The Death of Retail

…and what it means for the employment of the youth.

A couple articles ago, I briefly talked about how automation is starting to take hold in fast food businesses.  It is certain that the development of this technology will only accelerate.  But there is something else: retail is dying.

These two threats to the employment of the young lead me to predict that within two decades, there will be a tangible and perhaps serious crisis when it comes to the employment of the young and under-experienced.

Strictly speaking, retail will never completely die off – some things can never be practically fulfilled by amazon.  But as the baby boomers – the bulk of the consumers that support big box retail – die off, retail business will shrink because those consumers won’t be replaced.

Retail does seem, at the surface, to be plunder on the high seas.  Typically 100% markup on housewares, and for clothing it is much more, perhaps 300%+.

But retail served an important function: it served as a buffer between the producer and the consumer.  By buffer, I do not mean a simple middleman.  You see, manufacturers prefer to produce in bulk quantities, as that lowers the individual unit price of each product.  However, the market is not immediately willing to purchase bulk quantities, at any price.  So retailers accept the risk of buying large quantities of goods and then stocking them for purchase at the market’s leisure.  There is always the possibility that those items won’t sell, hence the high markup on the prices.

All well and good.  However, it’s obvious that Amazon and other services, while still technically playing the role of a retailer, can offer goods at a lower markup because the costs of warehousing and automation are much less than public retail space.  This is fairly obvious.  However, it means that there is another threat to the employment of the youth and under-experienced persons.

These are defined as 16 – 24 year olds, my generation, who may not yet have achieved their college degrees or may have just recently.  The statistics concerning this generation are a little less straight forward given that many of them work only seasonally, or not at all.

Nearly 12 percent of the participating youth workforce is unemployed.

What can we expect to happen when retail and fast food jobs begin to decline in number?  This will obviously mean that the effective market rate for youthful under-experienced labor will decrease to the lowest possible rate – minimum wage.  You’ll find that many jobs, especially in fast food situations, are $1 or $2 above minimum wage.  (the irony is of course, that it’s the calls for increasing minimum wage that helps to motivate further automation.)

I’m not really sure what, if anything, can be done about this.  It’s just a new reality.



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