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California's $15-an-Hour Minimum Wage May Spur Automation (computerworld.com)
An anonymous readers links to an article on ComputerWorld: For many California business groups, the state's decision to gradually raise its minimum wage to $15 by 2022 is a terrible thing. But for its technology industry, it may be a plus. Higher wages, says the California Restaurant Association, will force businesses to face "undesirable" options, including cutting staff, raising prices and adopting automation. But a higher minimum wage will "signal to tech companies and entrepreneurs" to look at the restaurant industry, said Darren Tristano, president of Technomic, a research group focused on the restaurant industry. The state's governor and legislators reached an agreement Monday to raise the wages. "I think there are a lot of tech companies that are looking at the restaurant industry to accelerate their growth," said Tristano. The restaurant industry is primed for change, said Tristano, "Many of the routines that take place in restaurants are not very different from 30 to 40 years ago," he said.
The goal of any advanced civilization should be 100% unemployment and automation.
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
I don't know about anyone else, but if I go to a real sit-down restaurant, I want an actual human server, not a robot or some other form of 'automation', and I sure as heck don't want a robot or some automation preparing my food, either. If that was my only other choice then I'd just as soon stay home and cook my own food.
Are YOU using the TOOL, or is the TOOL using YOU? Think about it!
It hit at least one bookseller pretty hard.
"First they came for the slanderers and i said nothing."
If the machines existed today, they'd be purchased; regardless of the minimum wage.
Not if the machines cost more than minimum wage.
If people who normally live paycheck to paycheck now have some disposable income, maybe they will spend some of it at restaurants. Maybe they will even spend enough to more than make up for the increase in employee wages.
I have been saying for years that an increase in the minimum wage can partly pay for itself by spurring automation. And that's a very good thing, for everyone.
Some business owners might prefer to pay a bunch of people $1/hour to dig a ditch using a shovel, but at $15/hour, you gotta use a backhoe.
I always find it funny when rightwingers complain that a minimum wage increase is simultaneously entirely inflationary AND that it will cause you to lose your job to automation.
I've often thought that we are using far too LITTLE automation, not too much. If burger flipping can be automated, why the heck aren't we automating it? Oh, right, because it's cheaper up-front (but not long-term) to just pay someone a poverty wage.
And it's also always funny to see rightwingers pull out the Luddite critique, i.e. that automation will put us out of jobs, when in fact we've had increasing automation for centuries, now, but not any lower voluntary unemployment. So the Luddite critique is ridiculous when OTHER people use it, but totally fine otherwise...
And then, realize that we had a real minimum wage of about $11/hour in the 1960s, when productivity was FAR lower, when we had far less economic productivity per person. If you adjusted the minimum wage for productivity growth, it'd be over $20/hour right now.
I actually think that by NOT raising the minimum wage, we've stymied technological progress. Yes, there's definitely a limit to how fast you can increase the minimum wage without hitting inflation (or possibly some unemployment), but we're not near that limit with $15/hour.
But then again, it may not...
Here in Ontario, Canada, we raised the minimum wage from $10.25 to $11.00, and unemployment went down in the following months and year, from around 7.5 %to 6.75% (source). While that doesn't prove that minimum wage increases never result in unemployment rises, it does disprove that they always result in unemployment rises.
Minimum wage increases killing jobs is a ridiculous notion - prices can always raise as well, and besides, the naysayers repeat this line almost Every. Single. Time. - even for overdue inflation-indexed increases, which generally casts doubt on their positions. In reality, it's a lot more complicated than that.
I will never understand why minimum wage is not tied to inflation rates - this is a ridiculous argument to have Every Five Years.
http://www.thenation.com/artic...
http://www.thestar.com/busines...
https://www.weforum.org/agenda...
"Government is like fire; a handy servant, but a dangerous master." -- George Washington
I am always bemused that after call centers being moved to India, manufacturing jobs ending up in China, and even Fords being built in Mexico that people can't fathom that increasing labor costs at home might have an affect on the job market. Like the US labor market is somehow a product of American exceptionalism, free from other cost concerns.
While trying to increase the ranks of the middle class is laudable, it seems to be more ending jobs for entry-level workers.
The difference in yearly income between a burrito engineer and a degreed and licensed professional is about $10k under the new scheme. Why bother with the school debit, the professional associations, and yearly certifications when you could just work fast-food?
