Thursday, January 5, 2017

Another job loss data point

Today, research demonstrated that shared ride of 2,000 cars could easily replace the 13,000 yellow cabs that circle NYC.  The implication is that anywhere between 11,000 and 22,000 jobs could disappear because of an algorithms (and NYC traffic would be positively impacted).  Trust me this is important news, Lyft or Uber via central dispatch can now dramatically improve car sharing opportunities for their drivers.

Now there are apparently 250,000 taxis in the US, which implies about 500,000 jobs that could be largely replaced by 40,000 ride share.  That means that almost 200,000 fewer cars (for taxi) would be bought.

I mentioned this before (many times), but self driving cars are the next step, today at least 90% of a car's life cycle is spend in garage.  Seriously if you drive 30,000km per annum its means that you use your car, on average 2 hours a day, which is 8% utilization.

Lets say that you increase your car usage to 40%, or about 10 hours a day -- which is high, but still achievable, think car sharing -- at an extreme level, but its easy to assume that 10 hours a day in a "restricted car pool" is achievable, then the number of cars you need drops by 75%, since you've just increased car efficiency by 400% (from 10% to 40%).  In 2016, in the United States, 15 million cars were sold, directly manufactured by 1.7 million Americans, moreover another 6 million American are in connected business (parts etc etc).  So the number of cars "needed" in the US just dropped by 75% -- America only needs 4 million cars -- that means that nearly 1.2 million direct jobs in the industry will go and another 4.5 million associated jobs will go too.  Today (ok in 2014) there are nearly 140 million jobs in the US -- the shift I see here is a 5% reduction in the labor force

Finally, the introduction of electric cars will dramatically reduce car maintenance (think mechanics), a modern gas powered car has between 7,000 and 10,000 moving parts, a Tesla has 150.  That reduces dramatically vehicle maintenance costs -- so garage and petrol station will disappear to.

Before taking into account the auto repair business almost 6 million jobs have been eliminated.   the The car repair industry in the US is a US$ 800 billion industry with more than 20,000 garage and workshops.

My point here is important, the world economy is not ready to deal with such massive loss of employment.  Moreover, there are no obvious new sources of jobs since automation is only increasing further.  You could move from Ford to Carrier, but thanks to Donald Trump, Carrier just got US$ 17 million that it will use to "improve productivity" (which means add many many more robots to reduce costs).  In fact, I would not be surprised that carrier could reduce by far more than 700 the number of jobs in the US over the next 6/9 months -- and Trump will say; the jobs are not gone to Mexico, this is the modern age (BTW Carrier probably contemplated automation but the costs were too high -- now they just got a freebie from the government.

It gets much worse -- looking at invoice technology (third party providers) you realize that you can fully integrate your invoicing, accounting and payroll into one application that will export the data directly to the relevant governmental agencies (no more form filling) and to your accountant (that is now software) and that will optimize your tax bill.  In effect, it is possible to automatize a massive percentage of your office's "back office" and several service providers (accountant, lawyers and financial services) will be fully automated.  Already treasurers can manage their financial exposure via bots provided by the large financial institution.

the world of employment is about to be shaken to the core, and the world is ill-equipped to deal with the problem


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