Does the Internet kill jobs?

tags: unemployment

Here’s an article from the Harvard Business Review which argues that the Internet is killing job creation in the middle class.

The Internet […] has massive displacement effects that are overwhelming the job creation effects.

To date the Internet has been much more effective at eliminating jobs than creating new ones. Exhibit A: Online retailing has directly replaced many jobs and indirectly eliminated many more. Amazon’s extremely efficient distribution system replaces retail stores and their employees. Their warehouses use robots instead of workers.

Those are the direct effects. The indirect effects are the disappearing need for retail space, along with workers who build the stores and maintain them, as well as companies that supply retail establishments with furnishings.

Consider these stats:

Monthly retail sales adjusted for both inflation and population growth are below where they were prior to the 2008 recession – $165 versus $168 billion – and have increased by less than 10% in the last 15 years or about 0.6% per year. Meanwhile, employment in the retail and wholesale trade has dropped from about 21.2 million in 2000 to 19.9 million in 2010.

Again, this is the story of making more stuff using less people, Later in the article, it notes that Google generates $1 million in revenue per employee. Per employee. That’s tough for any traditional business model to compete with.

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