On December 2, 2014, Andrea Chang writes in the Los Angeles Times:
This holiday season, Amazon’s little helper is an orange, 320-pound robot called Kiva.
The robots — more than 15,000 of them companywide — are part of Amazon’s high-tech strategy to get orders to customers faster. By lifting shelves of Amazon products off the ground and automatically delivering them to employee stations, the robots cut the time it takes for warehouse workers to walk around looking for items.
But a growing army of robots at the country’s biggest e-commerce retailer could spell trouble down the line for many of the thousands of employees at Amazon’s 109 warehouses. Amazon’s moves to revolutionize operations could also have implications industrywide if smaller companies feel forced to similarly adapt to compete.
“Real-life workers are going to have less to do,” said Michael Pachter, an analyst at Wedbush Securities. “It’s obvious that humans are going to lose these jobs. There will be exactly the same impact on retail as robots have had on manufacturing.”
During a tour of Amazon’s year-old fulfillment center here Sunday — the first time media were allowed to get a close-up look at the Kiva robots and Amazon’s latest warehouse model — the company sought to dispel worries about the rise in automation.
“We continue to add employees, and no employee has been negatively impacted by Kiva coming on board,” said Dave Clark, Amazon’s senior vice president of worldwide operations and customer service. He noted that Amazon hired 80,000 seasonal workers for the holidays, up 14% from a year earlier.
The Tracy warehouse, about an hour east of Oakland, was pulsing with activity on the eve of Cyber Monday as humans and machines worked side by side to prepare for one of the biggest shopping days of the year.
Kiva robots zoomed around four floors with uncanny precision, hoisting shelves laden with video games, coloring books and stuffed animals. Yellow bins filled with completed orders zipped by on conveyor belts. A group of employees, some sporting red Santa hats, took a break from sealing boxes to do a series of arm stretches.
Since acquiring robot-maker Kiva, a Massachusetts company, for $775 million in cash in 2012, Amazon has been increasingly implementing automation at its gargantuan fulfillment centers. Kivas, which resemble overgrown Roombas, are capable of lifting as much as 750 pounds and silently glide across Amazon’s warehouse floors by following rows of sensors.
The Tracy facility has the company’s latest “eighth-generation” fulfillment center technology, including 3,000 Kivas. Ten Amazon warehouses, including two in California, are classified as eighth-generation.
Clark said that because Kiva-equipped facilities eliminate the need for wide aisles for humans to walk down, eighth-generation centers can hold 50% more inventory than older warehouses. More storage capacity means a wider selection of merchandise, fewer chances of products being out of stock and more possibilities for same-day delivery, he said.
“It’s sort of a virtuous cycle,” he said. The robots, he added, have also cut processing times for orders to as little as 13 minutes from well over an hour.
He said increased automation hasn’t led to reduced staffing levels at newer warehouses because the company continues to grow rapidly, which has led to more hiring.
“When you look around at Kiva, there’s still a lot of people working,” Clark said. “What we’ve done is automate the walking element. Our focus on automation is to do automation that helps employees do their job in an easier way, in a more efficient manner.”
That may be true for now, but Amazon’s robots are already doing tasks humans would otherwise do, which over time will “almost assuredly” lead to fewer lower-wage workers, said Harley Shaiken, a professor and labor expert at UC Berkeley.
“The notion of robots is meant to replace workers; it’s meant to lower labor costs,” he said. “Just saying no one has ever been negatively affected doesn’t tell us much about what the future looks like.”
Since at least the early 1970s, labor productivity and employment in the U.S. have risen practically in tandem. That changed in the early 2000s, when productivity began to outpace employment, so far at an ever-widening rate.
Although Amazon maintains that it is still actively hiring in droves, it’s an open question whether the rapid hiring due to fast growth makes up for jobs lost as work is automated. Few economists, however, dispute the idea that automation increasingly makes low-skill human labor unnecessary. It’s not just an Amazon issue — it’s a problem that affects the entire economy.
But there are upsides. For shoppers, the cost savings and greater efficiency will mean continued low prices for Amazon goods, delivered at even faster speeds.
Because robots can’t replicate everything humans do, such as being able to identify the exact product a customer has ordered and check it for quality, hordes of employees will still be needed. Those jobs will tend to be higher-paid ones: While robots handle the more menial, labor-intensive tasks, skilled workers will be needed to operate, maintain and program the fleet of state-of-the-art machines.
