Amazon's Sparrow - Creating Unemployment for Americans

On November 10, 2022, Amazon announced its latest technological advance; Sparrow, an intelligent robotic system that advances the handling of items by detecting, selecting and handling individual products in Amazon's vast inventory.

 

Let's open this posting by looking at the number of Amazon employees doing back to 2009:

 

Here is a graph showing the annual growth rate in the number of Amazon employees:

 

Now, let's go back to Amazon's press release about its latest technological advancement.  Here is a video with background on Sparrow:

 

Amazon's team of roboticists, engineers and software developers have a decade-long history of developing and implementing advanced technology starting with the company's acquisition of robotics company Kiva in 2012.

 

Here is a quote from the press release about Sparrow:

 

"Sparrow represents a major advancement in the state-of-the-art technology of industrial robotics. Leveraging computer vision and artificial intelligence (AI), Sparrow can recognize and handle millions of items. Last year, with the support of Amazon technologies, our employees around the world picked, stowed, or packed approximately 5 billion packages—or over 13 million packages per day. Robotics technology enables us to work smarter, not harder, to operate efficiently and safely."

 

Here is what Amazon has to say about the upside of Sparrow with my bold:

 

"Beyond the technological advancements of Sparrow, what we’re truly excited about are the implications the technology has and the ways it will benefit our employees and customers. Working with our employees, Sparrow will take on repetitive tasks, enabling our employees to focus their time and energy on other things, while also advancing safety. At the same time, Sparrow will help us drive efficiency by automating a critical part of our fulfillment process so we can continue to deliver for customers."

Sparrow will allow Amazon's employees to focus their time and energy on other things like writing resumes and looking for new jobs.

 

Amazon claims that its robotics program is "investing in its employees" as quoted here:

 

"The design and deployment of robotics and technology across our operations have created over 700 new categories of jobs that now exist within the company—all because of the technology we’ve introduced into our operations. These new types of roles, which employ tens of thousands of people across Amazon, help tangibly demonstrate the positive impact technology and robotics can have for our employees and for our workplace. Supporting our employees and helping them transition and advance their career into roles working with our technology is an important part of how we will continue to innovate.

An example of our commitment to advancing employee careers is our Amazon Mechatronic and Robotics Apprenticeship. The 12-week classroom apprentice program, which is covered by Amazon, is followed by 2,000 hours of on-the-job training and industry-recognized certifications, helping our employees learn new skills and pursue in-demand, technical maintenance roles. Following completion of the apprenticeship, employee pay increases by approximately 40% for program participants."

  

Looking back a few months ago, we find this video about Amazon:

 

 

...and this news coverage on America's mainstream media:

 

 

...and this video by fulfillment centre workers:

  

Robots don't complain about heat, overwork, safety issues, low pay, injuries, they don't expect meal breaks, they don't get thirsty and, most importantly, they aren't so impertinent that they will try to unionize....at least until they become self-aware. 

 

If Amazon totally automates its fulfillment operations, the company will never again have to subject itself to scrutiny no matter how often it claims that the automation of its operations are supporting its employees.  With over 1.6 million employees, it's quite clear that Amazon could significantly reduce its long-term costs by replacing humans with Sparrow the more than 520,000 robotic drive units that are "on the job".

But, on the upside, Jeff Bezos just keeps on getting richer and richer.

Technological Unemployment in America

An interesting and very thorough study by Daron Acemoglu and Pascual Restrepo at MIT and Boston University respectively looks at how industrial robots are taking over jobs that were previously performed by humans and how this impacts the future of both wages and job creation.  For the study, the authors examined the effect of industrial robot usage over the period between 1990 and 2007 (with the year 2007 selected as the last year of the study to eliminate the impact of the Great Recession) on local labor markets in the United States with the data broken down into commuting zones.  Let's look at some of their conclusions, keeping in mind that a 2013 paper by Frey and Osborne concluded that 47 percent of U.S. workers' jobs are at risk of automation over the next two decades and that some of the impacts are felt by adding only one additional robot per thousand workers:

1.) Impact on Employment: Using the employment to population ratio between 1990 and 2007 and the increase in robots adoption of one more robot per thousand workers between 1993 and 2007, a commuting zone with a value of exposure to robots equals to the average for the entire United States experienced 0.37 percentage points lower employment to population ratio than commuting zones with no robot workers.  In other words, adding one more robot per thousand workers reduced employment by 6.2 workers.

2.) Impact on Wages: Since robots affect employment levels, they also impact the composition of the workforce which has an impact on wages.  Again, a commuting zone with a value of exposure to robots equal to the average for the United States experienced 0.73 percent lower wage growth than commuting zones with no robot workers.  In other words, adding one more robot per thousand workers reduced average yearly wages by about $200 in the affected commuting zones.

