I told you so.
This is something that I openly predicted for a number of years. While many professed the idea that "technology always creates more jobs than it destroys" mantra, I stated how AI coupled with robotics were going to wipe out jobs.
There is a case that can be made we are already seeing this in the technology sector. After all, who would be the most likely companies to implement AI first? That would be those designing it.
While this is not widespread at the moment, we are seeing the early signs how this could affect labor markets.
In other words, we can expect the unemployment rate of developed countries to increase regardless of what the economy is doing. No longer will high unemployment be a sign of a bad economy. Instead, technological transformation will be the cause. Of course, we will see how many actually catch onto this.
Amazon just made a major announcement that will affect 600K jobs in the future.
Amazon To Automate 600K Jobs
A greater portion of the economic model is moving from labor to capital. This is another point we have hammered over the past few years. Jobs are going away and people need to embrace this idea.
Amazon is being coy with how they are approaching this. In fact, there is a lot of corporate speak taking place. This will change as soon as the floodgates open.
The New York Times got a hold of an internal Amazon memo that discussed the automation of the company. Jobs being done by robots is what caught everyone's attention.
Executives told Amazon’s board last year that they hoped robotic automation would allow the company to continue to avoid adding to its U.S. work force in the coming years, even though they expect to sell twice as many products by 2033. That would translate to more than 600,000 people whom Amazon didn’t need to hire.
Notice the nuance. This is not talking about laying people off. It is a similar move to what Marc Benioff and Salesforce said at the end of 2024. He stated his company would not hire any engineers in 2025 yet expected to increase its code output by 30%.
The reason was due to the advancement of AI.
Amazon is dealing with a physical component, thus has to adapt in a different way. The goal is clear.
At facilities designed for superfast deliveries, Amazon is trying to create warehouses that employ few humans at all. And documents show that Amazon’s robotics team has an ultimate goal to automate 75 percent of its operations.
Why stop at 75%?
Fallout Happening Everywhere
Amazon is concerned about the fallout. Since it is one of the leaders, there is a target on its chest.
Amazon is so convinced this automated future is around the corner that it has started developing plans to mitigate the fallout in communities that may lose jobs. Documents show the company has considered building an image as a “good corporate citizen” through greater participation in community events such as parades and Toys for Tots.
This will be a temporary situation.
If Amazon is heading in this direction, we can presume Walmart is also thinking along the same lines. Then we have other retail establishments that run warehouses.
The impact, even if existing jobs are not lost, is the fact that hiring will, at some point, cease. Those who end up losing their jobs, for whatever reason, might find it difficult to get another one.
As this ripples throughout the job market, the numbers could get rather ugly.
To me, the debate is one of speed. Some believe this will be an 8-10 year process. Then we have some on the aggressive side who see a major disruption in 2-3 years, at least in the white collar segment.
Each day I come across videos that assert Grok5 could be AGI. In the real world, this does not matter. AGI or not is an academic exercise. Business depends upon implementation. How much benefit can a company receive by using the technology?
At this moment, it is still lagging. What AI can do as compared to what is employed is glaring. Humans are not great at adapting.
That said, another two years could see a major shift. Companies are going to keep pushing. A lot of office jobs that are basic in nature could be wiped out.
I predict Amazon is just the first. We will see more announcements like this coming out over the next couple years. Companies are going to try and keep it quiet but, as we see, this is difficult to do.
Stocks will benefit as those who "own" the AI stand to gain the most. Labor is the big loser in this.