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Higher Minimum Wages Bring Automation and Job Losses, Study Suggests (axios.com)
An anonymous reader shares a report via email: As of the start of the year, 19 U.S. states had raised minimum wages, dramatizing a long simmering debate: Do minimum wages kill jobs, and make the working class worse off in the end? Or do they simply make them a little richer, with little or no loss to overall employment? In a new paper, economists Grace Lordan of the London School of Economics and David Neumark of UC Irvine parse 35 years of census data and come down on the worse-off side: For lower-skill jobs like bookkeepers and assembly-line workers, they say, higher minimum wages encourage employers to automate -- according to their calculations, a $1 increase can cost tens of thousands of jobs nationally.
The laws of supply and demand have been well-understood for generations. Both ends of the political spectrum regularly enact legislation based on them (sin taxes, etc.). For some reason certain people feel that this one area "needs" to be exempt from what is basically a law of nature, because it's politically inconvenient to them. Ironically, it's the folks that tend to go around insisting that they are a "reality-based community." The pseudointellectual contortions required to do this are pretty funny to watch, even though they're wrecking the portion of the economy most important to the most financially vulnerable. Maybe the whole "Fight for $15" thing is just a world-class troll by the 0.1%.
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You had me until this:
The only way to increase wages is to increase worker productivity
Higher productivity creates a greater supply of labor, lowering wages in the process. The only ways to increase wages is generate demand for labor, or to lower the supply of labor. For example: one way to lower the labor supply would be to simply get rid of overtime exceptions.
I wish my 15 year old daughter could get a part time job for $8/hr. It would teach her responsibility, she'd learn a little about business, and she would have money of her own she's earned. It would be anything but demeaning. Unfortunately those types of jobs don't exist anymore.
At some point the purpose of unskilled losers is to serve as a warning to the next generation. Don't make the decisions they made...
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
All over Israel the McDonald's use automated ordering kiosks instead of human beings. There's about 3-4 actual humans working in any given McDonald's branch. And I can assure you that there's no $15 equivalent minimum wage in Israel, yet this still happened, and it's what McDonald's USA has a wet dream for. It will happen, and it will happen a lot sooner than you realize, regardless of any regional or even national minimum wage.
The rate at which automation eliminates jobs is not at all tied to increases in minimum wage, but rather in efficiencies gained by automation.
If I can automate a process, and save (eliminate jobs) labor costs, then that is what will happen. The wages are just function of that formula (as are other costs).
This is why you're seeing cashiers removed and kiosks being setup for things like ... burger joints. Raising the min wage just speeds up the process of automation, by making the break even point easier to reach.
Basic Economics isn't hard. What makes it hard are all the non-economic value judgement we place on things like ... employment. It is really hard to remove the emotional element.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
I'll play devil's advocate here. What right do you have to take money from somebody and give it to somebody else?
Maybe it is, maybe it isn't. That's actually irrelevant. Enlightened self interest says that wealthy people receive an enormous personal benefit in shoveling sufficient money at the starving classes that they don't rise up and revolt. I'm not wealthy, but I still don't want to be on the receiving end of the French Revolution so I support spending my taxes on basic life support for my neighbors.
You can be a complete sociopath and still support basic universal income for your own selfish reasons.
Dewey, what part of this looks like authorities should be involved?
I can recall from my school days that is exactly what "science fair" projects mostly teach. Come up with a "hypotheses" and then find or manufacture data to support your conclusion. Do you have any idea how many science fair projects I have seen where ethanol had more energy density (BTUs/gallon) than gasoline? That's what the kids believe based on the green energy marketing and that's what teachers should be verifying... But no, these projects routinely get evaluated well for whatever reason and end up at the state level where some judges actually know what they are talking about and ask simple questions about background research into the subject matter.
Even worse, pretty much every science fair project has to have a conclusion to get anywhere. Teachers don't let kids run an experiment where the conclusion is that the test didn't have any findings that support accepting or rejecting the hypothesis. That is not only a perfectly acceptable result in science, but a very good one to find. I encouraged this behavior in projects where kids "concluded" something invalid by running statistical analysis they didn't understand. Excel will give you a trend line even if there is no trend. It's hard to tell a kid their science project found nothing, but in science, that's how most experiments should end up.
Yes it's an anecdote! Were you expecting original research in a Slashdot comment?
A large part of why that emotional element is hard to remove is people have been indoctrinated to believe their work is all they're good for. Many people lose sight of their identity and fall into depression without work.
Just as businesses need to adapt their policies to account for automation, so too should our culture. Is it really a worker's fault if a machine can do the job better? Culture has never kept speed with technology, but it doesn't mean we can't try to shed this idea that productivity is all humanity's good for. It sets people up for disappointment and failure. They put trust into a system that claims they'll always have a decent job if they work hard. That statement is becoming less and less true as automation rises, and people feel misled by society when they can't find work despite 'doing all the right things'.
I fear we've brought this on ourselves and the fallout won't be pretty.
A high school student working at a below living wage is doing a job that could be done by an adult at a living wage. Same for every other example. By paying these people less, you give the companies an incentive to use them instead, reducing the job pool for adults and driving down wages for everyone.
If the job isn't important enough for you to pay them a living wage for, then the job isn't important enough to society for it to be done.
So no such thing as an entry job meant for people to learn how to work so they can move onto real jobs? And we seem to have convinced businesses hat if the job isn't important enough to pay a living wage, it isn't important enough to hire a human.
They do, but they are now called internships, and you don't get paid anything. Still better than working at the Taco shack because learning how to work a non-dead-end job is more valuable than minimum wage at that age.
Have her volunteer for the Special Olympics or something, then she will gain experience in a variety of useful business-related activities, instead of learning how to fold a burrito.
The rate at which automation eliminates jobs is not at all tied to increases in minimum wage, but rather in efficiencies gained by automation.
Well...not quite. The push for the $15/hr minimum wage has put a lot of pressure on certain industries, and some - the fast food industry - have come out and blatantly said they're replacing workers with automated terminals because of it since the terminals are cheaper, more efficient, etc. Yes, they've been evaluating the terminals for years, but they never had a major pressure to actually implement their usage until the minimum wage was pushed high enough that they couldn't afford not to move to the terminals.
Now that's not always true. There are plenty of Bank Tellers still working in conjunction with ATM terminal usage - ATMs didn't really put anyone of a job, just slowed down hiring. This is the more typical case, but when minimum wage is artificially inflated - as it has been with the push for $15/hr - it changes the valuation in favor of technology over workers.
Truth is like the sun. You can shut it out for a time, but it ain't goin' away. - Elvis Presley (source: imdb.com)