Raising minimum wage will raise something else: An army of robots taking away folks' jobs Raising the minimum wage increases the chance employers will automate low-skill jobs away, according to a paper published this week through National Bureau of Economic Research, a non-profit group of econ wonks. In People Versus Machines: The Impact of Minimum Wages on Automatable Jobs, Grace Lordan, associate professor in …
So when there are no jobs and all the cash is funnelled to the top, who is going to have any money to pay for stuff and then where will the rich make their income?
Thats an easy question that was answered 280 years ago by Jonathon Swift. in his pamphlet "A modest Proposal". If you haven't read it, its here: http://www.gutenberg.org/ebooks/1080 and is quite a short and easy read.
'Then why do we keep importing lowskilled workers and allowing children to leave school without sufficent education to get high skilled jobs?'
The first part at least is because it saves on the initial investment in automation which dwarfs the annual wage bill for a Bulgarian* fruit picker. The latter part is really just a sad indictment on the various education policies of the last 40 years or so.
*Other nationalities and occupations are available.
"Then why do we keep importing lowskilled workers and allowing children to leave school without sufficent education to get high skilled jobs?"
The metric used to evaluate the head's performance is based on graduation numbers, not skill level of the students graduating. The ultimate used in Baltimore, MD is to just graduate everybody whether they have shown up to class or not. The staff and school board all get top marks for their achievement and raises all around instead of massive cuts to the annual budget since there are only 5 backsides in seats in any particular classroom and they are there because they are so stoned they can't think of anyplace else to go and the AC is on and they'll get a free lunch.
Being long-term unemployed or underemployed creates real societal problems. Marriages and romantic relationships are much more likely break up, children do worse physically and mentally, enthusiasm declines, suicide and mental illness increases, substance abuse increases, crime (especially domestic) increases and communities suffer.
I don't want to go Luddite, but we need to incorporate these costs into getting your shopping done more cheaply. We've already seen where this leads with trump and brexit, and that will be a picnic compared to where we could be in 10-15 years if the more dire job loss projections happen.
That is one of the points i was going to make. A lot of people here seem to be focusing on what happens when people on minimum wage, no longer are, and are unable to buy their 'stuff' what happens to the economy?
What they are not looking at is, people on minimum wage are often not buying much 'stuff' because they are on MINIMUM wage, and what they do have goes on important things, like staying alive. Take that away from them, without giving them an alternative means of income and they stop paying bills, (rent / mortgage) and lose their homes. Cant afford food / clothes, resort to shoplifting.
All these things pile up making someone who was already in a low paid job (for what ever reason) even less employable.
Another thing is, the idea of re-training people (which many have already correctly identified as not being viable). You can only train people for the problems you have today, you can't start training people now, for an 'opportunity' that wont present itself for another 10 years, because you don't know what training they will need.
Even with school kids, we can teach kids today, with the skills that are relevant today, what we can't anticipate is how the world will change in the next 5-10 years before they leave school, and how relevant those skills will be then.
You can't replace someone's job with a robot then train them to fix that robot. What happens in the mean time (while they are being trained)? You need the people who can fix the robots before the robots take the jobs.
Also, 1 robot does not equate to 1 robot fixer, so even if you could retrain someone to fix 'their' robot, say you replace 100 minimum wagers, with 100 robots, you retrain and keep maybe 5 fixers. What about the other 95%?
RE: "Another thing is, the idea of re-training people (which many have already correctly identified as not being viable)."
Rubbish, you do not teach them the skills businesses need now you teach them the subjects you are targetting for the future and how to learn, same technique as employed by the countries that took the lead off the UK.
Why exactly should current business be any consideration they are the ones who are refusing to even train their existing staff without tax breaks and they are, afterall, mostly service industries trying to compete with countries without western infrastructure costs.
The fact is that selling services is going to be dead for the UK once we leave Europe, that last advantage of being on the inside of Europe is going and that puts us on an equal footing with the rest of the third world. No more quality immigration as the attractive education and health service is already on it's last legs, not even decent weather. The only immigrants we will get after brexit will be those that have already been rejected by everywhere decent to live.
Rubbish, you do not teach them the skills businesses need now you teach them the subjects you are targetting for the future and how to learn, same technique as employed by the countries that took the lead off the UK.
