Walmart, the largest private employer in the US, revealed on Tuesday plans to automate a large swath of its stores and warehouses within a three-year timeframe. This move aligns with the surge of artificial intelligence technologies being introduced into the economy to enhance efficiency; however, it also threatens to displace millions of jobs.
In a press release, the mega-retailer with more than 1.6 million US employees said:
By the end of Fiscal Year 2026, Walmart believes roughly 65% of stores will be serviced by automation, approximately 55% of the fulfillment center volume will move through automated facilities, and unit cost averages could improve by approximately 20%.
As Walmart’s stores and warehouses shift towards automation, the demand for human labor will drop. Nevertheless, the retailer noted that the reduction in the workforce could lead to increased wages for the remaining employees.
As the changes are implemented across the business, one of the outcomes is roles that require less physical labor but have a higher rate of pay.
Walmart did not provide specifics about the potential workforce reduction through 2026 due to automation.
Meanwhile, Goldman’s Jan Hatzius recently told clients that “roughly two-thirds of current jobs (in US and Europe) are exposed to some degree of AI automation, and that generative AI could substitute up to one-fourth of current work. Extrapolating our estimates globally suggests that generative AI could expose the equivalent of 300 million full-time jobs to automation” as up to “two-thirds of occupations could be partially automated by AI.”
Translation: one-third of a billion layoffs (at least) in the US and Europe (pro subs can read GS’ report here). Think of it as the robotization of the service sector.
What’s troubling is that America’s largest employer is full-speed ahead in automating its business along with the second largest employer, Amazon. There is no doubt a layoff wave is ahead, but where is the inflection point where mass layoffs translate to an abundance of angry folks? We suspect the government would implement universal basic income to keep the future laid-off masses from gathering in the streets.