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Will minimum wage hikes lead to a huge boost in automation? Only if we're lucky

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Re: Will minimum wage hikes lead to a huge boost in automation? Only if we're lucky

#51

Post by atemerev »

kdamken wrote: post #39
cornholio wrote: post #22

Earlier quoted context omitted.

You are essentially making the luddite case. The counterargument usually goes like this: yes, people would be fired and there will be serious pain in the short run; however the machines will drastically improve productivity, therefore reduce prices, so real wages will go up along with demand and the extra income not spent on, say, buying feed stock for your horse, will go in creating other jobs and economic sectors t…

> however the machines will drastically improve productivity, therefore reduce prices Except why would that ever happen? If you were a business owner selling widget X, and it suddenly cost you half as much to make that due to automation, you don't pass those savings on to your customers, you celebrate how much better your margins have gotten and how much more profit you're making.

Because of this little thing called "competition". There will always be new businesses who can live with lower profit margins and drive you out of the market for good.

Capitalism 101.

Re: Will minimum wage hikes lead to a huge boost in automation? Only if we're lucky

#52

Post by danielrhodes »

I think what you're going to see with any minimum wage hike is that businesses who have thin margins, namely restaurants and small stores, will be forced to go out of business or be forced to degrade their quality of service. Labor costs are for any business the biggest line-item expense. Spending on "robo waiters" or what have you is a big upfront capital expenditure, and I doubt many restaurants will be able to finance it. But it's not just small establishments: even Walmart is very exposed to these wage hikes. While it appears like they have lots of money, a lot of how they do what they do is based on cheap labor.

In SF, after they boosted the minimum wage, I observed a few stores go out of business. I'm all for people being paid more, but I doubt people losing their jobs altogether was the intended consequence.

Another thing I observed was the price of eating out in SF rose considerably. I remember feeling shocked that for a simple lunch (certainly not a luxury), I paid over $30. Things like that hurt people on the lower end of the economic spectrum, especially since poorer people are very sensitive to food prices.

The sad thing is: after taxes, if somebody is working the maximum hours they can without being a full-time employee (which very few minimum wage earners are), this would only net them an extra $450/mo. at most, which doesn't seem like it would be enough to have a big impact on somebody's life.

Perhaps I am cynical, but I don't see these wage hikes as having a net positive impact. What drives up wages is a shortage in the labor supply and businesses that need more skilled employees who they are willing to train and keep for awhile. A minimum wage hike just gives businesses more reasons not to hire people.

Re: Will minimum wage hikes lead to a huge boost in automation? Only if we're lucky

#53

Post by [deleted] »

Retra wrote: post #38
Pyxl101 wrote: post #26

Earlier quoted context omitted.

You're using an inadequate notion of what a "good argument" is in this context. You have not made an argument for why a price floor is necessary or desirable. I could just as easily say, "The good argument for having a maximum 'price of bread' is that without it, bread prices will be pressured up, because every bakery on the planet wants prices as high as possible, and they generally have the means to achieve it." Yo…

>You have not made an argument for why a price floor is necessary or desirable. I'm pretty sure that's all I did. Your inability to see that is on you. >"The good argument for having a maximum 'price of bread' is that without it, bread prices will be pressured up, because every bakery on the planet wants prices as high as possible, and they generally have the means to achieve it." You can say that all you want, but y…

[deleted]

Re: Will minimum wage hikes lead to a huge boost in automation? Only if we're lucky

#54

Post by makomk »

seabee wrote: post #49
kdamken wrote: post #39

Earlier quoted context omitted.

> however the machines will drastically improve productivity, therefore reduce prices Except why would that ever happen? If you were a business owner selling widget X, and it suddenly cost you half as much to make that due to automation, you don't pass those savings on to your customers, you celebrate how much better your margins have gotten and how much more profit you're making.

True in a monopoly situation, but if you have competition and they can automate like you, there will be a race to the bottom.

Now suppose the automation technology is thoroughly patented and the inventor effectively has a government-granted monopoly on the right to use it or anything similar to it.

Re: Will minimum wage hikes lead to a huge boost in automation? Only if we're lucky

#55

Post by eximius »

What happens when automation displaces a sufficient portion of the unskilled workforce that their value is less than 'minimum wage'?

In an increasingly technical and automated society, what do we do about those who cannot adapt or become skilled enough to work in the increasingly technical workspace? We can either manufacture menial, useless jobs or admit to ourselves that HAVING to work is not necessary. We NEED to begin exploring Universal Basic Income to learn how to accommodate this in the future. It's either that or we let those who can't join the workforce suffer.

