McDonald’s announced it will replace cashiers in 2,5000 stores with self-service kiosks.
The story buzzed across the internet but Business Insider reported McDonald’s shoots down fears it is planning to replace cashiers with kiosks.
Official Denial
“McDonald’s has repeatedly said that adding kiosks won’t result in mass layoffs, but will instead move some cashiers to other parts of the restaurant where it’s adding new jobs, such as table service. The burger chain reiterated that position again on Friday.”
Is McDonald’s denial believable? What would you expect the company to say?
McDonald’s has to deny the story or it might have a hiring problem, a morale problem, and other problems.
“Our CEO, Steve Easterbrook, has said on many occasions that self-order kiosks in McDonald’s restaurants are not a labor replacement,” a spokeswoman told Business Insider. “They provide an opportunity to transition back-of-the-house positions to more customer service roles such as concierges and table service where they are able to truly engage with guests and enhance the dining experience.”
Move cashiers to table service? Really?
Yeah, right.
An interesting political rule from the British sitcom “Yes, Minister” is to “never believe anything until it’s officially denied”.
Will Humans Be Necessary?
When someone can be replaced by a robot, how can the push for $15 be justified?
Psychology Today asks Will Humans Be Necessary?
Will automation kill as many jobs as is feared? A widely cited Oxford University study predicts that 47% of jobs could be automated in the next decade of two. Price Waterhouse pegs the U.S. risk at 38%. McKinsey estimates that 45% of what people are paid for could be automated using existing technology!
No less than Tesla’s Elon Musk, Bill Gates, and Stephen Hawking fear the loss of jobs will cause world cataclysm.
Lower-level jobs at risk
Let’s start with jobs likely to be eliminated, starting with the present and with those lower-level jobs.
Already, don’t you prefer a ATM to a teller, self-checkout to the supermarket checker, drive-through tolls rather than stop for the toll-taker, automated airline check-in rather than waiting for a clerk, shopping on Amazon rather than fighting traffic, parking, and the check-out experience with a live clerk, assuming the store has what you want in your size? Indeed, malls are closing while online retailers led by Amazon are growing.
As minimum wage and mandated benefits rise, fast-food restaurants especially are accelerating use of, for example, order-taking kiosks, which McDonald’s is rolling out in 2,500 stores, robotic burger flippers and fry cooks, even pizza, ramen and sushi makers. Even that fail-safe job, barista, is at-risk, Bosch now makes an automated barista. Mid-range restaurants such as Olive Garden, Outback, and Applebee are replacing waiters with tabletop tablets. Will you really miss having your conversation interrupted by a waiter hawking hors de oeuvres and expecting a 15+% tip? If you owned a fast-food franchise, mighn’t you be looking to replace people with automated solutions? Can it really be long until there are completely automated fast-food and even mid-range restaurants?
Robots are already being used as security guards. There are humanoid robots that can move heavy boxes, walk in uneven snow, and get up, not annoyed when thrown to the ground. (And won’t sue for failure to supervise or an OSHA violation.)
Instead of hiring architects for tens of thousands of dollars, many people are opting to spend just a few hundred bucks to instantly get any of thousands of often award-winning house plans which, if needed, can be inexpensively customized to suit. Far fewer architects needed.
BlackRock, the world’s largest fund company has replaced seven of its 53 analysts with AI-driven stock-picking.
The remaining jobs
In such a world, how can a human justify asking to be paid to work?
Four scenarios
The range of scenarios would seem circumscribed by these. How likely do you think each of these are?
- Continue on the current path: The world continues to slowly make progress, e.g., birth rates declining in developing nations, slowed global warming, more education and health care. Those positives would be mitigated by declining jobs, more concentration of wealth.
- World socialism.
- Mass population reduction, for example, by nuclear war, pandemic, or, per Clive Cussler, highly communicable biovirus simultaneously put into the water supply of a half-dozen cruise ships?
- A world run by machines and the few people they deem worthy.
Here is a debate between an optimistic and a pessimist on the future of the world.
The truth may well be something we can’t even envision. After all, he who lives by the crystal ball usually eats broken glass.
Note that Psychology Today author Marty Nemko did not ask about $15. He wonders if pay for some jobs is worth anything at all.
Mike “Mish” Shedlock
“Move cashiers to table service? Really?”
One of the statements said “…customer service roles such as concierges and table service…”. Someone would have to help customers figure out things, fix errors, etc.
If kiosks make McDonald’s more profitable, more McDonald’s could be opened, at least in theory, so there might actually be more jobs.
Some employees wouldn’t be capable of making the transition so they’ll have to forget about $10/hour, much less $15.
