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.

Comments

Sounds good.

[Kenja]

The goal of any advanced civilization should be 100% unemployment and automation.

Re:Sounds good.

[mileshigh]

Sounds good in theory, but look around any retirement home for a strong counterexample. You'll see a lot more people watching TV than painting, writing books, studying, etc. Yes, they're old, but that's not why they're vegging out. It's because they're people. It's often been said that most people start dying the minute they retire.

Re:Restaurants

[acoustix]

Robots aren't needed.

Menus will be replaced with touchscreens. All orders will be automated. Replace a waitstaff of 15 will a serving staff of 3.

Re:May spur automation

[Striek]

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...

Re:May spur automation

[ShanghaiBill]

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.

Businesses will automate anyway

[presidenteloco]

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.

Re:May spur automation

[ShanghaiBill]

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.

There's no "may" about it

[fyngyrz]

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.

Re:There's no "may" about it

[fyngyrz]

you are talking about increasing taxes on people who are still productive in the economy populated by more and more unproductive people

That's precisely correct. That's exactly what I'm talking about.

I'm just inclined to do it honestly, openly, and at the expense of military adventurism and foreign aid as well as as a tax burden on productivity above the zero level. If everyone has an adequate basic income, no tax on income above that is such a serious burden that they can't live as well as the basic income allows. It doesn't bother me in the least if my taxes support others as they do now; I'm extremely productive, and I enjoy that for its own sake, as do many others. There's nothing about that enjoyment that says to me that only I should benefit from my productivity (and that's why I write software and don't charge for that.) It's also why I, and my SO, are charitable givers. Nothing about basic income will slow my productivity even a little bit, nor retard my inclination towards charitable action.

I see no significant value in forcing unproductive people to take unwilling part in the economy; when someone sees the task as too hard or too unrewarding, let them go, and give the task to someone who wants to do it well for the sake of doing it well and the personal rewards that brings. I no more insist on people who don't like being productive attempt productive tasks than I would insist that a fingerless person make finger paintings.

The thing is, we're a very rich country in terms of both consumable / renewable resources and physical space. The idea that we can't support a large segment of our population based on the idea that sharing is somehow antithetical is not something I can get behind. And the fact is, many already don't participate. We've not been ruined by it. It's a known functional operating model. The fact that some people whine about it notwithstanding.

As for eliminating government, there are some tasks that are just too big for the states, never mind private enterprise. Roads, national defense, (not implying any support for international offense, mind you), distributing the cost of dealing events of injury and disease evenly enough that US residents never go without adequate high quality care, ensuring that the states conform to some sort of explicit formal mechanism supporting individual liberty, those sorts of things. Consequently I am highly confident that we need an entity at that level. I agree in principle that today it is too big and has its hand into far too many pies, and that it is presently in a highly anti-liberty mode of operation in its current form of an oligarchy driven by 545 opinions ungoverned by any higher authority.

But I see no change coming in that model. Not even a hint of it. Whatever chance we ever had at reaching the goal of becoming a constitutional republic, I see no sign of such a thing any longer. That ship has sailed.

Back to basic income; the ideal, as I see it, is that it is instantiated at a low but reasonable level; then as technology increases our leverage, and as the idea becomes embedded in the national mindset, the basic income is increased, raising everyone's standard of living, while the available ceiling for what is presently unlimited acquisition of wealth drops. For example, the ceiling might be that you can have up to 500 times the basic income yourself, but above that, everything goes in the pot. A little further along, that ceiling drops to 400, then 300, and so on, all the time the basic income is rising.

In the end, everyone could live very well. The idea that no productivity will exist under that scenario is not something I can take seriously. Nor are the ideas that there might no longer be any billionaires, or that no one might own a yacht, anything that upset me at all.