The job-eating, economy-boosting, social impact of driverless vehicles: Future of Transportation P5

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The job-eating, economy-boosting, social impact of driverless vehicles: Future of Transportation P5

    Millions of jobs will disappear. Hundreds of small towns will be abandoned. And governments worldwide will struggle to provide for a new and sizeable population of permanently unemployed citizens. No, I’m not talking about outsourcing jobs to China—I’m talking about a game-changing and disruptive new technology: autonomous vehicles (AVs).

    If you’ve read our Future of Transportation series up to this point, then by now you should have a solid understanding about what AVs are, their benefits, the consumer-oriented industry that will grow around them, the technology’s impact on all manner of vehicle types, and their use within the corporate sector. What we’ve largely left out, however, is their broader impact on the economy and society at large.

    For good and for bad, AVs are inevitable. They already exist. They’re already safe. It’s just a matter of our laws and society catching up to where science is pushing us. But the transition to this brave new world of ultra-cheap, on-demand transportation won’t be painless—it also won’t be the end of the world either. This final part of our series will explore how much the revolutions now happening in the transportation industry will change your world in 10-15 years time.

    The public and legal roadblocks to driverless vehicle adoption

    Most experts (ex. one, two, and three) agree AVs will become available by 2020, enter the mainstream by the 3030s, and become the largest form of transportation by the 2040s. Growth will be fastest in developing countries, like China and India, where middle incomes are rising and the size of the vehicle market has not yet matured.

    In developed regions such as North America and Europe, it may take longer for people to replace their cars with AVs, or even sell them in favor of carsharing services, due to the 16 to 20-year lifespans of most modern cars, as well as the older generation’s affection for car culture in general.

    Of course, these are just estimates. Most experts fail to account for the inertia, or resistance to change, many technologies face before wide-scale acceptance. Inertia can delay a technology’s adoption by at least five to ten years if not expertly planned for. And in the context of AVs, this inertia will come in two forms: public perceptions around AV safety and legislation around AV use in public.

    Public perceptions. When introducing a new gadget to a market, it usually enjoys the initial advantage of novelty. AVs will be no different. Early surveys in the US indicate that nearly 60 percent of adults would ride in an AV and 32 percent would stop driving their cars once AVs become available. Meanwhile, for younger folks, AVs may also become a status symbol: being the first person in your circle of friends to drive in the backseat of an AV, or better yet to own an AV, carries with it some boss-level social bragging rights. And in the social media age we live in, these experiences will go viral very quickly.

    That said, and this is probably obvious to all, people are also afraid of what they don’t know. The older generation is especially afraid of trusting their lives to machines they can’t control. That’s why AV makers will need to prove AV driving ability (maybe over decades) to a far higher standard than that of human drivers—especially if these cars don’t have a human backup. Here, legislation needs to play a part.

    AV legislation. For the general public to accept AVs in all their forms, this tech will need government controlled testing and regulation. This is especially vital due to the dangerous risk of remote car hacking (cyber terrorism) that AVs will be a target of.

    Based on the testing results, most state/provincial and federal governments will begin introducing AV legislation in stages, from limited automation to full automation. This is all pretty straight forward stuff, and heavy hitter tech companies like Google are already lobbying hard for favorable AV legislation. But three unique roadblocks will come into play over the coming years to complicate matters.

    First off, we have the matter of ethics. Will an AV be programmed to kill you to save the lives of others? For example, if a semi-truck was barrelling straight for your vehicle, and the only option your AV had was to swerve and hit two pedestrians (maybe even an infant), would car designers program the car to save your life or the lives of the two pedestrians?

    For a machine, the logic is simple: saving two lives is better than saving one. But from your perspective, maybe you’re not the noble type, or maybe you have a large family that depends on you. Having a machine dictate whether you live or die is an ethical grey zone—one different government jurisdictions may treat differently. Read Tanay Jaipuria’s Medium post for more dark, ethical questions about these types of outlier situations.

    Next, how will AVs be insured? Who’s liable if/when they do get into an accident: the AV owner or manufacturer? AVs represent a particular challenge for insurers. In the beginning, the lowered accident rate will lead to huge profits for these companies as their accident payout rate will plummet. But as more customers opt to sell their vehicles in favor of carsharing or taxi services, their revenue will begin to dip, and with fewer people paying premiums, insurance companies will be forced to raise their rates to cover their remaining customers—thereby creating a larger financial incentive for said remaining customers to sell their cars and use carsharing or taxi services. It will be a vicious, downward spiral—one that will see future insurance companies unable to generate the profits they enjoy today.

