13 states raising the minimum wage for workers, other states soon to follow

[Submodo]

Originally Posted by CuteOldGuy

Serious question, Sub. How do you do that? Is it primarily automation and technology? Some industries certainly benefit from that, but is it across the board?
Do you see society heading in this direction, Sub?

Roughly 50% automation/technology (for larger firms mostly), and 50% internal process/procedure improvements or outsourcing to cheaper providers.

I definitely see the U.S. heading for that kind of mess. My question to our great leaders is always "what do we do with all these people?"

My belief is in 50 or so years the US will be under some sort of Communist/Fascist government, and it will not be by hostile takeover. Eventually enough people will be so disenfranchised for so long that they will en masse be willing to vote in that kind of system.

[Jackie S]

Originally Posted by Submodo

Roughly 50% automation/technology (for larger firms mostly), and 50% internal process/procedure improvements or outsourcing to cheaper providers.

I definitely see the U.S. heading for that kind of mess. My question to our great leaders is always "what do we do with all these people?"

My belief is in 50 or so years the US will be under some sort of Communist/Fascist government, and it will not be by hostile takeover. Eventually enough people will be so disenfranchised for so long that they will en masse be willing to vote in that kind of system.

A while back, The Discovery Channel was running their series on modern Factories. They were in a huge Automobile Manufacturing Facility, where the host and guest were just marveling at all of the automated machinery, robots were doing just about everything from painting to assembly.

The problem? No people. Literally. None.

Who buys the cars?

[JD Barleycorn]

Originally Posted by Submodo

Roughly 50% automation/technology (for larger firms mostly), and 50% internal process/procedure improvements or outsourcing to cheaper providers.

I definitely see the U.S. heading for that kind of mess. My question to our great leaders is always "what do we do with all these people?"

My belief is in 50 or so years the US will be under some sort of Communist/Fascist government, and it will not be by hostile takeover. Eventually enough people will be so disenfranchised for so long that they will en masse be willing to vote in that kind of system.

Watch the movie Harrison Bergeron. It is on youtube. It tells of a dystopian future where only 10% of Americans work while the rest were replaced by automation. That vast majority get their revenge.

[blue3122]

I just returned from 7 months in Oregon on a project. They had an $8.95 minimum wage that is now $9.10. That also applies to tipped workers like waitstaff in restaurants and strippers. (Not kidding, look it up.)
Here are the effects that I observed and then confirmed by talking to owners of businesses.

Restaurants. Servers and bartenders make that minimum wage. In most states, there is something called a "tip credit" that allows employers to pay tipped employees about $2.30 (I am guessing based on what I was told) per hour. I know in Colorado, the tipped employees get about $3.00 an hour. The tip credit recognizes they get tips as part of their pay. So, the result is that the owners of restaurants have employees who are marginally skilled, making $9 per hour. One restaurant owner told me that his premium 1/2 pound hamburger costs $1.50 more than the same one in Colorado due to wage costs . (Kitchen wages are also the same, which is higher than minimum). The results are that he keeps the minium number of servers and bartenders on. Customers get crappy service and pay about 20% more for the products than they should. He wants to sell and move to Colorado or some other state. He makes money but less each year as fewer people eat out due to the higher cost/poor service. The owner I spent some time with told me a restaurant (8000 sf, seats about 175) in Colorado would employ about 30 people. He employs less than 20. The effect on employment is to decrease jobs.

Another great Oregon thing is that it is illegal for you to pump your own gas. (not kidding, look it up) Oregon and New Jersey have to have a licensed person pump your gas. The results are predictable. Fewer gas stations. Lines to get gas. Adjusting for state taxes, Oregon gas is about 15 cents per gallon higher than the surrounding states.

Beautiful state, but complete lack of understanding of economics.

[FU_CC]

is that a math question?

[Sidewinder]

Originally Posted by I B Hankering

How Much Would A Big Mac Cost If McDonald's Workers Were Paid $15 Per Hour?

The cost of a Big Mac–at least to consumers–probably wouldn’t go up at all. Why? In order to remain competitive with rivals on price, the company,as economist Adam Ozimek pointed out earlier this week, would probably find a way to keep overall labor costs in check, most likely by reducing the number of workers and introducing more automation–think ATMs in the banking industry....

Dr. Bittlingmayer described discussions on fast food wages as a symptom of a larger problem: the U.S. school system. “Low wages for adults are a sign that something didn’t go right in terms of education and work experience,” he said. “We’re not addressing the cause.”

http://www.forbes.com/sites/clareoco...d-15-per-hour/

The usual rule of thumb is that "overhead" on an employee costs about 100% of salary. This means that a $7.50/hour guy actually costs the business about $15/hour.

