Where the Boys Are – or Were!

As the millennials and Geneation-Z are displaced by machines and technology, where do they go?

James Lyman BSAE, BSEE, MSSM

I don’t know why, but in reading and thinking about jobs being replaced by machines and automation, I think of the 1960 beach party movie ‘Where the Boys Are’ or rather the title alluding to where are the people who lose their jobs to technology. Where do they go? Today, jobs are lost before young people even start looking, leaving them with few options and lower pay. In the daily news, I see story after story of new emerging technologies which will further reduce the available jobs, leaving more of the millennials and generation-Z with a lesser future.

I made a brief list of emerging technologies, found now the news, which will displace people and their jobs, technologies designed explicitly to eliminate the cost of labor and therefore people’s jobs while others will inadvertently take jobs away. Already, there is a long list of jobs taken by machines and technologies such as machinist, factory workers, construction trades, secretaries and clerk typist. Here’s just a few-

Cashiers: For several years now the big box stores have worked on systems to total up the purchases of a customer, collect their monies and send them on their way without any human required. Every major brand name retailer now has a section of automated checkout lines where the customer scans each item, drops it in a bag and makes payment to a machine. To remain competitive, retailers are looking for anything that will reduce their labor cost, and the cost of human cashiers is significant. Automatic checkout is now to the point where a customer only has to walk out the door and he’s purchases are automatically made when passing through a portal.

Truck Drivers: No doubt, you have seen more than one news article about self-driving or robot automobiles which drive themselves through traffic while the driver just sits and enjoys the scenery. But the declared target market for this technology isn’t the individual car commuter, it’s the truck drivers, both delivery and long haul. That’s where the money is. And it’s not that far away, with UPS, the U.S. Postal Service, and some retail stores actively experimenting with robot trucks. Just recently, the postal service had a robot semi-truck make daily deliveries of mail from Arizona to Houston Texas via I-10, to evaluate their feasability. There’s lots of money to be saved by eliminating truck drivers, both from their pay and by reducing accidents since the vast majority of truck accidents are ‘driver error’.

School Teachers: The cost for school teachers, both in public and private schools, consumes tremendous amounts of dollars. With school boards continually strapped for monies and high taxes, and the quality of American education closer to third world nations instead of the west, there’s big incentives for school systems to seek cheaper improvements. The technology for ATS (Automated Teaching Systems) is already here, where pupils would have individual tutors geared towards their academic needs. When an education company adopts the marketing model of cable and satellite television to ATS, the technology will sweep through schools and eliminate teachers. When the company fills the classroom with it’s own custom built furniture and computer network, while the school doesn’t pay one red cent for any of it, when the cost of educating a student is two-thirds to one-half the cost of a conventional teacher, the technology will flood into the American schools and classrooms. An instant revolution in education!

Airline Pilots: Even very highly skill professionals such as the pilots who fly the airliners you travel in, are subject to displacement by machines. Boeing Aircraft has already announced they are working on pilotless airliner designs, but keep in mind that when automatic elevators where first introduced, many people refused to ride on any elevator without a human operator. However, as automatic elevators became more prevalent, more people rode machines controlled by machines. Like automatic elevators, pilotless airliners will come to be accepted, after all- more than 95% of airline crashes are from pilot error. Automatic landing systems were developed in the late 1960’s and have been used to land the Space Shuttle. Today, for most of the flying time, the airline pilots just sit in their seats as computers fly the airplane for them.

Retail Workers: This is a job field that has already seen massive displacement of workers over the decades. Nevertheless, companies are experimenting with robots to stock their shelves, clean the floors, check inventory and other tasks that are now being done by humans. The online retailers have gone even further using automated warehouse technologies to eliminate even more human workers, making their operations much cheaper than traditional brick-and-mortar stores with all their expensive retail workers.

