Around 40 years ago (1979) the huge American motor company General Motors employed 840,000 workers. With this staggering number of employees they managed a profit of $11 billion (adjusted for inflation). That’s pretty damn impressive.

Five years ago however (in 2012), Google generated $14 billion in profit… with just 38,000 employees. That’s just 4.5% of the huge work force GM had and they still managed to generate 27% more money!

It now takes far fewer people to do the same job thanks to automation, robotics, computers and machine learning.

Automation

I’m sure the idea of Automation isn’t shocking news to most people.

There’s articles all over the web writing about it. Most of them describe the issue and normally people end up coming away with the thought that a life like Terminator style robot is going to boot them out of their office chair and “steal their job”. The reality of what happens is very different though.

For one thing, life like robots obviously don’t really exist yet. The few that do approach this cost tens of thousands and are still heavily in development. What does exist though is software programs, robot arms and recently machine learning algorithms. One very important point everyone must understand about automation and job loss is that it most likely won’t be a robot that steals your job but a software program or algorithm.

This isn’t how robots steal your job. Source: http://theconversation.com

Waymo, the company founded by Google’s Self Driving division has just started offering public rides on public streets to public people with no one behind the wheel. Until a few weeks ago every “self driving car” always had a technician behind the wheel just in case. Waymo’s step to remove that person is a huge shift indicating that they now fully trust their system and that it fully works. It’s just a matter of expansion and time now until software eliminates hundreds of thousands of jobs where people drive. No Terminator robots required.

Automation Is Already History

Another crucial point that needs to change when talking about Automation is that, like climate change, it’s not a “debate” anymore. There is no point debating whether or not Automation will or will not happen in the future. It is already happening now and has been happening for decades.

Source: ZeroHedge

As you can see above, the number of oil rigs and oil employees plummeted when the price of oil crashed in 2015/2016. As you’d expect the world responded to the crash by cutting supply, oil rigs and employees but when prices bounced back (somewhat) employment didn’t return.

Oil rigs were instead built and deployed with automated Iron Roughneck machines that cut down the number of employees needed to operate the rig from 20 to 5. Over the course of a year, the number of jobs available in that industry dropped by 73%… and they’ll likely never come back again.

There’s another trend we can see from this graph and that’s that companies and industries seem to follow a similar path when dealing with Automation and job replacement. While the times are good, they’ll happily employ people and not bother about optimisation and efficiency. When a GFC or other crisis happens people get laid off big time (no surprises there).

When the market recovers though… those employees are no longer needed. The company has increased efficiency through the hard times, automated many things and learned to get by without all those employees. It could also be that it’s easier for a company to fire someone saying “sorry it’s bad times, you understand” than for them to fire someone saying “sorry, we replaced you with a new piece of software“.

Regardless, it’s historically clear that as more and more markets take their otherwise normal cyclical “hits”, the number of available jobs in that industry decreases sharply. Permanently.

Why FI Is Even More Important Now

Most people want to reach Financial Independence so they can retire, relax, do things on their own terms or maybe travel the world etc. However now there’s a reason to want to pursue this goal even more urgently. The number of available jobs is running out fast.

I know this and what I’ve spoken about above sounds depressing. I don’t want anyone to lose their job. However we must be realistic about the future as otherwise our long term plans will be pointless. Taking Automation into account is extremely important as technology accelerates exponentially.

Millions of jobs have already been lost to automation and it’s only going to come at the world quicker and quicker over the next 10 years. The automation of cars alone will be a change like no one alive has seen before. Cab drivers, truck drivers, school bus drivers, package/mail delivery drivers, chauffeurs, Uber/Lyft drivers will all fade.

The services that cater for those jobs will also deteriorate at the same rate. Things like truck diners, petrol stations, take away food places and more I can’t even think of. Together they represent a huge amount of jobs and that’s just 1 form of Automation, the self driving car. There’s dozens of other jobs also at risk from Machine Learning and robotics. So what can you do about it?

The First Step

Well obviously you can become financially independent. It’s not an easy task though! One of the first steps to reaching FI however is to make sure you’re out of debt. It’s also likely that your biggest debt is your mortgage and as such, you stand to save the most by paying it off early. This way you can get a huge boost while you also address this critical future problem, a double win!

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