The Inevitable Self-Service Unemployment Crisis, Part 1

By Gary Deel, Ph.D., JD
Faculty Director, School of Business, American Public University

Note: This is the first of a five-part series that will appear each Tuesday.

For hundreds of years, horses were absolutely indispensable to our way of life. We used horses for transportation and logistics, for farming, for racing firefighters to burning structures, and even to move men and material in war.

Then suddenly, in a fraction of a century, technology including railroads, automobiles, mechanical farm equipment, artillery, jeeps and armored personnel carriers supplanted horses. What was once an invaluable component of human affairs was relegated in an instant to a hobby or special-interest commodity.

In First World countries, horses are no longer used for basic transportation, for cultivating fields, for delivering the mail, or for riding into battle. In fact, in major cities you’re unlikely to ever encounter these majestic animals at all anymore, save for the occasional policeman on horseback or the horse-drawn carriage in the park. For the most part, horses have literally and figuratively been put out to pasture.

Some Folks Still Believe Humans Are Invulnerable to This Same Fate

Despite this very clear precedent, some folks still inexplicably believe humans are somehow invulnerable to this same fate. But technology is rapidly proving them wrong. In no field of endeavor is this more apparent than in self-service technologies. There is absolutely no reason to believe that we humans will always be necessary components of the economies we create.

This five-part series will break down how and why humans will not remain competitive against the continued development and improvement of self-service technology; what the implications are for the future of humanity; and how we might best prepare for these eventualities.

Self-Service Technologies Are Rapidly Eroding the Job Markets 

Self-service technologies are rapidly eroding the job markets of working- and middle-class people. The term “self-service technology” is loosely defined as any technology that allows consumers to produce, purchase, and/or consume products and services without a customer-employee interaction.

There are two main types of self-service technology. The first relies on business-provided devices such as tablets, kiosks and vending machines that consumers can use onsite to perform transactions. The second type of self-service technology utilizes consumer-provided devices they can use to access the internet and do business over the web, onsite and remotely.

The earliest examples of self-service technology date back to the first half of the 20th century, and include coin-operated vending machines and nickelodeons. Later, pay-at-the-pump gas stations and automated teller machines (ATMs) sprang up all over. With the advent of electric cars, many young people today cannot imagine a time when one had no choice but to drive into a gas station for a fuel fill-up or wait in line for a bank teller to deposit or withdraw money.

In the last two to three decades, however, the list of ubiquitous self-service technologies has exploded. A few examples of some of these expansions include:

• In retail stores, including Walmart, Target, Home Depot, Lowe’s, and other major chains, checkout clerks have been replaced by self-service checkout machines that allow or require (depending on how you feel about it) customers to scan, bag, and pay for the items without any employee interaction.
• Most airlines are employing kiosks for flight check-in, reservation changes and baggage checks.
• At hotels, similar kiosks are used for check-in, check-out, payment processing and even concierge services.
• Many major chains have installed tablets on each table by which diners can order their food and drinks and pay their checks.
• At movie theaters, kiosks are alternatives to box offices for ticket purchases. Some theaters also have technology-based checkpoints at the traditional ticket-taker stand. In other words, the high school kid that used to tear your ticket and point you in the direction of your screen is being replaced by sophisticated ticket bar code scanners and turnstiles.

Majority of Mass Transit Transactions Are Processed at Kiosks or by Fare Cards

In most major cities, the majority of mass transit transactions — for buses, trains and ferries — are processed via kiosks or by fare cards. Additionally, other forms of transportation are now  shifting to self-driving vehicles, scooters and mopeds. Some auto rental companies have completely automated their systems so there is no need for employee intervention at check-in or check-out.

It’s equally important to note that, in virtually every instance of self-service technology applications, customers also have an e-commerce option. That is to say, in retail, airlines, hotels, restaurants, movie theaters, and transportation services, there is almost always a website or mobile app available for customers to access the same services that are available at onsite kiosks.

It’s also important to point out that, even as technological improvements have skyrocketed in the past few decades, we still have the same footprint of simple technologies from earlier times, such as coin-operated vending machines, pay-at-the-pump gas stations and ATMs. They are all still solid staples of our society.

But it is the growth of new technologies that is primarily responsible for the proliferation of our self-service lifestyle. E-commerce is a good example. In 1998, e-commerce was virtually non-existent as the internet was still in its infancy. E-commerce accounted for 0.5% of all U.S. sales, and was worth $15 billion.

By 2008, online sales transactions accounted for 3.6% of all retail business in the United States or $142 billion. And in 2018, e-commerce accounted for 14.3% of all U.S. retail sales, with a market value of $517 billion.

Retailers Are Cutting Traditional Checkout Space for Self-Service Machines

Onsite devices are also seeing similar upticks in demand. According to Retail Customer Experience, more than half of retailers are cutting their traditional checkout space in favor of self-service machines. Kiosks generated $218 million in 2016, and are expected to grow by more than 7% by 2021.

The vending machine industry has struggled in recent years, partially because many machines are still cash-driven while American society is increasingly becoming cashless. Nevertheless, the industry still generates more than $8 billion a year in the United States.

Given these trends, it’s easy to imagine what the status quo will look like in another 10 or 20 years. Self-service technology is poised to replace humans in most corners of daily commerce.

Why is this shift in the means of production and consumption moving at such a rapid pace? In the second part of this series, we will discuss the motivating factors behind the switch to self-service technology.

About the Author

Dr. Gary Deel is a Faculty Director with the School of Business at American Public University. He holds a JD in Law and a Ph.D. in Hospitality/Business Management. He teaches human resources and employment law classes for American Public University, the University of Central Florida, Colorado State University and others.