Monday, April 23, 2012

The Virtual Economy Hits Jobs

According to Bill Davidow of the Atlantic (2012, April 10), the impact of the emerging virtual economy on jobs introduces some interesting arithmetic with regard to labor productivity and jobs:
Walmart has some two million employees, and annual sales of around $200 billion. Given that many work part-time, I figure that the company has sales of around $100,000 per employee. With 56,000 employees in 2011, Amazon generated a little over $800,000 per employee.... Here's the challenge: In the past, every million-dollar increase in economic output generated on the order of ten jobs. In the future..., it may generate only one or two.
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If we accept that firms such as Amazon are the business models for the future economy, then the future of jobs in America gets gloomy fast. The only safe haven for labor is to acquire high productivity skills that earn premium wages in the still emerging virtual economy.

Source: Davidow, B (2012, April 10), How Computers Are Creating a Second Economy Without Workers, Atlantic.

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1 comment:

Anonymous said...

Offhand, I see what looks like a logical flaw: Most or all virtual businesses sell "stuff" of some kind... which has to be produced, stored and shipped from somewhere (typically, by a network of independent suppliers). Therefore e-commerce firms like Amazon are a superstructure over and above the bricks-and-mortar businesses -- not a replacement for them. The implication is that e-commerce creates additional jobs, rather than replacing jobs in physical commerce. The information economy changes underlying economics only for the narrow set of industries for which the product itself transforms from physical to virtual (books, music, and eventually films).

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