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What a solid article. The number that caught my eye is Revenue/Total Employees. That brings home some realities of markets. Total revenue in the market is the

by netcan 13y ago

What a solid article. The number that caught my eye is Revenue/Total Employees. That brings home some realities of markets. Total revenue in the market is the amount consumers spend on groceries. Thats more or less constant. Wall Mart's low revenue/employee ($211k vs $620k) means they employ more people for every dollar of market share they have. This is an enormous difference. It implies that every time Costco win $1m in market share from Wal Mart, total employment drops by 3.1 people. Aldi (and its slightly upmarket cousin, Liddel) serve a similar market segment to Wal Mart in Europe. Is suspect they do it with even higher revenue per employee. These store are all about labour efficiency. This might be a "be careful what you wish for" scenario for retail workers and people concerned with wages at the lower rungs. Employers might be able to afford higher wages, but demand for those wages will go down. In that case, its hard to imagine wages really improving in the long term. Even if they did, total employment would be much lower and that would hit the lowest skill workers hardest. When you pay better wages, you can be choosier. This may be taking it a little far but.. I think what we see running through this scenario is an example of how improved efficiency breeds wage inequality.

wffurr 13y ago
That's true for all kinds of efficiency, including automation, which is near and dear to the hearts of Hacker News readers. The benefits of improved efficiency and automation, as you have pointed out, skip over employees. Some of them accrue to customers in the form of lower prices, but largely they accrue to management and shareholders in the form of increased profits. Costco appears to be the exception that proves the rule, here. In theory, efficiency and automation should be a net benefit to society, as we can then enjoy the same level of goods produced with less labor involved, but the uneven distribution of benefits causes lots of avoidable suffering on the part of laid-off workers. A guaranteed basic income for all (as opposed to means-tested benefits like welfare and the EITC) would fix a lot of that. It would remove the suffering from losing your job, and give investors an incentive to automate even more, as now you would have to pay people quite a bit to motivate them to accept low-skill menial jobs. We can fund such a basic income in part by dismantling the welfare state bureaucracy. No means testing makes distribution much simpler. The rest through higher taxes on income beyond the basic.

by netcan 13y ago

wffurr 13y ago

That's true for all kinds of efficiency, including automation, which is near and dear to the hearts of Hacker News readers. The benefits of improved efficiency and automation, as you have pointed out, skip over employees. Some of them accrue to customers in the form of lower prices, but largely they accrue to management and shareholders in the form of increased profits. Costco appears to be the exception that proves the rule, here. In theory, efficiency and automation should be a net benefit to society, as we can then enjoy the same level of goods produced with less labor involved, but the uneven distribution of benefits causes lots of avoidable suffering on the part of laid-off workers. A guaranteed basic income for all (as opposed to means-tested benefits like welfare and the EITC) would fix a lot of that. It would remove the suffering from losing your job, and give investors an incentive to automate even more, as now you would have to pay people quite a bit to motivate them to accept low-skill menial jobs. We can fund such a basic income in part by dismantling the welfare state bureaucracy. No means testing makes distribution much simpler. The rest through higher taxes on income beyond the basic.