How would the world be different if labor were cheap everywhere?

I was talking to my dad the other day, who needed to mail me something from India. He said that someone was going to come by our house to pick up the item, package it and mail it to me. It sounded very similar to Shyp, an app that I recently downloaded. The thing was that this service has existed in India for years if not decades. Not in the same form (i.e., a mobile app) as Shyp, but the same basic idea. And that got me thinking about other things making their way as apps which I might have encountered when I grew up in Bombay. Some of the other ones I could think about were:

  • Fruit/grocery vendors would come home and take your order for you, and would later come by again and deliver them. It was also possible to set up recurring orders such as 3 gallons of milk 2 times a week and so on. The high-tech equivalent of this is Instacart/Google shopping express which have the added efficiency of being quicker and allowing one to browse a much larger catalog.
  • Some areas would be designated as shared taxi stands, which waited for cabs to fill up completely and then went to another fixed area. These were particularly common outside local train stations and very popular at commuting hours. The high-tech equivalent of this is Lyft Line/Uber pool which again allow for the added convenience of picking people up anywhere and dropping them off anywhere.
  • For laundry, someone would come to take your clothes, and then deliver them a day or two later washed/dry cleaned. The high-tech equivalent of this is FlyCleaners and Washio.

And I’m sure there are many more. These services as offered in India tend to be very inefficient. People often go from door to door in apartment buildings checking to see if anyone wants to place an order. Therefore, they often require multiple trips – one to take the order and one to deliver it. The only reason they’re economically feasible at all is because labor in India is quite cheap.

Now, they are making their way in the form of mobile apps to the US and other countries, where they didn’t exist/were not common in the past because of the high cost of labor. Not because the price of labor in these countries is going down. But instead, because mobile phones, which serve as a convenient way to aggregate the demand, along with technology on the back end for efficient logistics is making them viable from a cost perspective, and because customers are willing to pay a little bit extra for the added convenience.

Tech is used for all the parts other than the delivery of the service (such as taking orders, billing, efficient logistics/routing) which makes the use of labor very efficient.

As more and more people start using mobile phones and tech gets increasingly better to do more and more parts of the supply chain, I see these services becoming increasingly common.1

It seems that the question to be asking when trying to think of the impact of these services is:

“How would the world be different if (semi-skilled) labor were cheap everywhere?”


Thanks for reading! I’d love to hear your thoughts on this. I’m @tanayj on Twitter.

  1. Since as of now the labor still represents the biggest part of the cost for these businesses, it makes sense that they try to invest in technologies to reduce/eliminate the need for that labor (think self-driving cars and Google, drones and Amazon)