Lawyers: I use attorneys as an example of how technology displacement occurs by freeing up qualified people to become lawyers. This has been going on for the last several decades to the point that now 20% to 50% of new graduate attorneys are unable to find jobs as lawyers. Their jobs have been eliminated via oversupply of lawyers. But it’s getting worst. IBM’s new artificial intelligence technology Watson, which went on the game show Jeopardy and beat the pants off of the two highest winning champions, is now commercially available. Watson’s declared target market is medicine and the law . . . automated lawyers.

Artist and Song Writers: Now there’s even computer programs available to create art pictures and write the tunes and jingles used in advertizing. These are career fields that just a few short years ago, most people would have emphatically said was impossible to replace people with machines. This shows the reality that no one is immune from technology displacement, for no matter what the job might be, no matter what the pay bracket is, you can be replaced.

Like the movie ‘Where the Boys Are’, we face the question, where are the boys . . . and girls of our society going to go to? The answer- look at the images of the homeless people camped out on the streets of Los Angalais and San Francisco . . . because that’s where they end up!

28 February 2020

1) Many on Wall Street are betting the Federal Reserve Bank will again reduce the cost of borrowing in light of the coronavirus economic threat. Futures contract traders consider there is nearly a 60% chance of a rate cut this March, when the Feds meet, in an effort to counter the effects of the virus on America’s economy. While it appears the spread of the pathogen is declining in China, elsewhere in the world it’s on the rise.

2) Oil prices continue its downward spiral with a twelve month low for U.S. crude. The drop in oil prices is in anticipation of slowing of the U.S. and world economies, a direct result of the spreading coronavirus threat. China, a major world importer of oil, has cut back purchases as it containment policies reduces oil consumption from limited travel to and from major cities, as well as travel within those cities.

3) The home food delivery business continues to grow with DoorDash filing the paperwork with the SEC (Security and Exchange Commission) to start the IPO (Initial Public Offering) process to offer stock to the public. The IPO process has met with poor results from unprofitable companies like Lyft Inc. and Uber Technologies Inc. while WeWork was forced to abandon its IPO last year because of a poor showing of its stock. DoorDash faces the same challenges as Lyft and Uber..

4) Stock market closings for – 27 FEB 20: This is the worst point decline ever for the three markets. The Dow has dropped 3,000 points since Monday.

Dow 25,766.64 down 1190.95
Nasdaq 8,566.48 down 414.30
S&P 500 2,978.76 down 137.63

10 Year Yield: down at 1.30%

Oil: down at $46.34

27 February 2020

1) South Carolina has the lowest unemployment rate with 2.3% which ties with Utah and Vermont. But while there’s lots of jobs, they mostly pay low wages making it hard for people to make a living. The state is typical of states across the U.S., with job growth looking strong on the surface, but much of the work is meager wages and few benefits. As automation pushes more people down to the lower paying ranks, they find themselves struggling to acquire the basics of living, even with wages that are above the minimum wage.

2) With the government’s announcement that Americans should prepare for a Covid-19 (coronavirus) crisis, and the continual spread of the virus, prices of hygienic masks have surged upwards. Tracking the product on Amazon shows an immediate rise just twenty-four hours after the announcement. A pack of disposable masks which were $125 surged to $220 in just three days, showing the deep concerns people have to the coronavirus threat.

3) Micro units are small dwellings of about 350 square feet or less, which may be the answer to affordable housing. The micro unit comes complete with a kitchen, bathroom and living or sleeping space comparable to studio apartments in Paris, Tokyo or Rome. This gives everything needed for basic living, but little else. Micro units are approximately 20% to 30% cheaper than conventional sized units, and are most popular with young single working adults, age under 30, who are willing to compromise space for location, amenities and cost savings.

4) Stock market closings for – 26 FEB 20:

Dow 26,957.59 down 123.77
Nasdaq 8,980.78 up 15.16
S&P 500 3,116.39 down 11.82

10 Year Yield: down at 1.31%

Oil: down at $48.65

26 February 2020

1) Global trade experiences its first full-year drop since the financial crisis, with weaker world growth and a manufacturing recession taking their toll. The spread of the coronavirus, with its impact on businesses and households, is increasingly pulling world economics down. While the decline isn’t huge, it is the first since 2009 and follows growth of more than 3% in 2018. The virus has shut off huge areas of China causing the closing of factories and now is spreading internationally.