About 4,000 employees work out of the Tracy facility, 2,500 of them hired for the holiday season rush. Amazon has projected sales during the fourth quarter to increase 7% to 18% compared with the same quarter last year.
The warehouse, which is more than 1 million square feet in size, is still not at full capacity. It houses 21.5 million items (3.5 million unique SKUs), with plans by Amazon to increase that number to up to 27 million items next year. On a peak day — such as Cyber Monday — the fulfillment center ships 700,000 products.
Workers at the facility said they enjoyed the ease of Kiva robots bringing products directly to them, though some conceded they missed navigating the former maze of aisles to find products.
Clark declined to discuss the cost of each robot, or how much Amazon spent building the Tracy warehouse. But, he noted, “we’re very happy with the economics.”
Seattle-based Amazon is still in the early stages of warehouse automation and has been rolling out several tech upgrades. Some facilities use Robo-Stow, a six-ton robot that moves merchandise pallets as high as 24 feet onto Kiva robots, and “vision systems” that can confirm each item in an entire trailer of inventory in as little as 30 minutes by capturing an image of the trailer’s contents.
http://www.latimes.com/business/la-fi-amazon-robots-20141202-story.html
This transition should surprise no one who is conscious and who has even causally observed the constant shift to non-human productive inputs in the manufacturing, distribution, and sale of products, as well as the delivery of services, that has been occurring during their lifetime. The first burst of this phenomena was the Industrial Revolution. But now we are in an age of technology sophistication that is permeating every sector of industry and our day-to-day lives.
But unbelievably, economist and former Labor Secretary Robert Reich made a statement regarding Amazon’s decision to employ 15,000+ robots in its fulfillment centers: “PS: Here’s who’s filling your Amazon orders (if you’re using Amazon). Amazon now has over 15,000 of these robots at its “fulfillment” centers and is planning far more. It’s also making plans to replace its drivers with commercial drones. But once Amazon (and every other company) replaces their employees with robots, who’s going to buy their stuff? Robots?”
Reich is totally oblivious to the concept of broadened, universal individual OWNERSHIP of the capital assets––”robots, machines, automation, computerization”––that are replacing the need for labor workers. He can only see earning income through a job (and through redistributed earnings of others) and totally ignores the fact that the reason that rich people are rich is because they are OWNERS of wealth-creating, income-producing capital assets (such as the “15,000 robots”). The objective should be to empower EVERY child, woman and man (citizens) to acquire individual ownership shares in the FUTURE capital asset growth of the economy using insured, interest-free capital credit loans repayable out of the FUTURE earnings generated by the investment in our nation’s economic growth. This would create a new source of income tied directly to the tectonic shifts in the technologies of production that are replacing the need for humans with non-human physical capital, and simultaneously create unprecedented economic growth with plentiful employment opportunities necessary to building a FUTURE economy that can support general affluence for EVERY citizen.
There’s nothing new about machines replacing people, but the rate of replacement is exponential and the result is that productivity gains lead to more wealth for the OWNERS of the non-human factor of production, but for others who have always been dependent on jobs as their source of income, there has been a steady decline to poverty-level labor incomes, underemployment and unemployment.
What must be understood (which unfortunately is not understood by conventional economists) is that there are two independent factors of production––human or labor workers and non-human or physical productive capital.
Fundamentally, economic value is created through human and non-human contributions.
Also what needs to be understood is that human productivity has not advanced (our human abilities are limited by physical strength and brain power––and relatively constant), but that the productiveness of the non-human factor of production––productive capital––is the reason that private sector corporations, majority owned by the “1 percent,” are utilizing the non-human factor of production increasingly to create efficiencies and save labor costs. It is the function of technology to save labor from toil and to enable us to do things that otherwise is humanly impossible without non-human input. The critical question becomes who should own productive capital? The issue of OWNERSHIP is unbelievably overlooked by those in academia and politics. Yet we live in country founded upon private property rights.
Today, large streams of data, coupled with statistical analysis and sophisticated algorithms, are rapidly gaining importance in almost every field of science, politics, journalism, and much more. What does this mean for the future of work?
But what about China, the place where all the manufacturing jobs are supposedly going? True, China has added manufacturing jobs over the past 15 years. But now it is beginning its shift to super-robotic automation. Foxconn, which manufactures the iPhone and many other consumer electronics and is China’s largest private employer, has plans to install over a million manufacturing robots within three years. Thus, in reality off-shoring of manufacturing will eventually be replaced by human-intelligent super-robotic automation.
