "But there is no job security anymore."

Some economists say this is how the market is supposed to work. After the recession, retail hiring was a big driver of the recovery. But now that the economy is stronger, retail workers theoretically should be pushed out into potentially higher paying jobs that offer more chances to create wealth.

"This is creative destruction at its best," said Mark Zandi, chief economist at Moody's Analytics. "We are downsizing a part of the economy that is uncompetitive. While painful for those in the middle of it, this is how we grow and wealth is created."

But Mr. Cohen, of Columbia University, said the upending of an entire industry will not be so tidy. Warehouses like the one in Red Hook typically employ a few hundred people, according to Sitex Group, a private equity firm that is expected to close on the property in a few weeks.

While these distribution centers could replace some of the work lost in stores, they likely won't make up the entire difference. That is because much of the operations are automated and require different skills and sensibilities than selling jeans.

"There is a rolling crisis that has emerged in the last couple of years as store closings are being announced," Mr. Cohen said. "People are losing their jobs and have no other place to go.

"Theoretically this is the marketplace rationalizing itself, but in the interim how do people survive?"

http://www.slate.com/articles/news_and_politics/politics/2017/04/the_response_to_the_retail_apocalypse_shows_which_workers_count_in_trump.html

The retail industry's recent decline may have reached a "tipping point." That was the conclusion of a recent report from the New York Times with potentially far-reaching consequences. Once-bustling shopping malls and department stores are now empty as millions of Americans do their shopping online through businesses that have warehouses but don't operate storefronts. "This transformation is hollowing out suburban shopping malls, bankrupting longtime brands and leading to staggering job losses," the Times reports. "More workers in general merchandise stores have been laid off since October, about 89,000 Americans. That is more than all the people employed in the coal industry."

Retail jobs aren't good jobs, per se; on average, they pay little, provide few benefits, and are notoriously unstable. But roughly 1 in every 10 Americans works in retail, which means millions rely on the industry for their livelihoods. As the Times notes, "The job losses in retail could have unexpected social and political consequences, as huge numbers of low-wage retail employees become economically unhinged, just as manufacturing workers did in recent decades."

Despite this ongoing challenge and threat to millions of ordinary Americans, Washington is silent. What makes this even more striking is it comes at a time when politicians—and a multitude of voices in national media—are preoccupied with the prospects of blue-collar whites and the future of the Rust Belt. That contrast exists for several reasons, not the least of which is a simple one: Who does retail work in this country versus who does manufacturing work.

For those in the latter group, mostly white and mostly male, Donald Trump made their anger, anxiety, and identity the centerpiece of his presidential campaign, promising restoration through better "deals" and aggressive action against foreigners and perceived others. "Dying industries will come roaring back to life," he said in February during his first address to a joint session of Congress. Just weeks before, the president signed legislation repealing rules protecting local waterways from coal mining waste. Surrounded by a group of coal miners, Trump called the regulation "a major threat to your jobs" and said that ending it would save "many thousands American jobs, especially in the mines."

In terms of attention, these workers punch far above their weight class. They constitute a small portion of the American workforce, and yet, elite journalists devote countless words to their lives and communities, while politicians use them and their priorities as a platform for performing authenticity. For those in and around politics, one's connection to "real America" is often judged by one's proximity to these workers and their concerns. Which raises a question: Why them and not those retail workers who face an equally (if not more) precarious future?

One answer is that these jobs are ubiquitous. Retail work is everywhere. And while conditions in this sector are important to the overall economy, they don't define particular communities. (Even as the decline of retail hits small towns especially hard.) Politically, no one is especially invested in them. Not only are jobs in manufacturing and coal tied to specific places, but they predominate in swing states like Pennsylvania, Michigan, and Ohio, offering a strong incentive for ambitious politicians to pander. Likewise, retail work is concentrated where people live: in cities and suburbs. If the gerrymandering and the Electoral College devalues voters in dense areas of the country, then it does the same for workers in those places too.

Another answer is that these jobs are low-skill and lack the physical risk of mining or heavy manufacturing. And as such we tend, as a society, to give little attention and concern to those positions. We see them as expendable positions of low worth. It's one reason for the often-hostile reactions to calls for a higher minimum wage. Anyone can operate a cash register, goes the argument, why should we give them a larger paycheck?

There's one other answer to consider, one that speaks to deep divides in our society. Retail work in malls and shopping centers and department stores is largely work done by women. Of the nearly 6 million people who work in those fields in stores like Sears, Michaels, Target, J.C. Penney, and Payless, close to 60 percent are women. There's another issue to consider. A substantial portion of these workers—roughly 40 percent across the different kinds of retail—are black, Latino, or Asian American.

The Bureau of Labor Statistics doesn't disaggregate this data by race and gender, but it's likely that a large number of those nonwhite workers—if not a majority—are women too. By contrast, heavy manufacturing, industrial, and extraction work is overwhelmingly white and male. What's more, it's tied to a particular image of the standalone (and often unionized) worker who can provide for his family on one income. Americans have historically had an almost romantic attachment to the hard-hat worker, usually white, in a way that we don't to any other profession.

Work is gendered and it is racialized. What work matters is often tied to who performs it. It is no accident that those professions dominated by white men tend to bring the most prestige, respect, and pay, while those dominated by women—and especially women of color—are often ignored, disdained, and undercompensated.

For all of the impersonal economic reasons for the decline of retail, for all the understandable reasons motivating political attention to manufacturing, it's also the case that this is a story of race and gender. A story of who matters in our society; who deserves our collective concern. And if one thing is true in American history, it's that white men have always been among those called "deserving," with other groups struggling to attain that label and the respect it implies, and some—like black women—long stigmatized as inherently unworthy.