I don't know that we're there yet, but we will someday. Sooner than we think.

Re: Will minimum wage hikes lead to a huge boost in automation? Only if we're lucky

#56

Post by mbfg »

I'm all for raising the minimum wage, temporarily it may help people for several years. The truth is the automation wave is coming quickly regardless of what people are paid. And it's not for just minimum wage jobs. Think about jobs like truck driver where there's probably several million people who count this as their profession in the US. In 10-20 years, that number will probably approach 0.

There's a nasty new world order coming where a vast majority of jobs will be gone. There will be super wealthy 'robot owners' and peasant/slaves, and probably first in america.

The only hope is that the government completely changes the entire society through 'more than' basic income. Of course we know that won't happen. It is high unlikely that even a subsistent basic income will be put in place. The government is run by the super-rich, and really only does what ever it takes to protect their interests.

Hopefully my life span doesn't range long enough that i feel the devastating impact of these changes, but i fear the timespan where this occurs is so accelerating that it will be here in force way before we estimate it today. 30 years? I can see it being here in 30 years.

Even if you have a job that is 'automation-proof' or 'automation-resistent' but not an elite, your income will be paltry compared to the super rich class, and thus you will be relegated to the masses.

Yeah, I know, i sound hysterical. Hopefully i am. I doubt it.

Re: Will minimum wage hikes lead to a huge boost in automation? Only if we're lucky

#58

Post by Al-Khwarizmi »

atemerev wrote: post #31
Retra wrote: post #14

Earlier quoted context omitted.

The "good argument" for having a minimum wage is that without it, wages will be pressured down , because every business on the planet wants wages as low as possible, and they generally have the means to achieve this. It has nothing to do with job creation: it's about having jobs that are not basically slavery. It's for job quality, not quantity. Besides, you're just assuming people should be employed at "fair market…

True, every business on the planet wants wages as low as possible. This is, of course, correct. On the other hand, every employee on the planet wants her wage to be as high as possible. This is also obviously true. This creates law of supply and demand. Google can't hire a decent software engineer for, say, $30000/year, because other companies will immediately offer more, and supply of talented software engineers is…

How does this contradict the parent comment?

Minimum wage obviously doesn't affect Google engineers, it affects the unskilled labor with near-limitless supply that you have mentioned. The idea is to prevent that kind of labor from becoming basically slavery.

Re: Will minimum wage hikes lead to a huge boost in automation? Only if we're lucky

#59

Post by makomk »

atemerev wrote: post #31
Retra wrote: post #14

Earlier quoted context omitted.

The "good argument" for having a minimum wage is that without it, wages will be pressured down , because every business on the planet wants wages as low as possible, and they generally have the means to achieve this. It has nothing to do with job creation: it's about having jobs that are not basically slavery. It's for job quality, not quantity. Besides, you're just assuming people should be employed at "fair market…

True, every business on the planet wants wages as low as possible. This is, of course, correct. On the other hand, every employee on the planet wants her wage to be as high as possible. This is also obviously true. This creates law of supply and demand. Google can't hire a decent software engineer for, say, $30000/year, because other companies will immediately offer more, and supply of talented software engineers is…

The trouble with supply and demand is that people can't exactly stop eating for a few months if they can't find work that pays as much as they'd like, so as long as there are more people who need jobs to eat than there are jobs it can't do much to stop the downward pressure on wages - which in turn means that it's in business owners' interests to make sure this is true. (Why do you think there's really so much pressure to cut welfare in countries like the US?) If anything, decreasing prices could increase supply as people are forced to work multiple jobs in order to afford food and shelter.

Re: Will minimum wage hikes lead to a huge boost in automation? Only if we're lucky

#60

Post by hardcandy »

TheSpiceIsLife wrote: post #29
hardcandy wrote: post #21

Earlier quoted context omitted.

Australia is being fueled by huge external stimulus from China, which won't last forever. It's not the best example to use. Some of the mature European democracies provide much more useful data.

That's definitely true, to some extent at least. This[1] says "The mining sector represents 7%[31] of GDP; including services to mining, the total value of the Mining Industry in 2009-10 was 8.4% of GDP.", and "Despite the recent decline of the mining boom in the country, the Australian economy has remained resilient and stable." - We'll see how long that lasts. It's certainly given me pause when considering to take…

From my friends in Australia (academic economists) I hear that China's impact on housing now exceeds the impact on any other sector. Australia has effectively become mainland China's money laundering hub.
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