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One of the interesting (but little-discussed) aspects of the minimum wage debate is how it interacts with automation. Historically, the cost of building a robo

One of the interesting (but little-discussed) aspects of the minimum wage debate is how it interacts with automation. Historically, the cost of building a robot to do someone's job was in most cases effectively infinite (i.e. it could not be done no matter how much money you throw at the problem). Now, it seems like it's potentially in the $20-50/hour range for many industries, by which I mean not currently cost-competitive with existing labor, but getting close. It would be a fairly significant unintended consequence if setting the national minimum wage to $15 were to actually eliminate entire job categories like fruit picker and burger flipper, due to pushing the minimum cost of labor above the cost of automating the role. It's very interesting to watch developments like those described in the OP, since they will probably see sigmoid-like adoption; pretty much zero, until someone gets a model that's cost-competitive, and then I'd imagine quite wide adoption within a couple years. I don't think a minimum wage is going to solve the social unrest that this kind of technological change will bring.

tathougies 8y ago
> It would be a fairly significant unintended consequence if setting the national minimum wage to $15 were to actually eliminate entire job categories like fruit picker and burger flipper, due to pushing the minimum cost of labor above the cost of automating the role. This is not an unintended consequence, IMO. An unintended consequence is typically something that is not foreseeable, but the conversion of jobs to automation after minimum wage increases is not unforeseeable. You'd learn about that in an entry-level economics course.
- theptip 8y ago
  > An unintended consequence is typically something that is not foreseeable I'm using the definition of "an unintended consequence is a consequence that was not intended". Whether it was foreseeable is a different matter. Put another way, I believe that the intention of most people advocating a $15/h minimum wage is to increase the welfare of those currently earning sub-$15/h wages, not to eradicate their jobs. Therefore if job eradication is the consequence of the policy under discussion, then it is an unintended consequence for those advocates.
  - grandmczeb 8y ago
    Not to derail the conversation too far, but there are actually cases where a minimum wage has been used as a tool to eliminate certain jobs. For example, a big sticking point of the new NAFTA deal was the requirement that exported cars be manufactured in a factory with a $16/hr wage floor, with goal of making exports from Mexico uncompetitive and move some of those manufacturing jobs to the US. Obviously, I don't think that's the common policy goal though.
- Not1Hacker 8y ago
  I'd posit that by definition an unintended consequence is one that wasn't intended. An unforeseen consequence would be on that was not foreseen. That's why we have those words. You could play catch indoors and accidentally knock over a lamp. You absolutely foresaw that as a potential outcome, but you didn't intend for it to happen.
- MRD85 8y ago
  If cheaper automation drives down these wages far enough then it won't matter if the people have a job or not. $3 per hour would be similar to no job.
steve_adams_86 8y ago
I think you're absolutely right. I think the fight for living wages will likely be T-boned by the juggernaut of automation. That's why (to me) the conversation about universal basic income is far more constructive and durable than minimum wages. I'm also not convinced the minimum wage debates are as helpful since so many workers don't benefit from it. We certainly need to continue the conversation and ensure workers are paid fairly, but you're right - the more labour costs, the less companies will employ them (to some extent). There is a very short-lived benefit to focusing on raising minimum wages, such that something longer-lasting needs to be considered immediately as well. I think the sigmoid-like adoption will be incredibly pronounced and fast in some industries. I think about this a lot, and when friends justifiably argue and debate for higher minimum wages, I worry that they'll be totally blindsided by the reality that minimum wage is useless when you have no job.
- Buttons840 8y ago
  I have an idea that seems (to me) to be somewhere between a higher minimum wage, and universal basic income: Require employers to offer very high amounts of paid time off. Perhaps only applying to low paying jobs. For example, if a minimum wage employee was guaranteed 6-months worth of paid time off, they could work two jobs and make twice as much money. And even though they would technically be working two jobs, they would not have to work more hours. People with two jobs are less likely to lose all their income from being laid off, and would be willing to be more mobile in the market, because they already have two jobs and can compare them. It would increase competition between businesses to offer good work environments. It would also have some of the benefits of universal basic income, because people would have a lot of time they could spend going to school, or starting a business, etc. If minimum wage employees became accustom to a lot of time off that would also put pressure on other jobs to give more time off. As far as I understand the US is pretty stingy with time off compared to other developed nations? It could also address one of the fears about universal basic income, which is that people would become do-nothing hermits. That couldn't fully happen if people still had to work some of the time. It would essentially double the employee cost on business though. But so would doubling the minimum wage.
  - 8y ago
nitwit005 8y ago
Here in California, most farm workers appear to earn above the minimum wage already, so you could nudge the minimum wage up a decent amount without having much impact on the industry. I suspect full automation is the wrong way to think about the issue anyways. You don't need to completely automate things to reduce labor costs. There are a lot of ways to make a restaurant kitchen more labor efficient, some of which don't involve automation at all.
dv_dt 8y ago
I would hope that even if there would be fewer people hired in some areas, there would be a number of higher wage positions created - automated robot herder/field mechanic or the like. The issue is that our current economic conventions don't have (or explictly create) allowances for people to individually or systematically shift to whole new professions within their lifetimes. It's understandable, before the pace of change was slower, save for maybe a few transition times historically, and people could basically work in a field for their lives, maybe their children would pick up new lines of work. But change is much faster now - and we're sort of built for economic allowances to people for the slower pace.
jonahhorowitz 8y ago
This is pretty standard economic theory. We'd call automation "productivity gains". If tax rates are structured correctly, we expect productivity gains to be redistributed to workers - as a worker can produce more, their income rises. What we've seen in the past 30 years is that instead of productivity gains being shared with workers, they've been systematically redistributed upwards. It's not a problem a machine can replace 10 workers. You'll still need someone to manufacture and maintain that machine, and those people will be paid more than the workers that were replaced. The other workers will go on to other jobs. Per Dean Baker[0]: > Replacing human labor with technology is a very old story. It’s called “productivity growth.” We’ve been seeing it pretty much as long as we have had a capitalist economy. In fact, this is what allows for sustained improvements in living standards. If we had not seen massive productivity growth in agriculture, then the bulk of the country would still be working on farms, otherwise we would be going hungry. [0]:https://www.patreon.com/posts/robots-taking-24450257 https://www.patreon.com/posts/robots-taking-24450257
- theptip 8y ago
  > Replacing human labor with technology is a very old story. It’s called “productivity growth.” This is true and indisputable in the trivial sense, in that it describes history accurately. However the problem I have with this sort of statement is that it implicitly assumes that the future will be the same as the past. In this case I believe there are reasonable arguments that the future might be different. To expand upon that point, the position you've laid out says nothing about the rate of destruction of jobs. It seems plausible (though obviously not certain) that the next decade or two of automation could involve rates of obsolescence that have not been seen before in history. If "productivity growth" happens on the timescale of a generation, then the next generation can learn the new skills, and there is manageable social impact. The historical examples I'm familiar with fall into this category (e.g. power loom adoption over 25-50 years in the first half of the 19th century). In this domain, the rate of job destruction is below the maximum rate of job creation, and so there is no net job destruction. However if that effect happens in a shorter timeframe, then you could have a large segment of the population all trying to find new work at the same time. (e.g. a self-driving truck makes most long-distance freight drivers obsolete in 5 years, removing 1% of jobs from the economy without an immediate replacement; in the worst case, rinse and repeat for 10 other industries in the same period). In this domain, the rate of job creation hits a limit, and therefore there is net job destruction, until the rate of job destruction decreases and job creation can catch up. Do you have a model for where this breakdown might occur? > The other workers will go on to other jobs. This is true _on a long enough time scale_, but economics is silent on the broader societal and political impact during the re-equilibration period following a discontinuity in employment like this.

