Students looking to put some extra cash in their stocking this holiday season may end up with a lump of coal instead.
Traditional youth holiday job opportunities are increasingly being automated. Online shopping rates are expected to reach all-time highs this holiday season, growing 18 percent to roughly half of all shoppers. Amazon added 120,000 seasonal employees this year to meet the online shopping demand. That’s great for jobseekers in cities with Amazon warehouses, but not so great for those in the vast majority that don’t. These jobs are added at the expense of local mall jobs that have been a rite-of-passage for a generation of young jobseekers.
Other job opportunities that are traditionally filled by young people, including those at fast food and grocery stores, are also increasingly being automated. McDonald’s recently announced ordering kiosks throughout the entire country and introduced clamshell grills that eliminate the need to flip burgers. Other employers like Panera Bread and Chili’s Grill & Bar have also introduced self-ordering kiosks and tabletop tablets. According to one analysis from Cornerstone Capital Group, such systems can pay off in two or three years.
There’s little policymakers can do to slow this automation trend, but they shouldn’t exacerbate it with minimum wage increases that artificially increase the cost of entry-level labor and make automation more financially attractive for employers. Yet that’s exactly what much of the country is doing. Forty-two different state and local minimum wage increases are taking place on New Year Eve or New Year’s Day.
Online shopping, tablets, and kiosks are just a taste of what’s to come. Eatsa, a fast-casual restaurant with that has almost no employees, has five locations — all in cities or states that have passed a $15 starter wage. Amazon’s physical grocery store in Seattle uses sensors and gates to automatically identify, tally, and charge the items in customers’ carts. Self-service kiosks have already reduced cashier opportunities; this technology – which has implications beyond Amazon’s nascent grocery business — may eliminate them.
A Starship delivery robot, whose founder points to a rising minimum wage as a demand driver for his business, traverses the streets of San Francisco with packages. Momentum Machines has a burger making robot whose goal is not only to reduce employees but to “completely obviate them.” And Zume Pizza in Silicon Valley says that robots will be creating and cooking pizzas by themselves within months.
While widespread use of these futuristic technologies are still a long way off, that’s cold comfort for jobseekers feeling the pain now. An Oxford University study estimates that automation will replace one million jobs in the United States by 2020.
These aren’t jobs young employees can afford to lose, considering that youth employment has only negligibly improved since its Great Recession depths.
Research indicates that the implications of youth joblessness go far beyond just the loss of some extra spending cash. Recent research by economists at University of Virginia and Middle Tennessee State University finds that students with part-time or seasonal work experience earned incomes that were 20 percent higher than their peers 6-9 years after graduation. This earnings premium is likely due to the invisible curriculum of soft skills like customer service and time management that first jobs teach – skills that help employees throughout their entire careers.
Addressing automation’s impact on stubbornly low youth employment is a major societal challenge – one which will likely only increase in the coming years. Policymakers should start with a “first do no harm” approach and avoid pursuing further minimum wage increases that hasten the automation of entry-level jobs. That would be something for young jobseekers to celebrate this holiday season.
Michael Saltsman is research director at the Employment Policies Institute, which receives support from businesses, foundations and individuals.