All this will happen everywhere eventually. But it might happen a bit more slowly and less chaotically if they just go rid of high wage demands including minimum wage laws.
“Move cashiers to table service? To which the customer will be indoctrinated into tipping? Perhaps we will need a personal robot like Kuri to do that for us too.
You make a good point: In a number of States, employees who customarily receive tips are only eligible for a reduced minimum wage, e.g. one-half the minimum wage, with the expectation that tips will supplement the lost income. You can be sure that Mickey D’s has enough sway through regulatory capture to ensure all of its reassigned staff will be appropriately classified.
There is always some degree of contention with tips: Employees are not entirely stupid, and since tips are subject to tax and FICA withholding, they will report as little tip income as possible. The regs are currently written to require at least 8% of gross sales as the minimum taxable income subject to withholdings, but beyond that the employees will be doing McD’s the favour of reducing the employer share of FICA by under-reporting the income subject to it to the fullest extent possible. Its “win-win” without any headcount reduction … right?
We all know where this is heading. Eventually there won’t even be robots in McD’s. We’ll just have an app, order from our smart phones, exchange a few crypto McDCoin, and get our hot meal while passing by the freezers. Even the robots will be unemployed by then.
BTW, I saw that Visa is looking for a blockchain developer. They’re all getting worried now.
CC Market cap $114 billion going to $3.5 trillion soon.
Will robots spit in my food?
Nope, they won’t spit in your food, and won’t leave hairs in your food. You might find some oil or metal shavings, though.
” But it might happen a bit more slowly and less chaotically if they just go rid of high wage demands including minimum wage laws.”
Exactly. Minimum wage laws control the speed at which we adopt robotics. The higher the minimum wage, the faster we move to robotics, and the more people are unemployed, resulting in other problems like drug use, etc. On the other hands, if minimum wage laws are are eliminated entirely, the move will be much slower, and people can continue to have jobs and dignity, albeit at much lower wages.
It’s much cheaper to supplement wages than it is to pay the entire fee as unemployment benefits, plus fight the other problems that result from people not working at all. The idle mind is the devils workshop, as they say.
There is already a threshold past which a low-wage worker would be better off not working and instead collecting welfare. I am completely against the minimum wage in a true free-market economy, but the remedy you prescribe will hasten socialism, unless you plan on forcing people to work for low wages as part of the deal.
My suggestion would be to integrate all forms of welfare into a single entity (food stamps, housing assistance, energy assistance, medicare, unemployment, etc), and arrange it so that each person always had an incentive to earn more, rather than less. Thus, if you are unemployed, you’re better off to make $1/hr, and if you’re making $1/hr, you’re better off to make $2, and if you’re working 20 hours, you’re better off working 30, etc.
We already know that reducing marginal taxes provides incentives for the wealthy to earn more. Why not try the same system on the low end, too? Instead we have an idiotic patchwork system where people are often better off not working than working, or working less, rather than more.
We aren’t ever going to get rid of welfare, so instead let’s at least modify it so that we still have incentives for people to do more, not less.
Automation is not the enemy. Show some gratitude and respect for the good life you enjoy because of automation. You would not be having this discussion without automation, as there would be no mass communication system with phone service, on-demand movies, and Internet. If you believe automation is the enemy, then you are morally obligated to throwaway your cell phone and disconnect from the Internet and go back to the old ways. Get rid of your SUV and vehicles, and get a horse or start walking (would also reduce obesity, diabetes and other diseases of affluence in USA, making the national mandatory health insurance scam less necessary). To complain about automation will living on its fruits is hypocritical. Like the wage/income equality socialists like Obama who see no contradiction in enjoying $50 million book deals and giving $400k Wall Street speeches. Perhaps a massive failure of the public education system in the USA, that people cannot appreciate what they have. Since automation began with the UK textile mills, automation has created billions of new jobs and industries that never before existed. Absurd to argue that “this time is different.”
Sorry, wrong place for the reply, as WordPress software has some strange behaviors and makes it hard to know what is happening. Will try again to get this comment into right spot. Meant for here to say: Nixon’s guaranteed annual income would essentially have done that in the days of fewer entitlements. Though I suppose people might use the money for drugs, etc.
Hitler was possible because of the intense misery, if automation causes global misery and starvation expect similar events,blood will be flowing in the streets it will not be a world I would want to live in.
Hitler was possible because of Woodrow Wllson.
Hitler was possible because of the French.
