This blog has been in existence for just over a year now. But in that time, I have never addressed the most important reason of all for saving money and building wealth. This is the elephant in the room that no one seems to want to talk about. It is the biggest reason I cringe when I hear people saying things like “I can’t afford to save for retirement, so I’ll just work till I’m dead.” I’m not trying to be alarmist, but it’s time for a dose of reality. Most people think of 65 as a typical retirement age, but the median age is actually 62 and the average is 60. And that’s for current retirees. It is almost certain that those numbers are going to be much lower for my generation.
Why? Automation. Have you toured a factory recently? Hundreds, if not thousands of people probably worked there at one time. Today, you might see ten or twenty people out on the floor, mostly either sitting at computers or maintaining machinery. Yes, some of our manufacturing jobs went to China or other countries where labor is cheaper. But most of them didn’t. Most of them simply don’t exist anymore. And manufacturing was only the very beginning.
In spite of an economy that appears to be stronger than it has been in some time, today’s labor force participation rate is only 63%. In other words, 37% of people who could potentially be working, are not. Mind you, the rate peaked at 67% in 2000 so it’s not quite as dramatic as it sounds…yet. But in a country of 300 million people, that 4% difference amounts to over 10 million. And the trend isn’t likely to reverse, but to accelarate.
For example, tens of millions of people work in retail. Not only do the vast majority of those jobs pay poorly to begin with, but most of them are not going to be around for long. Remember when automated checkout lanes started popping up? At first, they were a novelty. Today, they are in as many stores as not and taking up more and more lanes. Instead of four or more cashiers, there is now one employee supervising all those checkouts. And it won’t stop there. Walmart is already piloting robot janitors that clean the floors and others that keep aisles stocked. Once they start replacing employees with these robots en masse, the economy of scale factor kicks in, the robots become much cheaper to buy, and other stores will quickly start following suit. They will have to. If they don’t, Walmart’s costs will be lower, allowing them to cut prices and take market share.
Suddenly, tens of millions of not so great jobs don’t even look very safe. The technology already exists to replace many of the jobs in fast food restaurants. Those people who have made the news over recent years demanding $15 an hour may not realize it, but by the time anyone makes that much money to work in fast food, the job will likely involve maintaining robots and computers. And there will be far fewer people doing it than there are now.
Millions of people drive for a living. What happens when the autonomous driving technology every auto manufacturer on the planet is working on cramming down our throats as quickly as possible becomes viable? Even more people sitting at home with no way to earn a living. This technology is no more than a decade or two from reaching that point. And technological progress tends to move faster than anyone expects it will.
By the way, if you think this will stop once most jobs lower skilled have been eliminated, you haven’t been paying much attention. Every day, companies are asking employees to do more with less. And even still, no job seems to be safe. It is never enough. That’s because eventually, technology will replace almost all of us. In some cases, it isn’t capable of doing it yet. In others, it’s just a matter of increased production bringing the cost down before it’s goodbye human employees. There are literally computers out there that can compose music. As in nothing was there before and suddenly, now there is a totally original set of notes. I have friends who work pretty high up in the technology world and every now and again I hear about these things from them. And if computers can create music, they can do a lot of other things that may not seem possible right now as well.
We as a society have some serious thinking to do. For as long as technology has existed, the question has only been “can we do it?” I believe we have long since passed the point where we should have started asking “should we?” We’ve already seen what happens when human labor becomes less and less in demand with each passing day – ugliness. More and more people have found themselves on the losing end of things and are living the consequences. It’s not just a lack of money. It’s a loss of purpose. We’ve seen mental health issues skyrocket and this is one of the biggest contributors, if not THE biggest. What is it going to look like when the majority of people are literally economically obsolete because there is a robot or computer that can do the same things they can, but more efficiently and effectively? We are a lot closer to that day than most people are willing to admit. In fact, the technology already exists right now. I’d say a decade or two is an optimistic estimate of how much time we have.
I don’t have the answers. I don’t know if some sort of universal basic income scenario is going to work. From what I’ve read, the experiments that have been done thus far have not yielded encouraging results. What I do know is this. Whatever the not so distant, mostly automated future looks like, I would rather face it with assets at my disposal than without. A lot of people talk about early retirement like it’s an optional luxury. For many people, I expect it will be totally the opposite. So to those who are taking a “let tomorrow take care of itself” approach to preparing for the future, please, let this be a wake up call. Fail to plan, plan to fail. And there is at least some chance that in our lifetimes, failure will have much starker consequences than it has ever had before.