Amazon has announced that it will purchase Whole Foods for $13.7 billion. And so the scaremongering begins.
"People are worried Amazon will replace Whole Foods workers with Robots", said a Washington Post headline Friday afternoon (Interestingly, Amazon founder and CEO Jeff Bezos also owns The Washington Post). The story claims "worker advocates worry that many of Whole Foods' 90,000 employees may be next."
But let's be clear: Amazon's latest purchase is good news, not bad.
For one, the risks of a mass staff culling are overstated. Bezos is not an idiot. He knows that Whole Foods has a very different business model than Amazon.com. Where Amazon focuses on selling goods via Internet browsers, Whole Foods focuses on selling a culinary experience. The difference is important. As long as it's delivered on time and in good order, customers do not care how their Amazon.com product arrives.
In Whole Foods, however, customers expect interaction in return for paying a premium for commonly available goods. Turning Whole Foods into a robot factory would be the height of idiocy. It would preference low-costs against customers who pay more for human service. If his past experiences are a guide, Bezos will inject creativity into Whole Foods. That's a positive thing.
And that speaks to another rationale in favor of this purchase: fixing Whole Foods.
After all, today, facing increasing competition, Whole Foods is struggling to maintain its market position. And unless Whole Foods is fixed, each and every one of its employees has an uncertain future. But if Amazon's purchase can produce efficiencies, including increased automation, that lower costs, those savings will translate into more affordable options for customers. In turn, Whole Foods will be able to attract more customers, and that will put the company's employees on a more sustainable footing.
The key here is that Bezos will also be aware that higher-skilled Whole Foods employees are the key to the future. That human capital base is instrumental to the brand's long-term success. Without it, customers can simply buy choice goods at Walmart, Safeway or Giant.
Ultimately, however, Amazon's purchase forces us to consider a broader issue: whether job losses in low-skilled positions are good or bad.
The Washington Post article would suggest they are a bad thing. But I disagree. Assuming that job losses are a bad thing requires a problematic assumption — namely, that displaced workers are incapable of finding work elsewhere. They are not. Yes, new technologies such as automation are an inevitability. And because they offer the prospect of lower costs for the majority (the customers), they will continue to play a growing role in the economy. But this is a challenge, not a disaster.It's a challenge to our leaders to find new ways to boost our human capital. We need a workforce of higher skills and greater productivity. That means better education system, but it also means a greater focus on nontraditional educational forms (such as apprenticeships). That's the way to a higher-wage, higher-employment economy.
In that sense, Amazon's revolution can be a good thing.
It's a wake-up call for the future. We can recognize reality and accept reform. Or we can sit idle and let modernity kill our economy.