Except once that pandora's box of automation is opened, even those professional careers are fair game.
To be fair, a wage hike of $0.75 (Canadian) is not really comparable to a $5.00 (US dollars) wage hike.
One constitutes less than an 8% raise, while the other is a 50% raise.
"-1 Troll" is the apparently the same as "-1 I disagree with you."
To be fair, the california hike is actually five one-dollar/hour hike a year apart.
Look at the old US car makers who refused to let the government force them to provide cars that were safer and got better gas mileage.
They fought the regulations, refused to comply, sued and delayed, and eventually got their market taken away by car makers who provided all of those benefits in less expensive vehicles
At which point, the manufacturers tried to blame it all on the unions without considering their own recalcitrant behavior
Yeah, they can all suck it, we see through their bs for the lies that it is
Minimum wage increases killing jobs is a ridiculous notion - prices can always raise as well
Not true. You can't just arbitrarily raise prices when there are substitute goods available. Fast food is labor intensive. If the price goes up, more people will cook at home or purchase low-labor pre-packaged food at grocery stores (using the self-checkout line).
California already has a much higher minimum wage than the rest of the nation. If you go in a McDonalds in California, you don't see teenagers working there. You see adults, since the pay is enough to attract them. Adults are more productive than teenagers, so you need fewer of them. So California has removed an important rung on the economic ladder, by turning entry level jobs into permanent no-skill "careers" flipping burgers. This effect is worst in minority neighborhoods which already have extremely high teenage unemployment.
Because the performance / cost of automated technology is steadily increasing.
This wage change only has the potential to bring very slightly sooner what seems an inevitable trend toward significant job losses to automation.
Minimum wage rise or no, society is going to have to deal with one of:
A) Guaranteed annual income (for existing as a human in the country).
B) Building really tall barbed wire walls (with automated machine guns/frickin' lasers?) to divide the still-employed and automation owners/shareholders from the increasing hordes.
Where are we going and why are we in a handbasket?
Suppose the local businesses have a 10% profit margin, and that a large fraction of that is fixed costs (rent, power, loans, taxes, etc). Now, suppose that 10% of their customers just lost their job to automation and no longer patronize them. Now their profit goes to zero, and their employees also get canned. This causes cascading business failures are fewer and fewer people in the town can afford to pay for things like going out to eat and movies and new cars. Now your local businesses get trashed, and the pool of unemployed go up, pushing down the value of labor. This, in turn, causes over a longer term, wage depression as there is now much more competition for jobs, and people are now willing to work at the mill for minimum wage instead of being able to demand a higher salary. Now the millworkers have less disposable income, which feeds into this depressionary cycle.
But someone will take advantage of the depressed wages, you say. Sure, why? Are you going to move your Googleplex to Modesto? Your expensive white collar people are unwilling to move there; there aren't any restaurants and such; it's now a poor people town. If low wages are important, move the plant overseas, otherwise, put the new plant where the people you're moving want to live. But, you say, they can get lower cost white collar employees there. Maybe, but those individuals left to get higher paying jobs, and when the real estate value plummeted, so did school funding and the quality of teachers, as the better ones didn't want to live there.
This is the death spiral that bay area taxes and minimum wages have pushed on the central valley. $15/hr in SFO is a reasonable minimum wage. It's going to kill the last 5 full time jobs in Modesto where $15/hr is well over a living wage and, frankly, more than unskilled labor is worth there.
Okay, so why does it remove entry-level jobs for minorities but apparently not for white teenagers?
Because white kids have a lot more opportunities. Many of them don't want a job, because they are too busy studying for college. Or they work part-time at their daddy's business. Black and Hispanic kids are at the bottom, so when that last rung is taken away, they get hurt the most.
For a clear illustration of what happens when you push "white" solutions onto communities where they don't apply, look what happened in Puerto Rico. The economy was doing well, and it was a hub for low end manufacturing, mostly paying about $3 an hour. Then the courts ruled that federal minimum wage laws had to apply to PR. So overnight the wages went up to $7.25, and the jobs disappeared. So instead of making $3 an hour, the workers were making $0 an hour, debts piled up as people stopped paying taxes, and now PR is bankrupt, and seeking a federal bailout.
What happened to PR will likely not happen in California, because the change will happen more slowly, and California has a far more diverse economy. But the same principles apply, and the worst effects will be on the people that can least afford it.