But what about the (hypothetical*) situation where a country has spent years dumbing down it's education because it's all about recording the number of passes and not about the quality of teaching and a person's ability to learn and think for themselves?
* hahahahahaha.
They could become telephone sanitisers, account executives, hair dressers, tired TV producers, insurance salesmen, personnel officers, security guards, public relations executives and management consultants.
At least until the mutant star-goat arrives....
"Even with school kids, we can teach kids today, with the skills that are relevant today, what we can't anticipate is how the world will change in the next 5-10 years before they leave school, and how relevant those skills will be then."
Math!, language skills, reasoning, logic, library skills (how to find information), basic finance, home economics (if you can do basic cooking, you can feed yourself cheaply).
Yes, there is no way to train anybody in a detailed way for a job that won't be defined for another 5 years, but if you are taught how to learn, you can adapt. I don't need to go back to school every year for science and engineering. I have learned (really learned) the basics and good engineering practices that mean I can teach myself new things starting from first principles if I have to. The verification of the Higgs Boson was easy to comprehend since I read lots of physics. If Dark Energy is figured out in my lifetime, I'll likely be able to understand the math. Not because I was trained specifically in Dark Energy, but because I learned higher level maths in general.
You can build things not yet invented if you have a good box of tools. Both literally and figuratively. I like to think I have both. (Although my welder is likely toast at this juncture).
@D@v3
See, the thing is, I agree with you. I'm more concerned about the human cost than the economic one, primarily because I know that if Trump and the Republithugs get their way, I will be the one paying the bill should I become sick or get injured somehow. Also now that the first digit in my age is a 3 and not a 2 or a 1 (oh god, I got OLD, when did THAT HAPPEN?!) and yet I'm still the most able-bodied young adult in my family (which is a massive switch from three years ago when I was a morbidly superobese hamplanet,) I'm having to take on more and more of the doing-stuff-for-the-elders routine that was the subject of my earlier post.
The reason people are making economic arguments is that those upon whom the human cost argument will work are already won. It's those who would, if they could, edit the starving, destitute and ill out of their experience of the world rather than lift a finger to help them, who are the targets of the economic arguments.
let's not forget this has a real effect on inflation....making the min wage rise....none of a rise....and yes the rise flows up through the immediate chain... those on £8 want £9 those on £9 want £10 etc etc
after a small amount of time stacking shelves for an hour goes back to being = x amount of groceries or y% of your electricity bill...no matter what they change in terms of statutory min wage.
It does help buy a persons vote though.
One of the things I believe that minimum wages may lead to is wage compression. Though I've not been reading about economics for a while, so this theory may no longer be popular. But the idea is you push wages up at the bottom, but the wages a bit above that don't go up to compensate. So you end up with more people on the minimum wage. Not that anyone's have gone down.
It's non-controversial that minimum wages cost jobs. There are some things that may be economic at £5 an hour, but not at £7 say. And also there are some robots that may not be economic when you can pay someone £5 an hour, but become cost effective at £7.
But wages are also a price. They're what companies have to pay to get stuff done. So what drives wages up is when they can't get the staff to do something for the current wage.
There are still labour shortages in the economy - so we don't need to be worried about robots putting us all out of work just yet.
I also don't have the faith in AI suddenly becoming magic that many people seem to do.
One of the problems is that modern economies do pretty much work as advertised, they are self-correcting but they don't do it fast enough. Plus we're not very good at moving between different skillsets. On the other hand, planned economies work even less well, and make even more people miserable and poor than market ones. So I guess we need government to do a better job at tidying up the messes. So better adult education services for a start.
"There are still labour shortages in the economy - so we don't need to be worried about robots putting us all out of work just yet."
i'd believe that if there weren't over 400 applications for a low-medium skill job we just advertised.
If there were labour shortages, wages would be rising naturally. They aren't. The figures are effectively made up and the real unemployment figure is somewhere north of 15%, not 4%
'The fatcats said the same when the UK first introduced the minimum wage. I don't recall inflation being a problem.'
Presumably because there were other factors* driving inflation down more than the minimum wage was increasing it. It's very hard to correct for all the confounding factors in an economy.
*I'd suggest the creation of the Euro which I believe helped the Pound remain relatively over valued holding down prices in the UK.
"making the min wage rise....none of a rise....and yes the rise flows up through the immediate chain... those on £8 want £9 those on £9 want £10 etc etc"
They may want that, but what _actually_ happens is that the variation flattens out and more people end up on the minimum wage or only slightly higher as the wages of those below them are lifted.
The economists call it wage compression and it was theorised a long time ago. Observations seem to show they're right on this one.
WRT minimum wage costing jobs: "Yes, but not nearly as many as the monied scream it will" - and people being paid extra tend to be slightly more motivated (there's only a tenuous link between pay and motivation overall once you get to middle-income brackets, but at the low end people who aren't financially stressed out are happier and do tend to work better)
Given a choice I'd take "Mmmm warm and comfy" every time.
Mr Tickle could reach the biscuit tin from bed. But for some reason, even he chose to get up. My only conclusion is that Mr Tickle was a cruel (and successful) attempt to brainwash my 4 year old self.
I have bought a teasmade though. So as well as making me get up and go to work, it's also forced me into consumerist behaviour to benefit the wider economy. Damn those Mr Men!
Although I'm not putting a biscuit tin on my bedside table until someone invents the self-decrumbing duvet. When will plastic surgery be able to give me 20 foot long arms?
Up until the 1980s a number of skilled blue collar jobs were in engineering manufacturing. A workshop might have had 20+ skilled people who were busy driving lathes and milling milling machines etc. Busy businesses ran shifts to keep the equipment running. After the introduction of CNC equipment (Mostly using Data General Nova computers where I was), the same workshop had at most 10 people left on the main shift with perhaps a couple at night. In those days we tried to retrain people or paid for them to retire early - Today market forces drive effected people into the minimum wage jobs discussed. I suspect that we are coming to the end of the economy being based on careers/jobs. Perhaps everyone will become a self employed contractor, with large amounts of "free time" ("unemployment")?
"Up until the 1980s a number of skilled blue collar jobs were in engineering manufacturing"
this has been happening since the industrial revolution.
a) banks had rooms full of "calculators", people who did hand calculations, then used adding machines, to tally up everyone's bank accounts. banks rarely make errors any more since digital computers, and all of those 'drudgery jobs' adding up numbers all day went byby.
b) craftsmen who made various complex machinery were replaced by assembly lines back in the 1800's. They became more efficient over the next century or so up until Ford more or less perfected the process for making cars.
c) The "buggy whip" and "horse carriage" industries virtually disappeared when cars took over.
d) ice delivery disappeared once everyone had a refrigerator
e) milk delivery mostly went away [except in certain neighborhoods] once the supermarket had a huge selection of dairy products at relatively low prices. [my mother had milk delivery when I was really small, but when Jordano's market opened up in the early 1960's, the milk delivery was stopped].
and so on. It's normally called "progress".
It means that we must either seek out jobs that are likely to be around in 50 years [less likely], _OR_ train ourselves well in "general skills", and be FLEXIBLE, constantly re-train [I do] and try to keep your skills on the edge of marketability. ADAPT and SURVIVE.
Some people call this attitude "Social Darwinism". Well, if it's good enough for NATURE...
(pirate icon because after all, I'm like a "privateer")
"the same workshop had at most 10 people left on the main shift with perhaps a couple at night. "
A lot of places that only used to run in the daytime started loading up the CNCs with repetitive jobs for overnight work. One customer of mine branched out into making towballs this way and it became one of his main money earners within a year - enough to pay for a bunch more CNCs
"In those days we tried to retrain people or paid for them to retire early"
And this is where the whammy comes along for millennials. In times gone by, employment would be largely driven by the rate of retirement of the existing workforce (which is why after WW2, thanks to "enlightened social planning", the retirement age was made mandatory in many countries, to ensure there were jobs available for Boomers). Nowadays it's common across the board for a retiring body to be replaced with expanded automation rather than a new apprentice.
There are exceptions of course. Electricians and plumbers aren't going away anytime soon, especially for retrofit jobs but the constant pressure to decrease costs is hard to resist when labour is the predominant item on the invoice these days.
"Reducing human population seems to be an obvious priority, but not one to which many governments want to give serious consideration."
There's only one _reliable_ way to reduce the human population and it isn't famine, pestilence or war - all three of those may give an initial dip in numbers but it's made up (and then some) in the following 2 generations.
Making people better off (wealthier) results in them having fewer children. That falling birthrate isn't just a "first world problem". Over the last 40 years as more than 100 countries have become advanced economies they've experienced the same phenomenon. Places like Singapore have switched from pushing one-child family policies to actively encouraging people to have children because so many couples decided to have none at all. China's seeing the same thing and it's starting to take effect in India along with moderately developed African countries (despite the stuff you see on TV, the vast majority of families since the late 1980s only have 1 or 2 kids, particularly in urban areas)
If you want to see where it is likely to lead, look at Japan. They call it the "lost (two) decades" due to deflation triggered by a falling population (Tokyo is shrinking and there are tens of thousands of abandoned houses in most cities) and a marked reluctance to encourage immigration. Those healthcare robots aren't there to put people out of work, they're there because there are so many pensioners need manual handling that carers are getting seriously injured trying to keep up with the workload.
(FWIW, the best way to stop "economic migration" is to try and improve the economy and governance where the migrants come from, so they don't get encouraged to risk their lives to move to a better life. Those that carp on about "bloody immigrants" are seriously out of touch with the reality on the ground in many countries. The reality is that a large amount of work _is_ going on to do just that across the world via global trading (which has so far lifted 4 billion people out of poverty in the last 40 years) and the migrants we see are mostly from warzones, failed governments or highly protectionist economies which resist change. Africa in particular is not poor, just poorly managed in many parts)
There's a popular theory in certain far left spaces I've been in that when enough jobs are automated, we'll reach a critical mass where everything manufacturable and all services are low value enough to be free. Then, we'll enter a golden age of art, culture, and space exploration. Being able to fabricate or order any item, for free.
The thing is, if the robots self repair (It's possible) or are very easily repaired, and they do every job.... there's no need for money. If enough people are unemployed and earning a universal income, everybody earns the same, everybody can pay the same, and everything begins to get priced the same. Currency, in its current form, ceases to exist, and instead people get what they want, when they want it, because finally humans learn to bend their 30 trillion tons and counting of technology to satisfy everyone's needs instead of just the capitalists.
I don't advocate communism now. It's not practical. But it is, as far as I can see, inevitable. Eventually we'll have too many resources to limit them to just some people.
"we'll enter a golden age of art, culture, and space exploration."
human nature says otherwise.
without incentive for GOOD behavior (i.e. a better wage than the next guy, better stuff, nicer house), along with the converse of DIS-incentive for BAD behavior (being lazy, drunk/drugged all the time, creating babies right/left with no concept of proper child rearing, etc.) you'll just get an ABUNDANCE of BAD behavior.
So instead of a "golden age of art, culture, and space exploration" you'll get a "rotten age of hedonism, sloth, and anti-social behavior".
[don't say I didn't warn you, and so did the fall of the Roman Empire, I might add]
Okay, I'm bracing myself for a bad reaction to this (not just because of the points I make but because I ramble an awful lot), but it's possible that human nature you state isn't all humans, or even most. Or at least it doesn't have to be. The only reason it is, is that since Europeans exceeded their continent and colonised a lot of places, the culture down to a pretty fine level has been about competition.
Pre-columbus North America is a good example of how a happy, widespread civilisation with always adequate resources can have a pleasant culture. They always had enough because they moved frequently. Of course they had to work, but it's the best I've got. They had trade routes and complex society, and the vikings even possibly traded with them at some point.
I think personally the mindset that is required to succeed now does lead to the collapse of empires. That doesn't mean everyone has it, and everyone will have it, though. People point to lord of the flies as a demonstration of human nature, when really it's a demonstration of privileged white schoolkids when exposed to a harsh unfamiliar environment. The Roman empire collapsed because of a few reasons.
Constantine split it into two, east and west. West was the home of actual Rome, which was arguably corrupt and becoming a weaker city, out of a lack of resources. The west half collapsed, the east didn't and it became the Byzantine who survived a lot longer. The Romans failed because they were stretched too thin and didn't, despite their civilization, have enough manpower to protect the lesser side of their empire, which was merely the side that held the name.
Constantine effectively split the empire, moved the capital, and then didn't exactly let the west collapse, but he gave it its own economic system, which failed quickly as all of the luxury goods came from the east, in a typical east-west country split (think Germany, reversed.) I think it was a lack of resources, not an overabundance, that collapsed that empire.
Maybe I'm a hopeless idealist optimist. I don't know. I just feel like every individual human is okay, so the sum of them all will be too, when there's nothing to fight over.
"To look at people in capitalist society and conclude that human nature is egoism, is like looking at people in a factory where pollution is destroying their lungs and saying that it is human nature to cough."
BTW, you forgot the "gay" part - it's properly known as FALGSC, Fully Automated Luxury Gay Space Communism (it doesn't mean you have to be gay, just that gender becomes irrelevant)
"Maybe I'm a hopeless idealist optimist. I don't know. I just feel like every individual human is okay, so the sum of them all will be too, when there's nothing to fight over."
I agree, you are a hopeless idealist optimist. As long as there are humans, there will be something to fight over. Sans a battle over resources, it will be a battle over whose deity is the one true deity or "were you looking at MY girlfriend/wife/boyfriend/husband? Huh?" or somebody feels dey ben "dissed".
The current issues in the middle east stem from oil. They got a lot of it and the entire world wants it (and wants to deny it to somebody they don't like). So what do the politicians do? The pose, posture and send in the jet fighters and tanks. What they should be doing is sponsoring research in their own countries to find ways to stop needing so much of the black stuff. Just the cost of one F-35 fighter would sponsor a very nice lab for several years. Reapply the cost of a squadron and a likelihood turns into a near certainty of finding many ways of economically reducing the reliance on crude. The big upside is that sending less money into the current oil producing dictatorships/kingdoms may lead to those countries being less of a problem.
"you'll just get an ABUNDANCE of BAD behavior."
If you look closer at the antisocial behaviour (vs lotus eating), you'll find it comes from those who are economically deprived or stressed. Drug abuse is concentrated in the same groups.(*)
Rat Universe 25 is a good proxy for human societies and is worth studying.
It's worth noting that actual levels of violence in societies across the world are constantly declining and tolerance of violent or abusive behaviour has also declined at about the same rate. There are small upticks in decadal terms but measured across centuries it's extremely marked. At the same time and in the same way, society, living condition, health and life expectancies have been constantly improving since civilisations started developing (again, with a few upticks - 1914 to 1945 for instance)
(*) The famous "rat experiments" showed that rats (highly social creatures) will drug themselves to a stupor when placed in solitary confinment in order to cope without going insane. Rats in a socially interactive environment and given the same free access to narcotics hardly touch the stuff - even when they're the same rats as in the first experiment.
"We all go down to one day per week oiling the robots and spend the rest of the time drinking marqueritas!
whats wrong with that plan?"
To start, there would be no faster way for the human race to stagnate. Some dictator will still want to be master of the entire world and with all of the soft and lazy humans everywhere else, he'd have a better chance of taking over.
There are already plenty of people on the "Margarita Plan". Though some substitute other mood altering substances. To institutionalize the practice might not be a great idea. Idle hands………. better the masses have to earn their daily crust.
If this is to believed then wages in the UK are so low that it's cheaper to use humans rather than automatic car washes, resulting in a halving of the number of carwashes.
"wages in the UK are so low that it's cheaper to use humans rather than automatic car washes, resulting in a halving of the number of carwashes."
There's a great deal of sense in the referenced article, but one thing it seems to overlook is the apparent unreliability of automated mechanical carwashes, both in terms of service delivery and in waiting time. Back in the days before hand washes (frequently based on undocumented immigrant workers and bosses who care little for any laws) became ubiquitous, it could take ages to find a working car wash and another age to get to the front of the queue. Presumably repairs were tricky or expensive, as the ones close to me used to stay in the "out of service" state for weeks.
Then along comes the hand car wash. Find a site at a negligible rent, find some immigrants of dubious status who don't want to go to the law if they're housed illegally and employed on illegal conditions, who unlike the machines don't need expensive repairs when they break, an owner who doesn't care about laws (including those re disposal of contaminated wastewater into the public drainage system). PROFIT!
http://www.newstatesman.com/politics/economy/2015/11/dirty-dealings-how-car-wash-became-hub-human-trafficking
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