The pursuit for lower and lower cost production that relies on slave wage labor will eventually run out of places to chase. Eventually, “rich” countries, whose productive capital capability is owned by its citizens (thought presently concentrated), will be forced to “re-shore” manufacturing capacity, and result in every-cheaper “robotic” manufacturing.
“The era we’re in is one in which the scope of tasks that can be automated is increasing rapidly, and in areas where we used to think those were our best skills, things that require thinking,” says David Autor, a labor economist at Massachusetts Institute of Technology.
Businesses are spending more on technology now because they spent so little during the recession. Yet total capital expenditures are still barely running ahead of replacement costs. “Most of the investment we’re seeing is simply replacing worn-out stuff,” says economist Paul Ashworth of Capital Economics.
Yet, while the problem is one that no one can no longer ignore, the solution also is one starring them in the face but they just can’t see the simplicity of it.
The fundamental challenge to be solved is how do we reinvent and redesign our economic institutions to keep pace with job destroying and devaluing technological innovation and invention so not all of the benefits of owning FUTURE productive capacity accrues to today’s wealthy 1 percent ownership class, and ownership is broadened so that EVERY American earns income through stock ownership dividends so they can afford to purchase the products and services produced by the economy.
None of this is new from a macro-economic viewpoint as productive capital is increasingly the source of the world’s economic growth. The role of physical productive capital is to do ever more of the work of producing more products and services, which produces income to its owners. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role. Over the past century there has been an ever-accelerating shift to productive capital––which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 235 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advance amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.
People invented tools to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive––the core function of technological invention. Binary economist Louis Kelso attributed most changes in the productive capacity of the world since the beginning of the Industrial Revolution to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital, in Kelso’s terms, does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, Kelso asserted that, “free-market forces no longer establish the ‘value’ of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.”
Furthermore, according to Kelso, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. Kelso postulated that if both labor and capital are interdependent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive.
A National Right To Capital Ownership Bill that restores the American dream should be advocated by the progressive movement, which addresses the reality of Americans facing job opportunity deterioration and devaluation due to tectonic shifts in the technologies of production.
There is a solution, which will result in double-digit economic growth and simultaneously broaden private, individual ownership so that EVERY American’s income significantly grows, providing the means to support themselves and their families with an affluent lifestyle. The Just Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.
The solution is obvious but our leaders, academia, conventional economist and the media are oblivious to the necessity to broaden ownership in the new capital formation of the future simultaneously with the growth of the economy, which then becomes self-propelled as increasingly more Americans accumulate ownership shares and earn a new source of dividend income derived from their capital ownership in the “machines” that are replacing them or devaluing their labor value.
The solution will require the reform of the Federal Reserve Bank to create new owners of future productive capital investment in businesses simultaneously with the growth of the economy. The solution to broadening private, individual ownership of America’s future capital wealth requires that the Federal Reserve stop monetizing unproductive debt, including bailouts of banks “too big to fail” and Wall Street derivatives speculators, and begin creating an asset-backed currency that could enable every child, woman and man to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. Policies need to insert American citizens into the low or no-interest investment money loop to enable non- and undercapitalized Americans, including the working class and poor, to acquire capital with the earnings of capital and build wealth, and become “customers with money.” The proposed Capital Homestead Act would produce this result.
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm
See the article “The Absent Conversation: Who Should Own America?” published by The Huffington Post at http://www.huffingtonpost.com/gary-reber/who-should-own-america_b_2040592.html and by OpEd News at http://www.opednews.com/articles/THE-Absent-Conversation–by-Gary-Reber-130429-498.html
Also see “The Path To Eradicating Poverty In America” at http://www.huffingtonpost.com/gary-reber/the-path-to-eradicating-p_b_3017072.html and “The Path To Sustainable Economic Growth” at http://www.huffingtonpost.com/gary-reber/sustainable-economic-growth_b_3141721.html. And also “Second Income Plan” at http://www.huffingtonpost.com/gary-reber/second-income-plan_b_3625319.html
Also see the article entitled “The Solution To America’s Economic Decline” at http://www.nationofchange.org/solution-america-s-economic-decline-1367588690 and “Education Is Critical To Our Future Societal Development” at http://www.nationofchange.org/education-critical-our-future-societal-development-1373556479. And also “Achieving The Green Economy” at http://www.nationofchange.org/achieving-green-economy-1373980790. Also see it complete with the footnotes at http://foreconomicjustice.org/?p=9082.
Also see “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and “The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.