tathougies 8y ago

> It would be a fairly significant unintended consequence if setting the national minimum wage to $15 were to actually eliminate entire job categories like fruit picker and burger flipper, due to pushing the minimum cost of labor above the cost of automating the role. This is not an unintended consequence, IMO. An unintended consequence is typically something that is not foreseeable, but the conversion of jobs to automation after minimum wage increases is not unforeseeable. You'd learn about that in an entry-level economics course.

theptip 8y ago
> An unintended consequence is typically something that is not foreseeable I'm using the definition of "an unintended consequence is a consequence that was not intended". Whether it was foreseeable is a different matter. Put another way, I believe that the intention of most people advocating a $15/h minimum wage is to increase the welfare of those currently earning sub-$15/h wages, not to eradicate their jobs. Therefore if job eradication is the consequence of the policy under discussion, then it is an unintended consequence for those advocates.
- grandmczeb 8y ago
  Not to derail the conversation too far, but there are actually cases where a minimum wage has been used as a tool to eliminate certain jobs. For example, a big sticking point of the new NAFTA deal was the requirement that exported cars be manufactured in a factory with a $16/hr wage floor, with goal of making exports from Mexico uncompetitive and move some of those manufacturing jobs to the US. Obviously, I don't think that's the common policy goal though.
Not1Hacker 8y ago
I'd posit that by definition an unintended consequence is one that wasn't intended. An unforeseen consequence would be on that was not foreseen. That's why we have those words. You could play catch indoors and accidentally knock over a lamp. You absolutely foresaw that as a potential outcome, but you didn't intend for it to happen.
MRD85 8y ago
If cheaper automation drives down these wages far enough then it won't matter if the people have a job or not. $3 per hour would be similar to no job.

steve_adams_86 8y ago

I think you're absolutely right. I think the fight for living wages will likely be T-boned by the juggernaut of automation. That's why (to me) the conversation about universal basic income is far more constructive and durable than minimum wages. I'm also not convinced the minimum wage debates are as helpful since so many workers don't benefit from it. We certainly need to continue the conversation and ensure workers are paid fairly, but you're right - the more labour costs, the less companies will employ them (to some extent). There is a very short-lived benefit to focusing on raising minimum wages, such that something longer-lasting needs to be considered immediately as well. I think the sigmoid-like adoption will be incredibly pronounced and fast in some industries. I think about this a lot, and when friends justifiably argue and debate for higher minimum wages, I worry that they'll be totally blindsided by the reality that minimum wage is useless when you have no job.