Here's the actual sitiuation.
On the one hand, cost of employing people in jobs that can be automated is rising. Picture this as a graphed ramp up on a plot.
On the other hand, cost of ever-higher quality automation is dropping rapidly. Picture this as a graphed ramp down on the same plot.
When those two lines cross each other, businesses will automate as soon as possible. Not may; will. Any of them that might be inclined not to, for whatever reason, will be out-competed in very short order and subsequently fail.
This can't be fixed by raising the minimum wage; it can only be accelerated, because it doesn't change the rate of the dropping automation line, but it only steepens the rate of the rising employment costs line.
So the solution cannot lie in "just raise minimum wages" approach. There has to be some way to either add costs to automation (most typically taxation is the cost suggested... which businesses generally arrange to be taken from the income of the remaining workers) or change the entire economic model to something along the lines of Basic Income. Something along the lines of that is inevitable due to inevitable technological change, but there's a lot of pain and screaming that will be done between where we are and that point. The former is right where we are already:
Walmart, for instance, is one example of severely low wage workers that are subsidized by the social safety net, which in turn is paid for by the middle class. This is what enables Walmart to keep prices low; they only pay part of the worker's survival needs. Same thing for waitresses, burger flippers and so on. Your hamburger isn't cheap if you're middle class; it's just that you pay for part of it at McDonald's, and then you pay for the rest when you pay your taxes. Very handy for McDonalds. They get to maintain the illusion that they sell cheap(er) food. Most taxpayers fail to make the connection, and continue to support McDonalds' business model by buying those burgers.
The question is how long that will be sustainable in the face of a mandated wage increase -- will people still buy a burger if, instead of $1.00 at the window and $x at tax time, it's $1.++ at the window? And what, do you imagine, will McDonald's do about it if they see this as less likely?
Pretty obviously, they will automate. People will lose their jobs. But now instead of paying for part of the burger flipper's wages at tax time, the ex-flippers are unemployed, so the social safety net must cover their entire cost of living using the income of those who remain employed. Business will continue to see to it via legislative control that they are not the ones who do the paying.
Isn't it clear that severe pain is on the way no matter what under the current economic model? I can't see a way out of it. At all.
This is why I support a change to a formal basic income. Looking at the stats and polls, though, I don't think it's likely in the near term.
I've fallen off your lawn, and I can't get up.
While I agree that this is an undesirable side effect of raising the minimum wage in some (or many?) circumstances, I also at the same time disagree with the idea that wages should be kept low (and in some cases well below the poverty line) simply to provide employment. By your argument, the result of this minimum wage hike is that McDonald's now has more productive workers at the expense of lesser skilled workers being more often unemployed. I see that as a zero-gain, but also zero-loss, proposition.
Now while your point that it removes an important rung on the economic ladder is at least in some (or again, many?) cases true, I tend towards my more capitalistic opinions - that wages should not be kept low simply to provide employment to the unskilled. There should be a wage floor that allows unskilled workers to consume baskets of goods, not merely subsist on them. For the record, I am currently unemployed, have been for a year, and live on a shoestring budget. 90% of my expenses are tax-free, give or take. Things like groceries, diapers, medications, rent, all of it is tax-free in most modern societies. Raise the minimum wage for my wife, and we'll have more money for luxuries, or at least, for taxable consumer goods, returning nearly all of that to the economy rather than a savings account or investment fund, and also returning more of it to government coffers.
Without minimum wage legislation, the market will tend towards indentured servitude (I know, that's a rather poignant term to use). I would rather see poverty level wages eliminated entirely, and a corresponding rise in unemployment, than see subsistence level wages proliferated. If that means I pay more for my Big Macs, I'm all for it. There is a reason I don't shop at WalMart, and don't buy clothing made in Bangladesh. I want the people who manufacture and sell my consumer goods to be capable of supporting a family. It's why I buy my coffee from Starbucks - they pay well (decently, at least, at least in Canada). I for one am happy to see more productive, and hopefully better paid, workers at McDonalds, knowing that the people working there can afford to feed a family. If that means higher unemployment, that is a sacrifice I am willing to make.
I suppose it all boils down to this - I'd rather see fewer better paying jobs than more lesser paying jobs (grammar, ugh...).
"Government is like fire; a handy servant, but a dangerous master." -- George Washington