An Ignored Factor in Job Loss and Job Change: The “Working Consumer”

The McKinsey Global Institute’s November, 2017 report deals with the future of work (including job loss and change) through 2030, especially in light of automation (and AI). While the report covers a wide array of causes of job change and loss, it, as is usually the case in economic reports, has nothing to say about the role of unpaid non-marketized “working consumers” (a kind of prosumer) in these changes. This omission is especially striking because the report does discuss the implications of the shift from unpaid non-marketized occupations (those that do such domestic work as “childcare, early childhood education, cleaning, cooking and gardening”) to others that are presumably paid and marketized (e.g., workers in the previously non-marketized occupations who are employed by agencies that sell their services in a broader marketplace). The non-marketized unpaid work performed by prosumers is far more important economically than that of the occupations discussed by the report. Further, unlike domestic workers prosumers are not likely to be marketized any time soon.

Among the many examples of the working consumer are prosumers bypassing the services of tellers and doing their own banking via the internet or on ATMs, doing all of the work involved in making purchases (of all manner of goods and services; for example, buying airline tickets online and bypassing travel agents), serving as their own wait- and bus-persons in fast food restaurants, pumping their own gasoline at self-service stations, and so on. While it is the case that this shift to the working consumer leads to the creation of new paid jobs (computer-related occupations relating to the burgeoning online sites), it is likely, at least in the short run, that job loss far exceeds those gains.

The source of the problem lies in the fact that the McKinsey researchers, as well as other economists and technicians associated with these kinds of reports, lack the concept of the prosumer. As a result they are unable to see, let alone analyze and quantify, the prosumer’s role in job change, primarily job loss. While the concept of the prosumer is gaining increasing attention in sociology (and other fields), it has yet to be noticed by economists. Yet, prosumers are doing infinitely more unpaid, non-marketized work than, for example, domestic workers.

It is also worth noting that advances in automation and IT will bring with them an increase in “prosuming machines” that produce and consume largely on their own. Such machines are likely to lead to significant job loss in the future.  For example, autonomous vehicles will be a cause of job loss for Uber, taxi, truck drivers, as well as those in associated occupations. However, far greater job loss will result from the interaction of working consumers and prosuming machines (e.g. the use of ATMs rather than human bank tellers).

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Sleeping with the Digital Enemy: Salvation for Brick-and-Mortar Shops?

While many brick-and-mortar consumption sites are going bankrupt (Radio Shack, Payless), dying (Sears), or are long gone (Circuit City, numerous dead malls [see deadmalls.com]), several late 2017 articles in the New York Times suggested that it is premature to sound the death knell for brick-and-mortar stores.

Some brick-and-mortar consumption sites, most notably fast food restaurants, are not dying. In fact, they will continue to exist, if not prosper, at least until the day when technology is advanced enough to deliver burgers and fries to our homes digitally (e.g., that can be produced on our 3-D printers, or by even more advanced technologies of the future).  Many other kinds of stores (e.g. supermarkets) will survive for many of the same reasons. Furthermore, still other brick-and-mortar stores will continue to exist if for no other reason than the fact that many people will continue to feel the need to get out of the house and away from their computers, at least some of the time. Since consumption is, for many people, their major form of recreation, this will undoubtedly lead them to updated brick-and-mortar shops, malls, amusement parks, and the like.

There are also hopeful, but contradictory, possibilities for other brick-and-mortar sites such as, making them smaller (more focused, more personal and intimate) or more multi-functional. However, there is general agreement on the need to make such sites more experiential (for example, malls that have fewer stores and more restaurants and movie theaters; showrooms offering more personalized services and an array of amenities such as manicures and a glass of wine). Beyond that, such sites can move beyond a focus on brick-and-mortar shops and, among other things, transform themselves into “event spaces, classrooms, community centers”. While there is some promise in these changes, they seem, at best, dim hopes. The chief executive of Oscar de la Renta is quoted as saying that brick-and-mortar stores are no longer necessarily advantageous and in the second-tier markets they might be considered “millstones”.

The main source of salvation for brick-and-mortar stores is said to be augmentation with that- digital consumption sites- which have been, are, and will continue to be the greatest threat to them. The major hope for many of the brick-and-mortar consumption sites that continue to exist is in synergistic relationships with digital sites. While this will keep some brick-and-mortar locales alive, they will clearly be subordinated to the digital and on life-support. Further, that which is keeping them alive, at least faintly, is the very digital force that has been killing them and will continue to be fatal to them in the future. Brick-and-mortar stores are eagerly climbing into bed with their mortal enemy. If the alliance with the digital world does not kill brick-and-mortar sites, it will reduce them to insignificant appendages to the digital.

Also not offering much hope to the brick-and-mortar world are the material sites Amazon has created (bookstores, convenience stores) or purchased (the Whole Foods chain of over 460 supermarkets). They are destined to be an infinitesimal part of Amazon’s total business. They may be useful for experimentation, the application of the massive amounts of data collected by Amazon.com, and for new bodies of data on consumers, but they are not going to contribute much to Amazon’s bottom line. On the other hand, Wal-Mart will gain much more by its move away from its massive number of brick-and-mortar stores and in the direction of becoming a greater presence in the digital world.