2) The markets continue to follow the Dow’s thousand point drop with more large loses. To add to the financial worries, bond yields are slipping down, raising concerns that the global economy is slowing significantly because of the spreading coronavirus. There is heavy buying of treasuries in order to shelter money, with the ten year Treasury yield traded at 1.32%, an all time low, with the thirty year bond yield also reaching a record low. Analysts are already cutting their earnings estimates for the first quarter, further dampening hopes for better near term growth.

3) Retail giant Amazon has opened its first Go Grocery store in Seattle. The automated store is cashierless where customers walk in, and get what they want, and on walking out, computer and sensors electronically charging their purchases. The store is over 10,000 square feet and has about 5,000 items including fresh produce, meats and alcohol. This is just another example of the grocery retailers efforts to automate their operations and reduce labor costs.

4) Stock market closings for – 25 FEB 20: Dow is down 1900 points in two days and some experts fear the markets are 500 points away from being a correction.

Dow 27,081.36 down 879.44
Nasdaq 8,965.61 down 255.67
S&P 500 3,128.21 down 97.68

10 Year Yield: down at 1.33%

Oil: down at $50.10

25 February 2020

1) The drug maker Moderna Inc. has shipped its first batch of coronavirus vaccine to U.S. government researchers for human testing. The government will test if the experimental shot can help suppress the epidemic that originated in China. Test are expected to start by the end of April on 20 to 25 healthy volunteers to see if two doses are safe and can induce an immune response that protects against infection. Using the virus’ genetic sequence, Moderna was able to make a fast response in developing a vaccine.

2) The United States Supreme Court has ruled on a decade long legal battle against Apple. The decision against Apple leaves the company open to paying $440 million dollars to the technology licensing company VirnetX for violations of its patents. The legal battle has been on going since 2010 for violations of VirnetX four patents. With the ruling against Apple, the case will be sent back to the district court in Texas to enforce the $440 million damages.

3) Canada’s oil sands industry may have built its last big mine. The cancellation of Teck Resources Ltd.’s Frontier project in northen Alberta, which was expected to produce more crude than OPEC member Gabon, has seen most of it’s foreign investors fall out. Other proposed mines may not be able to clear the hurdles that foil the Frontier project, thus ending an era of mega-projects that had made Canada the largest importer of crude to the United States. The dropping of crude oil prices has had a detrimental effect on the industry.

4) Stock market closings for – 24 FEB 20: The Dow closes down 1,000 points wiping out a year’s gains.

Dow 27,960.80 down 1031.61
Nasdaq 9,221.28 down 355.31
S&P 500 3,225.89 down 111.86

10 Year Yield: down at 1.38%

Oil: down at $51.34

24 February 2020

1) To settle its civil law suit over fake accounts, Wells Fargo, America’s fourth largest bank, is paying $3 billion dollars. In order to meet sales quotas, employees opened millions of savings and checking accounts using the names of actual customers. Wells Fargo is accountable for tolerating fraudulent conduct, which was remarkable for its duration and scope. The bank company took several steps to conceal the accounts from customers, such as forging signatures and preventing other bank departments from contacting customers to survey their accounts.

2) John Deere, a manufacturer of farm and construction equipment, has experience a first quarter profit, signs that the U.S. farm market is stabilizing. The manufacturer has been buffeted for the last two years by the U.S. – China trade war, which has pushed agriculture business down leaving farmers struggling to turn a profit.

3) Facebook will stop listening to and transcribing messenger voice for its speech recognition technology development. But the company still needs the voice recordings to improve its speech recognition, so the company will pay selected users to record snippets of audio using a development program called ‘Pronunciations’. Test subjects will have phrases recorded, which Facebook will specify, and in turn will receive compensation.