With nominally 2000 working hours in a year, a $15/hour employee working full-time costs the employer about $60,000/year. Times five years, that's $300,000. If you can replace one full-time-equivalent person with a robot that costs only $250,000, and lasts five years, you've made money on the deal. If, over the 5-year service life of the robot, you spend less than $50,000 on maintenance, you've broken even - AND you don't have to worry about the robot going out on strike for even higher wages.

If you can replace four FTEs with one robot, with a five-year service life, you can make money even if you spend a million dollars on each robot.

The question then becomes: Could you do it? The answer is Yes, quite easily. As of quite a few years ago, the typical McDonald's was a counterpoint chorus of beeps and boops, as various computers notified the human pick-and-place robots that it was time to, for example, pull the fry baskets out of the grease, or flip the burgers on the grill, or load the finished patties into the assembly line bins, or assemble another order. Humans were already being used as relatively simple industrial robots, and the state of the art in industrial robotics has improved a LOT since then.

[Chica Chaser]

Originally Posted by blue3122

Beautiful state, but complete lack of understanding of economics.

And look how they vote every time

[gnadfly]

Originally Posted by blue3122

...

Restaurants. Servers and bartenders make that minimum wage......
......

In Houston, you can't walk into any restaurant without finding illegals working in the kitchen. I'm curious if the same situ occurs in Oregon.

[LexusLover]

Originally Posted by blue3122

I just returned from 7 months in Oregon on a project.

Oregon has an income tax also ... so a lot of people who work in Portland live in Washington state, buy their gas in Washington ... but buy their groceries and household stuff in Oregon where there has not been a sales tax, which Washington state has.

The "pitch" on the no self-serve in Oregon was to "protect the environment" by not "spilling any gasoline while fueling."

[Texas Contrarian]

...I believe there are some interesting points to be made here.

Originally Posted by Submodo

"Corporations want to make money and the more product sold, the more workers needed to make the product that creates the profit."

Good dissertation up till there. True in 1914. Not true in 2014.

I've been making a pretty good living for the past decade helping firms sell more product/service while employing fewer and fewer people.

Originally Posted by CuteOldGuy

Serious question, Sub. How do you do that? Is it primarily automation and technology? Some industries certainly benefit from that, but is it across the board?

Originally Posted by Submodo

Roughly 50% automation/technology (for larger firms mostly), and 50% internal process/procedure improvements or outsourcing to cheaper providers.

I definitely see the U.S. heading for that kind of mess. My question to our great leaders is always "what do we do with all these people?"

My belief is in 50 or so years the US will be under some sort of Communist/Fascist government, and it will not be by hostile takeover. Eventually enough people will be so disenfranchised for so long that they will en masse be willing to vote in that kind of system.

In a similar vein, Tyler Cowen, one of the economics professoriate's more imaginative thinkers (there are all too few!), has written extensively on issues at least peripherally relating to this very concern. His essential point is that the top 10-15% of the intelligence, skills, and educational attainment distribution will do pretty well in the coming years, while the rest of the population will have a rather tough time. We may be in for a long, chaotic ride while those engaged in the political process try to ingratiate themselves with the electorate.

http://www.thedailybeast.com/article...-machines.html

http://www.npr.org/2013/09/12/221425...only-get-worse

http://www.utsandiego.com/news/2014/...-occupy-wrong/

http://blogs.hbr.org/2013/12/algorit...-what-they-do/

From the same post as his earlier quote snippet:

Originally Posted by CuteOldGuy

Interesting. Would make a good thread on its own. Do you see society heading in this direction, Sub?

Indeed, discussion of the consequences likely to result from all these structural transformations of the economy probably would make a good thread. In fact, I considered starting one after reading about some of Cowen's work, but felt that these points dovetailed nicely with the discussion in this already existing thread, so there was no need at this point to start another. In fact, I think this topic is closely associated with all the wrangling over the statutory minimum wage, and serves to point up the fact that the latter is mostly about winning political battles and does little to address the crux of the problem.

[Whirlaway]

True.....that is why the political objective should be to unwind the Federal Leviathan...........simply tinkering around the edges is muddling and will fail.

Return the power to the individual statehouses !

Originally Posted by CaptainMidnight

...I believe there are some interesting points to be made here.

In a similar vein, Tyler Cowen, one of the economics professoriate's more imaginative thinkers (there are all too few!), has written e....while the rest of the population will have a rather tough time. We may be in for a long, chaotic ride while those engaged in the political process try to ingratiate themselves to the electorate.

....

[Texas Contrarian]

Originally Posted by Whirlaway

True.....that is why the political objective should be to unwind the Federal Leviathan...........simply tinkering around the edges is muddling and will fail.

Return the power to the individual statehouses !

I'm certainly on board with the notion of limiting the size and scope of the federal government.

But when those controlling the power levers in the White House (any White House, not just this one), the House, or the Senate seem to be demonstrably loosening their grips on said levers, someone please let us know!

(Thus it should be obvious to even the most poorly informed observer that whatever he may think the political objective should be and what it will be are two altogether different things.)