Amazon to Replace 600,000 with AI and Robots

Amazon is planning to replace 600,000 jobs with robots as they automate 75% of operations.

With the first slab of 30,000 corporate cuts announced this week.

Meanwhile Trump’s AI Czar David Sacks says AI is currently 40% of economic growth, pushing GDP growth to a blistering 3.9%.

So which is it: will AI double the economy. Or double the job cuts.

The reality is both, with the danger being the cuts happen years before the growth.

Amazon’s 600,000 Jobs

So first the numbers. The New York Times got ahold of an internal Amazon plan to replace 160,000 planned hires with AI-fortified robots by 2027.

And 600,000 by 2033.

Amazon estimates this will shave 30 cents off every product they ship. Which saves customers 2 billion dollars per month -- $20 per customer per month.

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For perspective, 600,000 jobs is the entire movie and video industry in the US -- studios, actors, production, the popcorn guy at the Odeon.

It’s also the entire lawyer industry, from paralegals to ambulance chasers.

And Amazon’s just one company. If they shave 30 cents with robots everybody else has to do it -- from Walmart on down.

Zooming out, Amazon’s looking to replace almost half their current workforce in the next 8 years.

Extrapolate that to the entire blue-collar economy and you’re looking at roughly 10 million jobs.

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The AI Investment Boom

And that brings us to that AI investment boom that’s funding Amazon’s robots.

AI investment is currently running $400 billion annualized -- and rising fast.

For perspective, that’s about a tenth of all the investment in the entire economy in a given year -- everything from semiconductors and power plants to renovating the bathrooms in your local Starbucks.

It’s also on the order of ten times the dot-com buildout — the last tech bubble of this magnitude.

It could actually be a lot bigger -- there’s another couple hundred billion in VC money that’s overwhelmingly going to AI (see above chart).

Yet another $100 billion in private AI investment. Plus the stuff we don’t know about -- a lot of AI investment is non-public for competitive reasons.

All that money mean those 600,000 job replacements will turn into millions. And it’s not just manufacturing: AI’s already replacing 200,000 finance jobs. Indian call centers are being wiped out — sad, I know.

Those movie jobs and lawyer jobs are on deck.

What’s Next

Like the industrial revolution, in the long run we replace the automated jobs with higher paying jobs.

Basically, a guy with a shovel now drives an excavator driver at 3 times the wage. Or installs swimming pools since the tech itself made people richer.

The problem is the short run -- the period between Amazon replacing 600,000 people and new services and start-ups filling the gap.

The poster child for this is Hong Kong in the 1980’s, where manufacturing jobs were wiped out then quickly replaced with services at twice the pay. Thanks to a free market government.

Compared to Detroit. Which also lost manufacturing in the 80’s and — 50 years later — still hasn’t replaced the jobs. Thanks to a decidedly not free market government.

So if government stays out of the way so it’s easy to start and grow a business with minimal taxes and red tape, it’s maybe 5 or 10 years of an extra point of unemployment -- less if we deport enough illegals.

If not, AI and robots will deliver a permanent underclass of millions who will demand bread to go with their circuses.

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