4) Stock market closings for – 21 FEB 20:

Dow 28,992.41 down 227.57
Nasdaq 9,576.59 down 174.38
S&P 500 3,337.75 down 35.48

10 Year Yield: down at 1.47%

Oil: down at $53.46

20 February 2020

1) The chip maker Intel announced a chip which makes quantum computers smaller and faster, thus bringing the promise of quantum computer to realization. Working with QuTech, Intel has developed a new chip called Horse Ridge that should make quantum computers smaller, faster and requires less deep cooling. The system on a chip uses Intel’s FinFET low power process, having four radio frequency channels that control a total of 128 qubits, which is more than double the 49 qubits from back in 2018. For a quantum computer to be viable it needs over 1 million qubits.

2) The technology innovation company Alphabet has ended its work on Makani, a design to generate power using wind turbines attached to kites. While demonstration flights were successful, the path to commercialization was considered to be longer and riskier than expected. Makani was a seven year project which developed a 20 kilowatt demonstrator kite into a utility scale model generating 600 kilowatts.

3) Boeing Aircraft’s 737 MAX has met with another problem- foreign-object debris in the fuel tanks of several aircraft. Boeing is conducting a voluntary inspection for debris in undelivered aircraft with further action based on its findings, but doesn’t anticipate this problem will delay re-certification of the aircraft and it resumption of deliveries. Furthermore, Boeing plans to inspect the fuel tanks on all undelivered 737 MAX planes.

4) Stock market closings for – 19 FEB 20:

Dow 29,348.03 up 115.84
Nasdaq 9,817.18 up 84.44
S&P 500 3,386.15 up 15.86

10 Year Yield: up at 1.57%

Oil: up at $53.56

19 February 20

1) Negative yielding debt are bonds with an interest rate below 0%. Since the peaking of the U.S.- China trade dispute, a third of all investment grade bonds have rates below 0%, for a total of $17 trillion dollars. This forces portfolio managers into riskier assets to deliver returns. But because the global economy is not growing any more, the bonds may not be saleable.

2) The Boy Scouts of America filed for bankruptcy protection under Chapter 11 in the face of 275 abuse lawsuits and another 1,400 potential cases to come. The organization has already paid out more than $150 million dollars in settlements and legal cost. Its strategy is to contain financial damage of abuse scandals and emerge as a more sustainable organization.

3) The luxury automaker JLR (Jaguar Land Rover) is facing halts in their UK production plants because of supply chain problems from the deadly coronavirus in China. The company is racing to prevent plant closures by the end of the month, going to such extreme measures as flying critical parts out of China in suitcases. Fiat Chrysler’s European plants are facing similar closures from parts shortages.

4) Stock market closings for – 18 FEB 20:

Dow 29,232.19 down 165.89
Nasdaq 9,732.74 up 1.57
S&P 500 3,370.29 down 9.87

10 Year Yield: down at 1.56%

Oil: up at $52.10

18 February 2020

1) In order to help contain the Chinese coronavirus outbreak, China’s central bank has started deep cleaning and destroying potentially infected cash. The virus appears able to survive on surfaces for many hours which is why buildings in affected areas are regularly disinfecting elevator buttons, door handles and other commonly touched surfaces. Since cash money changes hands multiple times in a day, it too is a potential media to transmit the virus. The cash is disinfected with ultraviolet light and high temperatures, then stored for seven to fourteen days before returning to circulation.

2) The price of wine is expected to drop to its lowest levels in five years, in part because of a surplus of grapes in California. Additionally, there is a decreased demand for wine, with the lower prices lasting up to three years. Vineyards began planting thousands of acres of new vines in 2016, plus more efficient harvesting methods have combined to increase the supply of grapes.

3) GM (General Motors) has decided to pull out of Australia, New Zealand and Thailand as part of their strategy to exit markets that don’t produce adequate returns on investments. The car maker has 828 employees in Australia and New Zealand and another 1,500 in Thailand which will be eliminated.

4) Stock market closings for – 17 FEB 20:

Dow 29,398.08 down 25.23
Nasdaq 9,731.18 up 19.21
S&P 500 3,380.16 up 6.22

10 Year Yield: down at 1.59%

Oil: down at $51.92