    Finally, we have special interests. Auto manufacturers risk going bankrupt if a significant portion of society shifts their preferences from car ownership to using cheaper carsharing or taxi services. Meanwhile, unions representing truck and taxi drivers risk seeing their membership going extinct should AV tech go mainstream. These special interests will have every reason to lobby against, sabotage, protest, and maybe even riot against the wide-scale introduction of AVs. Of course, this all hints at the elephant in the room: jobs.

    20 million jobs lost in the US, far more lost around the world

    There’s no avoiding it, AV tech is going to kill more jobs than it creates. And the effects will reach further than you’d expect.

    Let’s look at the most immediate victim: drivers. The chart below, from the US Bureau of Labor Statistics, details the average annual wage and number of jobs available for different driver professions presently in the market.

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    These four million jobs—all of them—are at risk of disappearing in 10-15 years. While this job loss represents a staggering 1.5 trillion dollars in cost savings for US businesses and consumers, it also represents a further hollowing out of the middle class. Don’t believe it? Let’s focus on truck drivers. The chart below, created by NPR, details the most common US job per state, as of 2014.

    Image removed.

    Notice anything? It turns out that truck drivers are the most common form of employment for many US states. With an average annual wage of $42,000, truck driving also represents one of the few remaining employment opportunities people without college degrees can use to live a middle-class lifestyle.

    But that’s not all, folks. Truck drivers don’t operate alone. Another five million people are employed within the truck-driving industry. These trucking support jobs are at risk as well. Then consider the millions of secondary support jobs at risk inside the hundreds of highway pit-stop towns across the country—these waitresses, gas pump operators, and motel owners depend almost entirely on the income generated from traveling truckers who need to stop for a meal, to refuel, or to sleep. To be conservative, let’s say these people represent another million at risk of losing their living.

    All in all, the loss of the driving profession alone could represent an eventual loss of up to 10 million US jobs. And if you consider that Europe has the same population as the US (roughly 325 million), and India and China each have four times said population, then it’s entirely possible that 100 million jobs can be put at risk worldwide (and keep in mind I left out huge chunks of the world from that estimate as well).

    The other big group of workers that will be hit hard by AV tech is the auto manufacturing and service industries. Once the market for AVs matures and once carsharing services like Uber begin operating huge fleets of these vehicles across the globe, the demand for vehicles for private ownership will fall substantially. It will just be cheaper to rent a car when needed, rather than to own a personal car.

    Once this happens, auto manufacturers will need to severely downsize their operations just to stay afloat. This too will have knock-on effects. In the US alone, automakers employ 2.44 million people, auto suppliers employ 3.16 million, and auto dealers employ 1.65 million. Together, these jobs represent 500 million dollars in wages. And we’re not even counting the number of people who might get downsized from the auto insurance, aftermarket, and financing industries, let alone the blue collar jobs lost from parking, washing, renting and repairing cars. All together, we’re talking at least another seven to nine million jobs and people at risk multiplied worldwide.

    During the 80s and 90s, North America lost jobs when it outsourced them overseas. This time, it will lose jobs because they won’t be necessary anymore. That said, the future isn’t all doom and gloom. How will AV’s impact society outside of employment?

    Driverless vehicles will transform our cities

    One of the more interesting aspects of AVs will be how they influence city design (or redesign). For example, once this tech matures and once AVs represent a sizeable portion of a given city’s car fleet, their impact on traffic will be substantial.

    In the most likely scenario, massive fleets of AVs will concentrate in the suburbs during the early morning hours to prepare for the morning rush hour. But since these AVs (especially those with separate compartments for each rider) can pick up multiple people, fewer total cars will be needed to transport suburban commuters into the city core for work. Once these commuters enter the city, they will simply exit their AVs at their destination, instead of causing traffic by looking for parking. This flood of suburban AVs will then roam the streets offering cheap rides for individuals within the city throughout the late morning and early afternoon. When the workday ends, the cycle will reverse itself with fleets of AVs driving riders back to their suburban homes.

    Overall, this process will substantially reduce the number of cars and the amount of traffic seen on roads, leading to a gradual shift away from car-centric cities. Think about it: cities will no longer need to devote so much space for streets as they do today. Sidewalks can be made wider, greener, and more pedestrian friendly. Dedicated bike lanes can be built to end the deadly and frequent car-on-bike collisions. And parking lots can be repurposed into new commercial or residential buildings, leading to a real estate boom.