3.) Impact on Men vs. Women: The authors concluded that employment and wages fall for both men and women, however, the effects of adopting industrial robots on declining employment for men are about 1.5 to 2.0 times higher than they are for women.

4.) Impact on Different Industries:  Here is a graphic which shows the negative effects of robots on the employment to population ratio in different industries over the period between 1993 and 2007:

Here is a graphic which shows the negative effects of robots on the employment to population ratio for specific occupations over the period between 1993 and 2007:

As you can see, the greatest impact on the employment to population ratio is felt in the manufacturing industries followed by services and retail.  Just think about that the next time that you use a self-scanning and checkout system at your local retailer.

5.) Impact on Educational Levels:  Here is a graphic which shows the negative effects of robots on the employment levels for various educational levels over the period between 1993 and 2007:

The greatest negative impact of increased use of robot workers on employment is felt by male workers with a high school or some college education.

  

Here is a graphic which shows the negative effects of robots on wages for various educational levels over the period between 1993 and 2007:

The greatest negative impact of increased use of robot workers on wages is felt by males and female with less that a high school education.

To close this posting, let's look at how the employment to population ratio for American workers has dropped significantly over the past decade and a half:

Given that this study looks at the period only up to 2007 and the fact that U.S. industries and businesses have increasingly adopting the use of robots over the decade since 2007, one has to wonder how much of an impact technology has had on the rather stubborn "real" unemployment rate and dropping employment to population ratio since the Great Recession.  With the industrial robot workforce expected to quadruple by 2025, perhaps the Trump Administration's mantra that America's foreign trade partners are to blame for the country's loss of jobs is disingenuous and ignores the reality of technological advances that have made human workers redundant.  This situation is only likely to worsen given the advances in artificial intelligence.

Where Do Robots Live in the United States?

A fascinating brief by Mark Muro, Senior Fellow at the Brookings Institute takes a unique look at one of the key issues facing American workers (and other workers in developed nations); automation, particularly the growing use of industrial robots in the workplace.

Mr. Muro's analysis looks at the geographic distribution of industrial robots which he defines as "automatically controlled, reprogrammable machines that are capable of replacing labor in a range of tasks".  If you want to get a sense of how pervasive robotics are in some industries, here is a video showing Telsa's use of robots in its manufacturing operations at Fremont:

As you can see, in the case of Tesla, a great deal of the manufacturing process is handled by industrial robots.

Using data from economists Daron Acemoglu and Pascual Restrepo which looked at sales data for robotics, Mr. Muro was able to calculate the number of industrial robots per thousand workers in U.S. metropolitan areas and then plot them on a map as such:

In total, in 2015, there were 233,305 industrial robots in use across the United States.  As you can see, the incidence of industrial robots is not evenly dispersed across the United States, rather, robots are concentrated in the Midwest and Southern states and to some degree in California, in fact, more than half of the robots are located in 10 states led by Michigan with nearly 28,000 robots (12 percent of the nation's total) followed by Ohio with 20,400 robots (8.7 percent of the nation's total) and Indiana with 19,400 robots (8.3 percent of the nation's total).

Despite the general decline in its economy, Detroit had 15,115 robots in 2015, up from 5,753 in 2010 with 8.5 robots per thousand workers giving it the distinction of having, by a wide margin, the most robots of any other metropolitan area in the United States.  Here is a list showing the largest metropolitan areas with the most and least robots per thousand workers:

As you can see when you examine the column showing the annualized percentage change in total robots between 2010 and 2015, there has been rather explosive growth in the use of industrial robots with some areas seeing a near tripling of the number of robots used over the five year period.

In case you thought that only large metropolitan areas were impacted by the use of robots, some smaller towns and cities scattered throughout the former industrial heartland have even more intensively adopted robots.  Elkhart County in Indiana had a total of 4,355 robots in 2015, up from 1,778 in 2010 and has a robot-to-thousand workers ratio of 35.9 to one.  The city of Kokomo in Indiana is not far behind with a robot-to-thousand workers ratio of 35.2 to one, however, it had only 1,274 robots or less than one-third of Elkhart County's total.

What is fascinating about this analysis is the explosive growth in the use of industrial robots over the past five years.  It is no wonder that workers in many industries are feeling threatened, that is, if they still have their jobs.  Much of Corporate America seems to be fully embracing the use of robots; they don't join unions, they don't require bathroom or lunch breaks, they don't call in sick and they don't require their employer to spend money on raises, funding pensions or health care.  In so many ways, it is easy to see why the post-Great Recession improvement in employment has had a very variable impact on American workers and why this recovery feels so different than other post-recessional economic expansions and perhaps, why Donald Trump attracted millions of voters.  The expansion in the use of robots has displaced hundreds of thousands of workers who used to be able to count on a lifetime of work and has, no doubt, had a significant impact on what those who have retained their jobs can expect to earn one the long run.