But we’re not prepared.
Tesla made headlines the other day with the first traffic fatality caused by its “Autopilot” system, which had failed to “see” a big tractor-trailer rig that had pulled right in front of the car. But humans fail to see things too, and gruesome accidents are happening with humans behind the wheel. Last year, 38,300 people were killed in traffic accidents in the US, up 8% from 2014, and 4.4 million were injured enough to require medical attention.
Other manufacturers all have similar or better systems than Tesla’s beta version, but they’re more conservative in their hype and what they allow drivers to do.
On Tuesday, Ford, touting its plans for self-driving taxis and other autonomous-vehicle services, took reporters on a spin through the neighborhood in its self-driving cars. It will roll out its services in big cities first, such as New York and Detroit, and will initially limit the service to cities.
Uber is now starting to test about two dozen partially self-driving Ford Fusions in Pittsburgh, and surely there will be some accidents too. There are always accidents once you put enough vehicles into motion.
Ford is doing it because that’s where the future is. And the money. It’s expecting 20% profit margins from these services, rather than the razor-thin margin in its regular business. Sales of autonomous vehicles might account for 20% of its total sales in the US by the end of this decade, it said. That would be huge, and fast!
GM and other automakers have similar plans. Google, Apple, and many other companies are plying the field, not by making the actual cars – no one cares about them – but by developing the software, sensors, services (such as mapping), and the “passenger” interface (since there won’t be “drivers”) to make the package work. Everyone is doing it. Huge amounts of money and talent are flowing into it.
There will be delays, setbacks, and gruesome accidents. Some people will call for putting an end to this. And others will refuse to get into those cars. But this is happening.
When I replace my car with something that can figure out on its own how to get me safely and quickly to my destination – a moment that can’t come soon enough, as far as I’m concerned – it won’t have much impact on the economy.
But what’s happening in the commercial sector will be a mini-version of the industrial revolution: doing away with professional drivers.
And the magnitude of this problem is breath-taking. Here are some numbers about the people in the US working in the trade:
- 1.8 million heavy-truck and tractor-trailer long-haul drivers in 2014, expected to grow 4% a year (BLS), with a median pay of $40,260 in 2015. At this growth rate, there will be 1.94 million long-haul drivers by the end of this year.
- 1.33 million delivery truck drivers in 2014, expected to grow 4% a year (BLS), with a median pay of $27,800 in 2015. They’re picking up and/or delivering packages and small shipments within the city or region, driving a vehicle of 26,000 pounds or less, usually between a distribution center and businesses or households. At this growth rate, there will be 1.44 million drivers by the end of this year.
- 233,700 taxi drivers and chauffeurs in 2014, growing at 13% annually (BLS). They earned a median pay of $23,510 in 2015. One in five worked part time. This doesn’t – or doesn’t fully – reflect the “rideshare” drivers working for Uber, Lyft, and the like.
- “Over 500,000” rideshare drivers are estimated to ply the trade in the US. It’s a high-growth sector: the number of Uber drivers in the US doubled in 2015 from the prior year to 327,000. Half of them worked 15 hours or less per week.
So by the end of 2016, if these numbers play out, there will be over 4.1 million people who drive for a living. Over 3.5 million are doing it full-time.
But for companies in the sector, the total cost of drivers, including wages, benefits, and taxes, is among the biggest expense items. Plus, drivers get sick, need vacation, and can’t drive 24 hours a day, seven days a week.
Uber reportedly lost $1.68 billion in the first three quarters of 2015, up 150% from the same period a year earlier. That’s a lot of dough to burn through. And much of the cash drain would go away if it could just get rid of the costs of its drivers!
Trucking and delivery companies are looking at this math from their point of view. Automating the driving process could save them a ton of money. And the big ones are all thinking about it, and spending money on research.
No one is going to switch to fully autonomous trucks next year. This will take some time. But given the amount of resources pouring into it, it won’t take all that much time. A few years perhaps before the first significant numbers are starting to crop up.
Then what? What are the 3.5 million professional and trained full-time drivers going to do? OK, some of them are going to retire by then. But this is still one of the big job opportunities for people without a degree in engineering, willing to be trained and willing to work hard and long hours. These opportunities are now scheduled to go away.
And what are the part-timers going to do? How are they going to supplement their incomes to maintain their consumer spending, which is so critical to this economy? Are they going to tighten their belts further?
Over 4 million jobs is a big number. These people can’t easily switch to writing software. There’s no room for them in manufacturing. Even the fast-food sector is getting automated, as are many other jobs, including writing stories for the major wire and news services. It all might be happening faster than society is prepared to deal with it. And we’re not even talking about it!
And this focus on automation and cost cutting might in part explain why CEOs are so bearish on jobs in their own companies, part of the “unfortunate new normal.” Read… The Chilling Thing CEOs of Corporate America Said about Jobs
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