The story of our outsize concern for coal and manufacturing, or rather our indifference to the collapse of retail, is inescapably the story of how worth, value, and citizenship are still tied to those traits we can't control.

[Monoriu]

I can't recall the last time my wife bought her clothes at a retail shop.  She buys everything online now.  It isn't about the speed.  It typically takes a week or two for the stuff to arrive in Hong Kong.  It is about the cost.  The same piece of clothing purchased online costs about 10% of what it costs in retail.  Even if 50% of the stuff that she orders online don't fit, she still saves a lot.  50% is an exaggeration.  It is more like 10-20%. 

I think in theory there are a lot of jobs in the online distribution model.  Workers are needed to operate the logistics network, the IT side of things, online marketing, and delivery.  The actual delivery employs a lot of people.  But the thing is they are different people from what is required in traditional retail.  The typical retail salesperson is an unskilled woman who talks her way to success.  The typical person who operates a cash register is a housewife who works part time for some extra cash.  The typical delivery person is a guy who does a lot of physical work, running around, lifting stuff, knowing his way around the city, driving etc.  IT is, again, male dominated and the barriers to entry are a lot higher.  And both IT and delivery are pretty much full time jobs.  Whereas retail is much more suitable for people looking for part-time work.  The jobs are still there but it is very difficult for people to make the transition. 

[CountDeMoney]

Ten percent of jobs are at grave risk, and these are the folks who are already low skilled and vulnerable. Now tell me Minsky, how are we reasonably going to put these folks back to work?

How the fuck would he know? And besides, he's Wall Street--they feed off these "folks".

[Valmy]

The whole world needs to be thinking about that question. Our lives are going to be, well are really, transformed by new technology and there seems to be a lack of thinktanks coming up with new public policies to deal with it.

[Admiral Yi]

How the fuck would he know? And besides, he's Wall Street--they feed off these "folks".

You do an excellent Seedy parody.

[Eddie Teach]

What's wrong with the word folks? 

[CountDeMoney]

How the fuck would he know? And besides, he's Wall Street--they feed off these "folks".

You do an excellent Seedy parody.

Don't you have a factory closing or something to masturbate in public over somewhere out there? Go fuck youself in the throat, shitfuck.

[Zanza]

America has much more retailers than other countries, so Tim's quoted example might not be directly transferable to other countries:

"Retail square feet per capita in the United States is more than six times that of Europe or Japan,"

https://www.bloomberg.com/news/articles/2017-04-07/stores-are-closing-at-a-record-pace-as-amazon-chews-up-retailers

[Valmy]

It is because we love our superstores. The only time I really go shopping at brick and mortar shops anymore is during Christmas because I like to browse and get ideas on what to buy people. But, you know, I can do that on Amazon as well.

[Admiral Yi]

That has more to do with airplane hangar superstores than it does relative importance of retail to the economy or number of retailers.

[The Minsky Moment]

Ten percent of jobs are at grave risk, and these are the folks who are already low skilled and vulnerable. Now tell me Minsky, how are we reasonably going to put these folks back to work?

The root problem here is not robots but the fact that retail was vastly overbuilt in the US.  In comparison with other OECD countries, the US has far more mall space per person.  For example, until recently there was about 4 times as much retail space per person in the US as in Canada.  One of the drivers was the fact that companies nominally in the retail business in reality were really real estate investment companies that also happened to sell some stuff.  The value of the RE holdings dwarfed the value of the underlying retail operations, and a whole industry of sale-leaseback transactions sprouted up with private equity leading the charge.  Then in 08-09 when retail got killed, interest rates were so low that banks were willing to roll-over rather than foreclose.  That prolonged the adjustment and with the rate environment only now starting to shift, there is a backlog of wounded retailers that need to be worked out.

As for what to do, here's one thing that won't work - "bringing back" manufacturing.  Manufacturing is a lot more capital intensive.  So for example if Trump's "border adjustment" tax went through, retail would be savaged even worse and the resulting job loss would exceed whatever employment would be added in manufacturing.

A nice infrastructure boom OTH . . .

[The Brain]

I fail to be worried. "OMG No THIS time it will be different!!!1111" Maybe, maybe not.

[jimmy olsen]

Ten percent of jobs are at grave risk, and these are the folks who are already low skilled and vulnerable. Now tell me Minsky, how are we reasonably going to put these folks back to work?

The root problem here is not robots but the fact that retail was vastly overbuilt in the US.  In comparison with other OECD countries, the US has far more mall space per person.  For example, until recently there was about 4 times as much retail space per person in the US as in Canada.  One of the drivers was the fact that companies nominally in the retail business in reality were really real estate investment companies that also happened to sell some stuff.  The value of the RE holdings dwarfed the value of the underlying retail operations, and a whole industry of sale-leaseback transactions sprouted up with private equity leading the charge.  Then in 08-09 when retail got killed, interest rates were so low that banks were willing to roll-over rather than foreclose.  That prolonged the adjustment and with the rate environment only now starting to shift, there is a backlog of wounded retailers that need to be worked out.

As for what to do, here's one thing that won't work - "bringing back" manufacturing.  Manufacturing is a lot more capital intensive.  So for example if Trump's "border adjustment" tax went through, retail would be savaged even worse and the resulting job loss would exceed whatever employment would be added in manufacturing.

A nice infrastructure boom OTH . . .

That was a lot of words to say "they're not going to be put back to work".

[DGuller]

That was a lot of words to say "they're not going to be put back to work".

Even vastly more words to say nothing of the kind.