    To be fair, parking lots, garages, and gas pumps will still exist for older, non-AV cars, but since they will represent a smaller percentage of vehicles with each passing year, the number of locations serving them will decrease over time. It’s also true that AVs will need to park from time to time, whether its to refuel/recharge, to be serviced, or to wait out periods of low transport demand (late weekday evenings and early mornings). But in these cases, we’ll likely see a shift towards centralizing these services into multi-story, automated parking, refueling/recharging, and servicing depots. Alternatively, privately owned AVs can simply drive themselves home when not in use.

    Finally, the jury is still out as to whether AVs will encourage or discourage sprawl. As much as the last decade has seen a huge influx of people settling inside city cores, the fact that AVs can make commutes easier, productive, and more enjoyable could lead to people being more willing to live outside city limits.

    The odds and ends of society’s reaction to driverless cars

    Throughout this series on the Future of Transportation, we covered a wide range of issues and scenarios where AVs transform society in weird and profound ways. There are a few interesting points that almost got left out, but instead, we decided to add them here before wrapping things up:

    The end of the driver’s license. As AVs grow into the dominant form of transport by the mid-2040s, it’s likely that young people will stop training and applying for driver's licenses altogether. They just won’t need them. Moreover, studies have shown that as cars get smarter (e.g. cars equipped with self-parking or lane control tech), humans become worse drivers since they need to think less when driving—this skill regression will only accelerate the case for AVs.

    The end of speeding tickets. Since AVs will be programmed to obey road rules and speed limits perfectly, the amount of speeding tickets highway patrol cops hand out will drop considerably. While this might lead to a reduction in traffic cop numbers, more concerning will be the heavy drop in revenues funneled into local governments—many small towns and police departments depend on speeding ticket revenue as a sizeable portion of their operating budget.

    Disappearing towns and ballooning cities. As hinted earlier, the coming collapse of the trucking profession will have a negative knock-on effect upon many small towns that largely cater to the needs of truckers during their long-haul, cross-country trips. This loss of revenue may lead to a steady thinning out of these towns, the populations of whom will likely head to the nearest big city to find work.

    Greater independence for those in need. A less talked about quality of AVs is the enabling effect they will have for the most vulnerable of society. Using AVs, children above a certain age can ride themselves home from school or even drive themselves to their soccer or dance classes. More young women will be able to afford a safe drive home after a long night of drinking. The elderly will be able to lead more independent lives by transporting themselves, instead of depending on family members. The same can be said for persons with disabilities, once specially designed AVs are built to accommodate their needs.

    Increased disposable income. As with any technology that makes life easier, AV tech could make society a whole lot richer—well, not counting the millions put out of work, of course. This is for three reasons: First, by reducing the labor and logistics costs of a product or service, companies will be able to pass on those savings to the end consumer, especially within a competitive market.

    Second, as fleets of driverless taxis flood our streets, our collective need to own cars will fall by the wayside. For the average person, owning and operating a car can cost up to $9,000 US a year. If said person were able to save even half of that money, that would represent a huge amount of a person’s annual income that can be spent, saved, or invested more effectively. In the US alone, those savings could amount to over $1 trillion in additional disposable income for the public.

    The third reason is also the main reason advocates of AV tech will succeed in making driverless cars a broadly accepted reality.

    The top reason why driverless cars will become a reality

    The US Department of Transportation estimated the statistical value of a single human life at $9.2 million. In 2012, the US reported 30,800 fatal car crashes. If AVs saved even two-thirds of those crashes, with one life a piece, that would save the US economy over $187 billion. Forbes contributor, Adam Ozimek, crunched the numbers further, estimating a savings of $41 billion from avoided medical and work loss costs, $189 billion from avoided medical expenses associated with survivable crash injuries, as well as $226 billion saved from no-injury crashes (e.g. scrapes and fender benders). Together, that’s $643 billion worth of avoided damage, suffering and deaths.

    And yet, this entire train of thought around these dollars and cents avoids the simple adage: Whoever saves one life saves the world entire (Schindler’s List, originally from the Talmud). If this tech saves even one life, whether it be your friend, your family member, or your own, it will be worth the abovementioned sacrifices society will endure to accommodate it. At the end of the day, a person’s salary will never compare to a single human life.

    Future of transportation series

    A day with you and your self-driving car: Future of Transportation P1

    The big business future behind self-driving cars: Future of Transportation P2

    Public transit go bust while planes, trains go driverless: Future of Transportation P3

    The rise of the Transportation Internet: Future of Transportation P4

    Rise of the electric car: BONUS CHAPTER 

    73 mind-blowing implications of driverless cars and trucks

    Next scheduled update for this forecast


    Forecast references

    The following popular and institutional links were referenced for this forecast:

    Victoria Transport Policy Institute

    The following Quantumrun links were referenced for this forecast: