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Businesses The Almighty Buck

Higher Minimum Wages Bring Automation and Job Losses, Study Suggests (axios.com) 601

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.
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Higher Minimum Wages Bring Automation and Job Losses, Study Suggests

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  • by __aaclcg7560 ( 824291 ) on Wednesday August 16, 2017 @12:03PM (#55025837)
    We know how many jobs will be lost. Do we know how many workers will benefit from a $1 per hour increase? I think that number will be larger than the number of jobs lost.
    • by Okian Warrior ( 537106 ) on Wednesday August 16, 2017 @12:15PM (#55025995) Homepage Journal

      We know how many jobs will be lost. Do we know how many workers will benefit from a $1 per hour increase? I think that number will be larger than the number of jobs lost.

      Be careful of that calculation.

      The justification behind Chinese off-shoring was that the benefits of reduced prices outweigh the domestic loss of wages. For example, the damage from losing one worker at $50K is more than compensated if 10 million people spend $1 less on some product. That frees up $10 million to be spent on other things, and the economy gets stronger.

      The problem is that the benefits are not linear. You can easily see that by going to the limits of the policy - when all manufacturing is done in China and all workers are out of a job, for instance.

      If you assume a fixed or shrinking pool of available jobs, then you quickly come to the point where there are more job-seekers than there are jobs. In this case the economic benefits can still be argued, but the cost of doing so is the loss of the $50K job and the extra burden of having an unemployed person in the labor pool.

      It's not a linear function, and you can't rely on past economic studies that were done based on a previous historical situation.

      So... be careful with that calculation.

      • by PopeRatzo ( 965947 ) on Wednesday August 16, 2017 @12:50PM (#55026449) Journal

        Be careful of that calculation.

        That's for sure. If you read the article (I know, right?) you will learn the methodology that these "economists" used:

        1. Take a period of time when the minimum wage went up from $6.77 to $7.77, specifically 1980 to 2015.

        2. See how many low-skill jobs were lost to automation in that time.

        3. Assume that the automation was implemented purely to avoid paying the extra buck an hour to those greedy people making $7.77/hr and had nothing do with, I don't know, technological advances in automation.

        4. Conclude that companies won't implement automation if we can just keep wages low enough, and that people would be better off if they just accepted their lot in life. Just think of how many jobs would be created if workers stopped expecting to be paid altogether!

        If you think I'm kidding, read the article (and the linked "research" by these "economists")

        • by Archangel Michael ( 180766 ) on Wednesday August 16, 2017 @01:21PM (#55026837) Journal

          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.

          • by Anonymous Coward

            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 h

          • by TemporalBeing ( 803363 ) <bm_witness@@@yahoo...com> on Wednesday August 16, 2017 @04:39PM (#55028989) Homepage Journal

            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.

        • The conclusion that companies won't implement automation if labor is cheap enough has some validity. The problem with the conclusion is that the cost of labor is only one of at least a dozen factors to consider.

          There is a similar problem when discussing minimum wages in general, let alone increases in minimum wage. If profit margins are too low businesses lay off people, which often reduces their overall business. Consider a Grocery store that can't hire enough people and customers end up leaving before

      • by Anonymous Coward on Wednesday August 16, 2017 @01:09PM (#55026711)

        the "justification" for moving jobs overseas has nothing to do with it being "better" for *US* or the 'economy' as a whole than a wage increase.. it had everything to do with just being *cheaper*, period. companies are evil. they're greedy as fuck. they will choose the cheaper option 999 times of 1000 without any other considerations.

        automation is coming, *regardless* of what the minimum wage is. because for many, many jobs, it is *cheaper* than people doing the same thing.. even at the lowest possible wages in the u.s. the companies don't give a shit about lost jobs if they can do or make more with less money, their bean counters are happy.

        • by Rob Y. ( 110975 )

          This. Squared. And as evidenced by the utter failure of many outsourcing efforts in tech, they'll even do it to the point where they destroy their companies.

          If you don't factor in the short-range benefits to executives of the brief improvement to the bottom line - before the actual failure of the actual work starts affecting cash flow - you miss the true evil behind it. It's not even a matter of "business will do what's best for the bottom line - and no point trying to stop that". It's a matter of greed

          • And as evidenced by the utter failure of many outsourcing efforts in tech, they'll even do it to the point where they destroy their companies.

            But that's just the market at work. If outsourcing worked, we wouldn't have all of our tech jobs in the U.S. any more. Just because a particular company fails doesn't mean that the jobs are completely and permanently lost. Obviously that company existed to fill some need in the market to begin with or they wouldn't have existed long enough to even try outsourcing, so those workers will go to other companies or some might even form their own because that demand still exists.

            If you think the problem exists

        • the "justification" for moving jobs overseas has nothing to do with it being "better" for *US* or the 'economy' as a whole than a wage increase.. it had everything to do with just being *cheaper*, period. companies are evil. they're greedy as fuck. they will choose the cheaper option 999 times of 1000 without any other considerations.

          Actually companies are inherently amoral, not evil. For example, most companies wouldn't direct their employees to go out of their way to harm innocent bystanders. Companies generally exist for one purpose, to create profits for the owner(s). Companies can be good if the owner(s) or the customers wish it to, and they can be evil because the owner(s) wish it [wired.com] and the customers can't stop it (for example, in monopoly or oligopoly situations). Most of the time they are neither explicitly evil nor explicitly

        • by bws111 ( 1216812 ) on Wednesday August 16, 2017 @03:08PM (#55027889)

          companies are evil. they're greedy as fuck. they will choose the cheaper option 999 times of 1000 without any other considerations.

          Companies? How about consumers?

          Companies used to manufacture in the US. When asian imports became available consumers flocked to them because they were CHEAP. Two particular glaring examples of this were consumer electronics and textiles. The US manufacturers had a choice: become as cheap as the imports, or die. Some went the outsourcing method and survived. Most just died.

          I have an acquaintance who is losing her job at a retailer. Naturally, this is all the greedy retailers fault. When I pointed out to her that she buys damn near everything on Amazon, her response was 'well it is cheaper.' Remind me again who will choose the cheaper option without any other considerations.

      • The problem is that the benefits are not linear. You can easily see that by going to the limits of the policy - when all manufacturing is done in China and all workers are out of a job, for instance.

        That's not what happens. The only way U.S. companies could move all manufacturing to China is if they're able to import and sell all those manufactured goods back here in the U.S. So in that scenario, the U.S. has no more manufacturing jobs, but has sufficient design, service, and other jobs to sustain the c

    • by Anonymous Coward on Wednesday August 16, 2017 @12:34PM (#55026239)

      It's not even clear that jobs are lost. They calculate -10 000 jobs for 1$ increase due to automatisation, but they're not considering the number of jobs that will be created by having 2.6 millions workers with extra money to spend.

      • by alvinrod ( 889928 ) on Wednesday August 16, 2017 @01:38PM (#55027055)
        Yes, but this assumes the businesses that saved that $1 in wages aren't going to spend it on something else. Paying a higher minimum wage doesn't magically create additional money. You don't think businesses or rich people just hoard piles of money like dragons with gold do you?

        All you change is where the money gets spent. If you have 10 employees a $1 raise works out to about $20,000 per year. Either the business eats the added cost from their profits or they pass the $20,000 on to customers or some combination of both. If they eat it from profits it's $20,000 less to return to shareholders or invest in some other endeavor which also means spending it on someone else's labor.

        If you still can't see that it makes no difference imagine that all workers and all businesses put the amount into a savings account. 10 workers each put $2,000 in the bank or the business puts $20,000 in the bank. The same applies to if they spend all of it.
        • by MikeKD ( 549924 ) on Wednesday August 16, 2017 @04:56PM (#55029193) Homepage

          Yes, but this assumes the businesses that saved that $1 in wages aren't going to spend it on something else. Paying a higher minimum wage doesn't magically create additional money. You don't think businesses or rich people just hoard piles of money like dragons with gold do you?

          Actually, that is exactly what they are doing:

          Why Are Corporations Hoarding Trillions? [nytimes.com] Jan, 2016: "This strange vogue for corporate hoarding seems to have begun around the turn of the millennium. General Motors is perhaps the most extreme: It now holds nearly half its value in cash. Apple holds more than a third. These numbers are maddening on their face. If the companies spent their savings, rather than hoarding them, the economy would instantly grow, and we would most likely see more jobs with better pay. In the 1990s, when companies saved far less of their profits, they built new factories, bought new buildings. In part because of all that corporate spending, the 1990s were a period of low unemployment and high growth. Remarkably, the United States government was able to tax all that productive corporate behavior so much that it came close to paying off all its debts for the first time in 160 years."

          US companies are hoarding $2.5 trillion in cash overseas [cnbc.com] Sept, 2016: "American companies are holding $2.5 trillion abroad, an increase of nearly 20 percent over the past two years, according to the latest calculations from forecaster Capital Economics. The total is equivalent to nearly 14 percent of total U.S. gross domestic product."

          Announcement: Moody's: US corporate cash pile, led by tech sector, to grow to $1.77 trillion by end of 2016 [moodys.com]: "New York, November 03, 2016 -- US non-financial companies rated by Moody's will increase their cash holdings to $1.77 trillion by the end of the year, from $1.68 trillion at the end of 2015, Moody's Investors Services says in a report."

    • According to the bureau of labor statistics [bls.gov],

      Together, these 2.2 million workers with wages at or below the federal minimum made up 2.7 percent of all hourly paid workers.

      So, around 1% would lose their jobs and the rest will have have a 15% rise in pay. Spending that should create some jobs, obv.
    • by zifn4b ( 1040588 )

      We know how many jobs will be lost. Do we know how many workers will benefit from a $1 per hour increase? I think that number will be larger than the number of jobs lost.

      I don't think that's a relevant question anymore. Your assumption is that every citizen is required to work because there is a job that needs to be done by every citizen for the benefit of society. When we start seeing things like automation what that does is it lowers the number of jobs that need to be done because some jobs are now being done by robots instead of manual labor.

      I mean we knew this day was coming at some point with our ever increasing technology right? Isn't this what we wanted? Less nee

    • by davecb ( 6526 )

      Every time Ontario raises the minimum wage, another study comes out with new claims that the job losses will be immediate and permanent.

      This is followed six months later with a report that says the first one is incorrect, the emplyment rate didn't fall as much as expected, and is back up where it was before in any case.

      I suspect stupidity and a startingly short memory, or perhaps a whole new generation of study-writers, but it actually could be malice (ie, fake news)

  • Common Sense (Score:3, Insightful)

    by Tulsa_Time ( 2430696 ) on Wednesday August 16, 2017 @12:04PM (#55025855)

    Why is this concept so controversial ?

    Why do those advocating the $15 hamburger wage not see this ?

    • Re: Common Sense (Score:5, Insightful)

      by Anonymous Coward on Wednesday August 16, 2017 @12:07PM (#55025887)

      I wouldn't say its controversal, just that there is more to the discussion..

      1) Would the automation happen naturally regardless? A machine needs a 0 wage, which a human can't beat and automation will continue to get cheaper.

      2) What are these jobs providing unlivable wages really worth?

      • Unlivable (Score:3, Insightful)

        by Anonymous Coward

        They aren't supposed to be providing a living wage. They are entry-level jobs. They are *supposed* to be filled by college students and people just getting started in the work force.

        Once you increase the cost of those jobs, the value proposition changes, and they aren't "entry level" anymore. Most employers won't think twice about hiring someone at $4 to clean up a restaurant. If you have to pay them $15/hour, then they are going to need more value out of them. They are probably going to have the waiters an

      • Re: (Score:2, Insightful)

        by Anonymous Coward

        1) The automation has been progressing for over 200 years and will continue to. Slow progress to automation is good. Sudden changers to the workforce are bad. Raising the minimum wage quickly disrupts business, we'll see a lot of smaller more personal shops close down while the Amazons and Walmarts with deep pockets for automation will only benefit from less competition. It will lead to a hard push towards automation that will disrupt the workforce a lot faster and harder than it should have.

        2) For peo

      • A machine needs a 0 wage, which a human can't beat and automation will continue to get cheaper.

        Automation will get cheaper to setup. Run costs will be primarily fixed to power costs. Maintenance costs will gradually go up. Support contracts will go up.

        Once automation is pervasive and most businesses can't function without it, it'll turn into "Pay us our quarterly licensing fee or your robots will go on strike.".
        Imagine if McDonald's decided to fully automate their kitchens and gave the contract to someone like IBM or Oracle.

    • by Anonymous Coward

      Anything that encourages labor automation is a net benefit to the world. That tech is the only thing that has the potential to fundamentally alter how the economy works.

      And a fundamental alteration is exactly what we need, because the status quo is "a tiny group of wealthy at the top, sitting on top of a smallish group of workers living comfortable lives, sitting on top of an enormous mountain (80% of the human population) of people who suffer in abject poverty for their entire lives."

      No amount of law, rel

      • by Tablizer ( 95088 ) on Wednesday August 16, 2017 @12:25PM (#55026139) Journal

        Anything that encourages labor automation is a net benefit to the world.

        "could be" instead of "is". The problem is that the benefits of automation are not trickling down in practice (other than cheap widgets and lawn-chairs). The benefits go mostly to the owners of the machines: it's becoming a winner-take-all economy.

        I'm not a "commie", but this is just the kind of problem Karl Marx ranted about. I don't necessarily agree with his proposed solutions, but if some other solution is not found, then rioting etc. could lead to Marxism/communism, along with its down sides. Better to solve it smartly rather than let angry mobs "solve" it for us.

    • by Tailhook ( 98486 )

      It's politically inconvenient.

    • Who says they don't see it? Maybe everyone who advocates for minimum wage just happens to be in the robot manufacturing business.

    • I advocate .... (Score:4, Insightful)

      by Anonymous Coward on Wednesday August 16, 2017 @12:27PM (#55026171)

      Where I live, $15/hour is still too low to live hear. (A one bedroom shit apartment is over a $1,100 a month) What folks do is commute an hour or more one way from the poor areas. So, two hours a day is just traveling to and from the job. Plus work the 8+ hours and try to do the things that one has to do to live.

      That's a shitty life. But they do it because there's just Walmart as an employer and some small businesses that have no job openings.

      Yeah yeah yeah, they made "poor life choices" - they should have went to medical school.

      See, the trouble with our society is that a person's worth is based upon their economic value. Can't make a living with the intelligence you are stuck with? Well, you're stuck as a poor slob eeking out enough to eat - just a like a Third World country,

      • Your Mama thinks you are worth more than your 'economic value', but I bet Dad knows better.

      • A lot of it is poor life choices but not how you are portraying it. Take 3 of my wife's cousins who are all siblings. One is an artist, one is a fitness trainer and does self help books/programs, and the other is a motivational speaker. On the surface one would expect that the fitness trainer would be doing reasonably well, the motivational speaker exceptionally well (why else would you hire them), and the artist eating ramen for 89 meals each month. This is just with the knowledge of their chosen professio
    • I don't know if it is controversial. More jobs is just a number, and numbers aren't holy. In "Das Kapital", Marx describes that in 19th century England machines existed to wipe chimneys, but little boys were cheaper. Common sense tells us that a too high minimum wage will make people unemployed, and a too low minimum wage will exploit them. Exploited people are still dependent on welfare and crime, thereby destabilizing society. Nothing new here.
      • _Another_ thing Marx was wrong about. If a chimney cleaning machines exist, why aren't they in common use now? Chimney sweeps are well paid.

        People that start their analysis with Marx puzzle me. Why?

    • by ljw1004 ( 764174 )

      Why is this concept so controversial ? Why do those advocating the $15 hamburger wage not see this ?

      You can see this and still advocate for the $15 minimum wage.

      I think $8/hour labor is just demeaning to the workers and to society, and should be stopped for that reason.

      On the one hand that means that some people will now no longer have a job. On the other hand our society as a whole is still producing just as much (actually it's producing slightly more because there's extra work in producing the robots). And a society where more is produced for less labor is a BETTER society.

      Separate from that is the ques

      • Re:Common Sense (Score:5, Interesting)

        by Anonymous Coward on Wednesday August 16, 2017 @12:37PM (#55026287)

        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.

        • Re:Common Sense (Score:4, Interesting)

          by VocationalZero ( 1306233 ) on Wednesday August 16, 2017 @04:38PM (#55028975) Journal
          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.
    • Because Macroeconomics is a complex topic.
      Improvements in efficiency in general has a wide reaching improvement in the economy. While some jobs are lost new jobs are created. We can go back over a hundred years, of evidence of things said to kill the need for workers, only to have their jobs change and have the need for more people working.

      Raising the minimum wage, will force some businesses to increase efficiency, however for the most part most companies including fast food places, have employees already

    • I think there are a lot of people who want to make the world a better place, so for them the reasoning goes that money can be used to improve peoples' lives (true in a general sense), so if you give people more money they can use it to improve their lives and the world is a better place. They now think they've satisfied their objective so they don't feel too compelled to think beyond that point and most people in general aren't really good at sitting down and honestly dissecting all of the things that may b
    • Perhaps we don't need hamburger businesses to begin with. If the only way you can make money is by paying dogshit wages to your employees, maybe your business isn't very worthwhile.
    • Simple - while 10,000 jobs might go away due to this, 26 million people will be earning $1 more an hour, and as a result, $26 billion more is circulating in the economy, rather than sitting in a rich company's bank account.

      That $26bn circulating in the economy creates *far* more jobs than the 10,000 lost.

      That's why the economy in the states that have introduced higher minimum wages has got better, and why unemployment has gone down.

    • People Need to Eat (Score:5, Insightful)

      by mx+b ( 2078162 ) on Wednesday August 16, 2017 @12:50PM (#55026445)

      Why do those advocating the $15 hamburger wage not see this ?

      Because you're making a detached economic argument in favor of business interests, and they're making a "I need enough food to survive" argument in favor of community interests and human rights.

      In most areas of the country, especially near big cities, the cost of living is approximately $15 if not much higher (I've seen estimates of more like $20-25 in New York City, for example). This is the cost of basic rent, basic utilities like electric and water, food, transportation to a job (whether by owning a small used car or taking the bus - what you think buses are free?), and replacement clothing (nothing fancy, just new pair of jeans every once in a while as old one rips). Basically, inflation is increase in cost of goods and services, and if you took the minimum wage of the '60s and '70s and adjusted it for inflation, it really should be something like $15 per hour now. With the productivity gains of the average American worker due to increased education and technology, it should probably be even higher, but almost all of the profit gains have gone to top executives rather than increased the salaries of those that actually do the work.

      So what does this mean? It means any job paying less than approximately $15 per hour is NOT LIVABLE. You will starve, or end up homeless, or some sort of big problem. It's not sustainable. What I don't understand is why people make the argument of the don't "deserve" $15. Who says? Who decided some arbitrary number is the cap? The REAL issue is: does every person deserve enough to meet basic needs in modern society? I think the answer is unequivocally YES. Every American deserves the dignity of basic needs met, especially when they're willing to work full time to do so. No matter what the work is, if it takes up a full week of work, then they deserve to have basic bills covered, end of story. Full time work is opportunity cost -- if you're working full time, it means you don't have free time to take other jobs, attend school or training, etc. IT HAS TO BE WORTHWHILE. It has to be enough to survive.

      Having "more jobs" that pay starvation wages is not really an improvement. It makes job numbers reports and corporate profits look better, but those aren't the only metrics of the success of a society. In fact, I think they're bad metrics; a much better one is: do we ensure every American that works hard can take care of themselves, and has opportunity to improve their lives? By that metric we are failing disastrously.

      In my view, businesses that cannot budget for and pay living wages are FAILING BUSINESSES. A business that requires its workers to starve for its owner to make a profit is a FAILING BUSINESS and deserves no sympathy or respect. They should have to drastically change their business strategy or go out of business and be replaced in the free market by business owners that DO pay a living wage.

      As far as automation goes, do you think they'll ever decide "Nah, I don't need more profit!"?. At best, low wages slightly delay automation, but make no mistake: it's coming. It's the story of the industrial revolution and the Gilded Age, big business grew larger and larger until it controlled the economy and could automate or improve efficiency, and laid off many many workers once they were unneeded. The poverty and starvation was great, which is what lead to so many of our labor reforms and formation of unions. We have to start putting human interests first over corporate interests. Don't fall for their propaganda. Every American that works hard deserves to live without fear of where the next meal will come from or how to pay rent this month.

      And really, we should be taking advantage of automation to work LESS. Lower the amount of hours for full time work. Give everyone more time to raise their families, get involved in the community and local politics, take classes and improve education, volunteer, etc. There's more to life than wage labor. We can make that happen if we stop obsessing with letting big business take more, more, more for themselves.

      • Assume our main goal is that everyone gets a living wage.

        First assume we don't have minimum wage laws. Therefore the government needs to make up the difference. (This is a bit how it is now with subsidized housing and food stamps.) This seems like a reasonable system. If we did have a minimum wage then it might be too high for full employment and the government would have to fully pay for this living wage. Therefore the companies are offsetting this cost. Of course, with this system, what incentiv

    • At some point I question this "common sense". My parents and my grandparents could live on minimum wage. My aunt put herself through nursing school and then law school on a minimum wage (at that time) job, had a car, could go out to eat on occasion (or to the bar), and paid for her apartment. My grandfather didn't make a lot of money - but he was able to have a house, a car, a farm, and a family which included 3 kids. Single household income. He was far from rich. What has changed? Why has it changed? There
    • Re:Common Sense (Score:5, Interesting)

      by mishehu ( 712452 ) on Wednesday August 16, 2017 @01:06PM (#55026659)
      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.
    • Because when you're dealing with complex feedback loops (and economics is full of those), common sense is often too lazy to finish even the first round of feedback, much less correctly solve the full recurrence.
  • If the cost of human labor rises, then other types of labor may become more cost effective.

    .
    They had to look through 35 years of data to come up with that conclusion?

    • Re:Well, duh... (Score:5, Informative)

      by dunkelfalke ( 91624 ) on Wednesday August 16, 2017 @12:11PM (#55025929)

      Not as duh as you think it is.
      Just a few years ago Germany had no minimum wage at all. No jobs were lost since it was introduced even though many conservative politicians and heads of German industry prophesied doom and destruction.

      • Data to show 'No jobs were lost'...I call bullshit, there is no way to know. Anybody claiming to know with certainty, is just repeating derp.

        You could disprove your claim by finding one small business where the owner chose to clean his own toilets.

      • Not as duh as you think it is.

        It is exactly as "duh" as I think it is. If the cost of human labor rises, other types of labor may become more cost effective. That is what I said, and it still holds true. Where you went off the rails is to extrapolate my comment with your opinion that less cost effective human labor results in the loss of human jobs.

  • by ErikTheRed ( 162431 ) on Wednesday August 16, 2017 @12:10PM (#55025905) Homepage

    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%.

    • The laws of supply and demand have been well-understood for generations.

      So has the economic concept of Externalities. If someone is willing to work for less than they need to survive, then they are obviously being subsidized somehow (living in parents basement, government food stamps & welfare, shoplifting from employer, etc). Minimum wage is a way to level the playing field and eliminate the need for these subsidies so the employer pays the true cost of labor.

  • by llZENll ( 545605 ) on Wednesday August 16, 2017 @12:11PM (#55025931)

    In a free market, demand is always a function of price: the higher the price, the lower the demand. What may surprise most politicians is that these rules apply equally to both prices and wages. When employers evaluate their labor and capital needs, cost is a primary factor. When the cost of hiring low-skilled workers moves higher, jobs are lost. Despite this, minimum wage hikes, like the one set to take effect later this month, are always seen as an act of governmental benevolence. Nothing could be further from the truth.

    When confronted with a clogged drain, most of us will call several plumbers and hire the one who quotes us the lowest price. If all the quotes are too high, most of us will grab some Drano and a wrench, and have at it. Labor markets work the same way. Before bringing on another worker, an employer must be convinced that the added productivity will exceed the added cost (this includes not just wages, but all payroll taxes and other benefits.) So if an unskilled worker is capable of delivering only $6 per hour of increased productivity, such an individual is legally unemployable with a minimum wage of $7.25 per hour.

    Low-skilled workers must compete for employers’ dollars with both skilled workers and capital. For example, if a skilled worker can do a job for $14 per hour that two unskilled workers can do for $6.50 per hour each, then it makes economic sense for the employer to go with the unskilled labor. Increase the minimum wage to $7.25 per hour and the unskilled workers are priced out of their jobs. This dynamic is precisely why labor unions are such big supporters of minimum wage laws. Even though none of their members earn the minimum wage, the law helps protect their members from having to compete with lower-skilled workers.

    Employers also have the choice of whether to employ people or machines. For example, an employer can hire a receptionist or invest in an automated answering system. The next time you are screaming obscenities into the phone as you try to have a conversation with a computer, you know what to blame for your frustration.

    There are numerous other examples of employers substituting capital for labor simply because the minimum wage has made low-skilled workers uncompetitive. For example, handcarts have replaced skycaps at airports. The main reason fast-food restaurants use paper plates and plastic utensils is to avoid having to hire dishwashers.

    As a result, many low-skilled jobs that used to be the first rung on the employment ladder have been priced out of the market. Can you remember the last time an usher showed you to your seat in a dark movie theater? When was the last time someone other than the cashier not only bagged your groceries, but also loaded them into your car? By the way, it won’t be long before the cashiers themselves are priced out of the market, replaced by automated scanners, leaving you to bag your purchases with no help whatsoever.

    The disappearance of these jobs has broader economic and societal consequences. First jobs are a means to improve skills so that low skilled workers can offer greater productivity to current or future employers. As their skills grow, so does their ability to earn higher wages. However, remove the bottom rung from the employment ladder and many never have a chance to climb it.

    So the next time you are pumping your own gas in the rain, do not just think about the teenager who could have been pumping it for you, think about the auto mechanic he could have become – had the minimum wage not denied him a job. Many auto mechanics used to learn their trade while working as pump jockeys. Between fill-ups, checking tire pressure, and washing windows, they would spend a lot of time helping – and learning from – the mechanics.

    Because the minimum wage prevents so many young people (including a disproportionate number of minorities) from getting entry-level jobs, they never develop the skills necessary to command higher paying jobs. As a result, many turn to crime,

  • by evilRhino ( 638506 ) on Wednesday August 16, 2017 @12:12PM (#55025949)
    Right now, the taxpayer is subsidizing these low paying jobs with welfare. If raising the minimum wage encourages companies to automate, society will be better off because it makes the inefficient jobs obsolete.
  • Either pay people a livable wage, or they will take it via legislation or angry mob.

  • I'm old enough to remember living on minimum wage. and living through two hikes in the 90s

    the first hike we lost health insurance, the second hike we lost other benefits

    At the same time prices did go up, so it didn't help those on minimum wage, they stayed about even. The "rich" were not adversely affected by the increase, but the middle class were hurt because of the increased prices on almost everything, they didn't get an automagic raise.

  • We are about to increased our minimum wage from $11.40 to $15. Restaurants are openly declaring significant layoffs. McDonald's is using Kiosks, and supermarkets in Toronto has started using a lot of self-serve checkout booths. in Ontario, we may also have universal minimal income doing as well (being discussed). It's going to be an interesting shift.

    Apparently the magic number is around $30-40k/year salary when managers start considering replacing those employees with robots and/or AI. People in this
  • Simple economic principle. If two entities are doing the same exact thing with the same quality, use the one which costs you less. Automation is going cheaper and more accurate everyday, while the states like mine, i.e. California, think that flipping burgers at MickeyD's should be treated as careers and raise the pay rates for jobs, which were supposed to be summer jobs for kids on vacation. If you are 30 and working at a burger joint for minimum wage, regardless how good that minimum wage rate is, you nee
    • by Tablizer ( 95088 )

      If you are 30 and working at a burger joint for minimum wage, regardless how good that minimum wage rate is, you need to re-evaluate your life and see how you can improve yourself

      I'm not sure that solution scales. As a thought experiment, suppose a sexy genie blinked her eyes and everybody had a PhD education. That still wouldn't mean there's enough openings for advanced jobs. You'd end up with PhD's mopping the floors. (Maybe all the PhD's together would eventually invent true AI, but that's a whole other

  • by dirk ( 87083 ) <dirk@one.net> on Wednesday August 16, 2017 @12:33PM (#55026229) Homepage

    I think there is at least some truth to this study. It does make sense that businesses will automate whatever they can and raising the minimum wage may hasten that. But the thing not talked about is that as time goes on these technologies will come down in price and be cheaper than the current minimum wage and businesses will automate then anyway. So yes, it may hasten it a little bit, it certainly isn't the reason businesses are automating. So the choice is basically to keep the minimum wage where it is and have these jobs for an extra couple years while people still make less than they need to live or to raise the minimum wage and hasten the loss of these jobs but get everyone else closer to a wage they can survive on. If we wait, businesses will still save money with automation and will save money by continuing to pay wages people can't live on.

    What needs to be addressed is how to help everyone who is pushed out of their job via automation. There needs to be some type of job training or something to help people adjust to the new economy, but that isn't happening. No matter what we do, people are going to lose their job to automation, it is just a matter of when. I think we should at least make sure that the people who don't lose their job to automation make enough money to live on.

    • You're absolutely right, but the problem is that the Republicans don't want to train or educate because they need unskilled workers to exploit to keep themselves rich. Instead of investing in coal and manufacturing, we should be investing in education, science and technology, because those are the things that drive a country forward, not coal mining. Automation is clearly the future, so we should be training roboticists, machinists and engineers otherwise some other enterprising country is going to take t
  • by EndlessNameless ( 673105 ) on Wednesday August 16, 2017 @12:34PM (#55026237)

    Automation is going to supplant a lot of jobs. The only questions are: "Which ones?" and "How fast?"

    Higher wages will accelerate the process, but we need to decide what happens as automation takes over regardless of changes to the minimum wage.

    The whole article is a bit of a red herring. Whatever we decide for workers displaced by automation, we ought to do with these people. I'm not going to pretend I have a 100% fair solution, and no one seems to agree. So let's focus on the fundamental problem instead of fussing over a bunch of poorly-paid jobs that no one wants, including most of the people who have them.

    Because on the whole, I think everyone is perfectly happy to let machines do more work. So we need to figure out how to make it work without FUD about losing jobs.

  • I think the automation of crap jobs is the first real sign that a post scarcity society is possible. Unfortunately it's looking certain we'll navigate the changes to labor about as horribly as the historical Luddites and their opponents did. At least we have free porn now.
  • A living wage (Score:4, Insightful)

    by Rick Schumann ( 4662797 ) on Wednesday August 16, 2017 @12:42PM (#55026365) Journal
    If the only job someone can get doesn't make them enough to pay rent, utilities, and buy them sufficient food to eat, then there's a problem. Saying "Well, those people should go find a better job", or "Well, those people should go back to school and get a better education so they can get a better job", and similar comments, just are not helpful at all. Saying "Well, that's why we need Universal Basic Income" is even less helpful, because it just plain won't work on the scale of a country with 300,000,000 people in it, and even if it's only 10% (i.e. 30,000,000 people) who need a big handout from the government in order to actually sustain their lives, the other 90% are going to scream about it being unfair -- and I don't totally blame them. I think the real problem is capitalism; it can work if managed properly, but in it's current state capitalism is totally out of control, and it's creating an ever-widening gap between the poor and rich, destroying the middle class in the process. Whether it's out of control by chance or by design is a matter that should be investigated, but just like the problem of homelessness, this isn't going to go away just by ignoring it. You can't just throw people away, not and continue to call yourself a human being. We're supposed to be better than that.
    • Re:A living wage (Score:4, Insightful)

      by king neckbeard ( 1801738 ) on Wednesday August 16, 2017 @01:01PM (#55026603)
      Except the structure of a UBI is that everyone gets it, it's more efficient than welfare, and lacks the perverse incentives of welfare where earning more can result in having less. Plus, SO MANY people will be more happy and productive, because they can actually choose their career. The uber-rich will complain, but that's just because they're spoiled brats.
      • I am not getting into a debate over UBI with you or anyone else because I do not believe it's feasible except on a VERY SMALL SCALE and would BANKRUPT the United States in nothing flat, so don't even bother.
        • Congratulations. You are more economically right-wing than Milton Friedman, or you just don't understand proposed models of UBI.
  • Something seems a bit dubious about this research, almost like it is calculated to counter efforts at raising the minimum wage to a livable standard. And sure enough, there are some ties to a fiscally conservative think tank called, The Employment Policies Institute. The Employment Policies Institute is very pro-employer and pro-Privatized Health Insurance. This research study is simply meant to lobby elected officials to not raise the minimum wage. There is no credible, peer-reviewed research to suggest th
  • In general, the people that do lose their jobs on account of automation will eventually find alternative employment, and at an overall higher pay than what they were making before... so it's fairly clear that despite the immediate job losses, there are longer term net benefits to society that can be easily overlooked if you only focus on the here and now, as long as the minimum wage increases are kept within tolerances for the rate at which the cost of living has increased (which is historically is not typi
  • by king neckbeard ( 1801738 ) on Wednesday August 16, 2017 @12:55PM (#55026531)
    It's all about framing. Imagine this headline:
    Low wages slow technological growth and reduce leisure time.

    It's essentially stating the same thing, but without the worship of jobs, which are a means to an end.

  • by bravecanadian ( 638315 ) on Wednesday August 16, 2017 @01:11PM (#55026729)

    Automation causes job losses.

    If automation was already on the cusp of automating jobs at minimum wage, then those jobs would have been automated soon, anyways.

  • From TFS:

    For lower-skill jobs like bookkeepers and assembly-line workers,

    OK, so you cherry-pick medium-skill jobs that typically pay above-minimum-wages and have already lost tons of ground to automation (in the case of factory workers, the job losses stretch back 40 years) as an admonition against raising the minimum wage?

    Lesson learned, that's a fine way to run a flawed study.

  • by rbrander ( 73222 ) on Wednesday August 16, 2017 @01:32PM (#55026983) Homepage

    ...automation and job loss. Lack of a minimum wage for farming did not stop those plucky "automators" from reducing farm jobs by about 97% in a century flat. Nor were Luddite concerns related to 19th-century English minimum wage policies.

    The automatiion/wage situation was really nailed to the wall by this fine journalism in The Atlantic five years back:
    https://www.theatlantic.com/ma... [theatlantic.com]

    We are taken to hang-ten on the dividing line between automation and human-work in the case of Maddie Parlier, auto-parts worker who was next up for replacement. The nearly-empty auto-parts factory in which she works automates a job when the machine to do it falls in price below two years' salary. She makes $13/hour, or about $25K/year - and the machine that could replace her exists, but costs $100,000 so her job is "safe" - for a few years.

    So this is really about your societal standards. "We don't work for less than $13 an hour" is no different conceptually from "We don't work full time before age 16" and "We don't let employers work people more than 16 hours at a time" and "We don't let our employers work people with no safety equipment" even though safety equipment costs money and therefore, mandating it costs jobs.

    These societal rules of COURSE have prices: "forbidding child labour" caused 100% job loss for the affected kids, and serious financial hardship for their families, I'm sure there was a lot of smirking at the time about how much harm had been done by Good Intentions.

    If you hate the minimum wage, consider reading "Utopia for Realists" by Rutger Bregman. One of the cases for Universal Basic Income is that the moral argument about minimum wage vanishes: with the minimum already taken care of, $1/hour for a job you enjoy might make perfect sense.

  • by oldgraybeard ( 2939809 ) on Wednesday August 16, 2017 @03:11PM (#55027915)
    Many here do not understand the cost of hiring an employee.
    - Yes, you have the per hour pay rate.
    - But you also have the fed and fica. The federal government charges an additional 7.62% of the wage paid, to the employer on top of the wages.
    - And there is also, added Workers Comp. Ins. charges which are based on the number of employees and the size of the payroll.
    - Equal Opportunity Employment laws.
    - And there is health care, if you have 50 employees, the ACA requires you to provide health care. There are 27,000 pages of reg's in the ACA alone.
    - Finally, there are numerous reports that are required by the feds, states, etc. when a business has employees that also add to the cost of choosing to hire. Making the choice to hire is a real balancing act for small businesses.
    I think the basic formula is base pay rate plus 50%+ is a real estimated cost to the employer.
    FYI I am not saying any of this is wrong, but there is a lot more cost for each employee than just the base pay rate. And in order to understand anything one should have all the facts.
  • by Khashishi ( 775369 ) on Wednesday August 16, 2017 @03:30PM (#55028149) Journal

    We should automate all jobs and eliminate work. There seems to be some puritan idea of work being good for the character or something. No, work is a terrible waste of the gift of life, and the sooner we are rid of it, the better.

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