Wednesday, September 21, 2016

Self-driving cars and the auto service industry

On the heels of a big new regulatory rollout concerning the development and deployment of self-driving cars, Conor Sen makes some good observations about the technology's likely effects on urban life:
The final battle, should the first two problems be solved, will be about how to repurpose street parking and garages, especially in single-family residential neighborhoods. With street parking, some will argue that streets should be narrowed and sidewalks and paths widened, allowing for a better pedestrian experience and more cycling. Others will argue for increasing the percentage of land that can be built upon, at which point the nimby activists will rise up to shout "not in my backyard."
Self-driving cars present a fascinating and diverse set of possibilities, and informed thinkers have sliced and diced the issue from nearly every angle: urban planning and design; public safety; social justice (poverty, age, disability); lifestyle/time management; real income effects; business creation; labor market effects.

Discussion about labor market disruption caused by self-driving cars is politically salient, but often fairly cursory: truckers, bus drivers, delivery drivers and cabbies are screwed, as well as many industrial workers in factories and airports. Technological unemployment of this sort is historically mundane--productivity basically grows by substituting labor for capital, and presumably the losers from self-driving cars will on-net be offset by the (numerically greater) winners. Society will be better off.

But self-driving cars worry some people because the pace of change is likely to be rapid, thus limiting the ability for commercial drivers to re-skill in other fields. Labor effects will also disproportionately hit prime-age men, who are already experiencing record unemployment and detachment from the labor market. The contours of self-driving car labor effects align perfectly with the prevailing narrative about rich-world economic growth: high-skill, intellectual work is rewarded, while jobs requiring minimal education (like driving) are being eaten by AI.

As a speculative exercise, let's think about the possible second-order effects of self-driving car labor disruption on the (large) auto service industry. Innovation scholar Brent Skorup asks the question:


He later speculates that all car service functions--fuel, cleaning, mechanical--might consolidate into a "one stop shop" business model.

This does seem inevitable if self-driving cars enable a shift from individual vehicle ownership to a 'service and flow' economy. It also seems inevitable that even if total auto service employment increases (possible if low costs bring low prices, leading to a demand-response resulting in higher overall car volume), the industry will change in important ways. Whether these changes end up being simply disruptive--or truly disastrous--for current workers will largely depend on the choices of car manufacturers and policymakers.

It seems clear that the new auto service industry has the potential to become highly automated and skill-intensive. This would involve innovations like automated fuel delivery systems, for example, and probably would be awful for current low-skill industry workers. The 'fuel attendant' jobs of the future might very well involve sitting behind a computer and managing robots.

On the other hand, low-skill auto service jobs might survive if industry consolidation leads to productivity increases in labor-intensive tasks that are sufficient to outcompete capital substitution. In other words, if Tesla or Uber opens up a huge maintenance center serving an entire city or region, the scale efficiencies might just make the old-fashioned 'gas station attendant' jobs economically rational again.

Paradoxically, if the industry doesn't consolidate and remains oriented around small service shops it might be even worse for low-skill workers, as they won't be able to leverage scale efficiencies to make their labor competitive in the face of robotic servicing.

The cultural power of cars in the US is mighty, however, and it's highly plausible that small business workers will be motivated to upskill in order to survive. Politicians might also be inclined to pass regulation limiting carmakers' ability to set up huge service centers. Additionally, if regulation and manufacturer choices do prevent huge consolidation, it's possible that service automation is too expensive and/or limited for small businesses to deploy. In this scenario, life would be pretty similar to the status quo, with low-skill workers able to survive with minimal upskilling.

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