Buttons840 8y ago
I have an idea that seems (to me) to be somewhere between a higher minimum wage, and universal basic income: Require employers to offer very high amounts of paid time off. Perhaps only applying to low paying jobs. For example, if a minimum wage employee was guaranteed 6-months worth of paid time off, they could work two jobs and make twice as much money. And even though they would technically be working two jobs, they would not have to work more hours. People with two jobs are less likely to lose all their income from being laid off, and would be willing to be more mobile in the market, because they already have two jobs and can compare them. It would increase competition between businesses to offer good work environments. It would also have some of the benefits of universal basic income, because people would have a lot of time they could spend going to school, or starting a business, etc. If minimum wage employees became accustom to a lot of time off that would also put pressure on other jobs to give more time off. As far as I understand the US is pretty stingy with time off compared to other developed nations? It could also address one of the fears about universal basic income, which is that people would become do-nothing hermits. That couldn't fully happen if people still had to work some of the time. It would essentially double the employee cost on business though. But so would doubling the minimum wage.
- 8y ago

nitwit005 8y ago

Here in California, most farm workers appear to earn above the minimum wage already, so you could nudge the minimum wage up a decent amount without having much impact on the industry. I suspect full automation is the wrong way to think about the issue anyways. You don't need to completely automate things to reduce labor costs. There are a lot of ways to make a restaurant kitchen more labor efficient, some of which don't involve automation at all.

dv_dt 8y ago

I would hope that even if there would be fewer people hired in some areas, there would be a number of higher wage positions created - automated robot herder/field mechanic or the like. The issue is that our current economic conventions don't have (or explictly create) allowances for people to individually or systematically shift to whole new professions within their lifetimes. It's understandable, before the pace of change was slower, save for maybe a few transition times historically, and people could basically work in a field for their lives, maybe their children would pick up new lines of work. But change is much faster now - and we're sort of built for economic allowances to people for the slower pace.

jonahhorowitz 8y ago

This is pretty standard economic theory. We'd call automation "productivity gains". If tax rates are structured correctly, we expect productivity gains to be redistributed to workers - as a worker can produce more, their income rises. What we've seen in the past 30 years is that instead of productivity gains being shared with workers, they've been systematically redistributed upwards. It's not a problem a machine can replace 10 workers. You'll still need someone to manufacture and maintain that machine, and those people will be paid more than the workers that were replaced. The other workers will go on to other jobs. Per Dean Baker[0]: > Replacing human labor with technology is a very old story. It’s called “productivity growth.” We’ve been seeing it pretty much as long as we have had a capitalist economy. In fact, this is what allows for sustained improvements in living standards. If we had not seen massive productivity growth in agriculture, then the bulk of the country would still be working on farms, otherwise we would be going hungry. [0]:https://www.patreon.com/posts/robots-taking-24450257 https://www.patreon.com/posts/robots-taking-24450257

theptip 8y ago
> Replacing human labor with technology is a very old story. It’s called “productivity growth.” This is true and indisputable in the trivial sense, in that it describes history accurately. However the problem I have with this sort of statement is that it implicitly assumes that the future will be the same as the past. In this case I believe there are reasonable arguments that the future might be different. To expand upon that point, the position you've laid out says nothing about the rate of destruction of jobs. It seems plausible (though obviously not certain) that the next decade or two of automation could involve rates of obsolescence that have not been seen before in history. If "productivity growth" happens on the timescale of a generation, then the next generation can learn the new skills, and there is manageable social impact. The historical examples I'm familiar with fall into this category (e.g. power loom adoption over 25-50 years in the first half of the 19th century). In this domain, the rate of job destruction is below the maximum rate of job creation, and so there is no net job destruction. However if that effect happens in a shorter timeframe, then you could have a large segment of the population all trying to find new work at the same time. (e.g. a self-driving truck makes most long-distance freight drivers obsolete in 5 years, removing 1% of jobs from the economy without an immediate replacement; in the worst case, rinse and repeat for 10 other industries in the same period). In this domain, the rate of job creation hits a limit, and therefore there is net job destruction, until the rate of job destruction decreases and job creation can catch up. Do you have a model for where this breakdown might occur? > The other workers will go on to other jobs. This is true _on a long enough time scale_, but economics is silent on the broader societal and political impact during the re-equilibration period following a discontinuity in employment like this.