Jul 17, 2019

Amazon is positioned to save America from automation

Illustration: Sarah Grillo/Axios

As automation gnaws at the economy, Fortune 500 companies have come out with training programs to prepare their workers for a future in which their jobs change significantly — or cease to exist at all.

Why it matters: Alongside those programs, a for-profit, training-as-a-service industry is emerging — firms that will come into your company and train everyone for you. Amazon, with its troves of data and cash, may be best positioned to dominate this new reskilling-in-a-box business.

The big picture: Around 90 million American workers will require some degree of new training to hold onto their jobs in the near future, says Andy Van Kleunen, CEO of the National Skills Coalition. "But companies and governments have barely figured out how to close skills gaps."

  • "We know how to take someone with a college degree and teach them machine learning," he says. "Taking someone who's reading at an 8th grade level and training them for an IT job" is much more difficult.
  • The field of companies in the reskilling game is relatively narrow. "There are a couple of examples of bootcamps that are focused on a small set of tech skills," but that's it, says Matt Sigelman, head of Burning Glass Technologies, a labor analytics firm.

Driving the news: Amazon announced last week that it is putting $700 million into training 100,000 employees, a third of its U.S. workforce, over the next six years. Broken down, that totals just $1,077 per worker per year.

  • The average firm spends $1,296 a year per employee on training, according to the Association for Talent Development, which makes Amazon's commitment less impressive, writes Bloomberg's Eric Newcomer.

The bigger bet for Amazon — with its history of monetizing shipping, warehousing and data storage — would be to design a model that works for training and sell it to dozens of other firms.

  • Amazon training-in-a-box: Amazon tells Axios that it is focusing only on its own employees and is not out to create a standalone service for other firms. But experts say the signs — and logic — are there for the e-commerce giant to launch such a business, as it has already done with Marketplace, Fulfillment by Amazon and AWS.
  • It arguably has already gotten started: Amazon has rolled out one of its training programs, Career Choice, to several companies across 13 countries. Through the program, it partners with community colleges to train Amazon workers and place them in jobs ranging from dental hygienist to plumber to web developer.

Its advantage over other training companies is the same it has in other fights — data.

  • The e-commerce giant can curate its training "on a warehouse-by-warehouse basis based on the data it has" on its massive pool of employees, says Sigelman, Burning Glass CEO.
  • It also knows what sorts of programs are most effective and how large or small the skills jumps are between certain jobs, he says.

The other side: "Selling commodities is easier to scale than training human beings," says Van Kleunen, National Skills Coalition CEO.

  • If Amazon or other firms want to offer such services, "there’s a publicly-funded infrastructure of community colleges and schools that will be required to pull that off," he added.

The bottom line: The potential market is huge. Per an analysis by the World Economic Forum, the cost to retrain 77% of U.S. workers at risk of displacement is $20 billion.

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Illustration: Sarah Grillo/Axios

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How Amazon will take over your house

Illustration: Sarah Grillo/Axios

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The growth of U.S. tech job listings has slowed

Data: Cognizant; Chart: Axios Visuals

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Quick take: The reported weakening in hiring may reflect the general U.S. economic slowdown. But, amid a 50-year low in joblessness, it also highlights the extraordinary volatility in the technology industry, the most reliably vibrant part of the U.S. economy.

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