Hitler was possible because of binary gender reproduction (I think) …
The first grammar Nazi was Hitler’s proofreader.
wilson our second worst president
There a lot of competition for that slot, but he is certainly a good candidate.
our worst president was lincoln
our worst president was lincoln
my list is roughly ( listing worst first )
lincoln
wilson
mckinley
Teddy Roosevelt
FDR
Bush I
Obama
Bush II
Polk
Truman
I think the best president was Cleveland
Obama definitely the worst. If he had been POTUS during Lincoln’s time, the Confederate flag would be flying in DC. If he would have been in place of FDR, east of the Mississippi would be speaking German and west of the Mississippi would be speaking Japanese.
FDR was clearly the worst. Thanks to his court-packing plan, he essentially re-wrote the Constitution, dramatically increasing the power of the Federal Government, and hastening the end of the country. Reagan ranks of there, in my mind, due to his incredible deficits at a time when we should have been running a surplus. Had we run a surplus, Eisenhauer-style, during the 80’s, we wouldn’t be in the fix we are today.
Maybe we eventually will realize that we are a herd animal and survive by co-operating with each other. Concentration on fiat monetary rights and fictionalization of everything hides the fact that we got where we are from caveman to space explorer by finding ways to give others a chance to expand their areas of excellence (or otherwise). Put in other words closer to home we don’t survive by eating our children.
I wouldn’t give credit to the socializing brain for what was achieved by the systemizing brain.
The social brain allowed our ancestors to survive in nature, the systemizing brain allowed the creation of technology, science, and modern civilization.
Of course, people have to be paid to eat there.
“Will Humans Be Necessary?”
You could make the same argument for self-driving vehicles.
The government is putting pressure on Mickey Dee’s and other fast food joints to raise their wages to push them into an income bracket out of the free entitlement zone. Besides, those who subsist on food stamps, free government provided medical care, housing subsidies, government cash disbursements, etc… makes more per hour (broken down) than a Mickey Dee’s worker who puts in 8 hours a day.
The problem is that as we go full-on automated and millions lose their job many unskilled workers won’t be reabsorbed into the economy and they’ll become fully dependent on government aid. And once on government aid they’ll form a habit of being unproductive and suck on the government teat for the rest of their natural lives.
Everybody raves over automation and claim it’s the engine to prosperity – but they fail to acknowledge all the unintended consequences that automation will foist on society down the road.
Beware what you wish for.
exactly the same utter shit was said after every technology break though in the history of the human race. Every time it has been wrong. Every single time without exception. Every advancement has led to more opportunity not less. Every time better jobs and more un-imagined possibility has unfolded.
The world is demonetising many essentials at an increasing rate. Rapid advancements in all aspects of human life including what job you get to do.
Shops will disappear? What tosh. People enjoy shopping they enjoy the browsing and selecting process. What they don’t like is mundane essential shopping like grocery’s which will and need to be replaced.
They will still look for designer, artisan, quality produced goods and service.
They still want wonderful food hand prepared in exquisite restaurants and numerous other services that cannot be slopped out by a robot that will be used in fast food places, why wouldn’t you use them?
Now if only we can replace the idiots in Parliament with responsible robots there will be no stopping us.
This isn’t 1915. It’s 2017 and we have a mature economy. There are only so many jobs to go around. Not everyone can be a computer design engineer to program self-driving cars and kiosks at fast food restaurants. We have a HUGE underclass population in America that need menial jobs. It’s not that easy find a job at Walmart. The applications are 6 feet high. Start taking away all these menial jobs and you’re going to have a HUGE social problem on your hands. The table server jobs that they claim will absorb the displaced clerk positions is total BS. Those will be $15/hr jobs too. The reason Mickey Dee’s brought in the kiosks is to avoid paying $15/hr. This is not that difficult to understand.
I haven’t been to Mickey Dees in a coons age. But if I ever decided to eat there I would have no intention to sit at a table and get served like I’m at the Ritz Carlton. I would probably use the drive-though because all I’d want is a quick burger and a drink. Mostly, I’d want a good cash value for my food. And the only way Mickey Dees can offer a good cash value is by paying their workers LESS than $15/hr or going automated.
If we were living in 1915 your theory would make sense. Not in 2017.
Mickey Dees was ironically built on automation, machines that made dozens of malts at once and automated French fries. Because of automation, Mickey Dees became a big employer of people. So, now they should freeze progress and stop automation? Ironic example to choose, seeing that automation expanded jobs at Mickey Dees. But somehow “this time is different”?
Personally, I don’t care what they do. I don’t intend to work there and I can’t remember the last time I ate there. I simply commented on the unintended (or intended, if you will) consequences of automation in America’s mature economy.
Since you failed to respond to the gist of my comment I suspect you don’t have an answer.
Personally, I rarely eat at McDs, and do not wish to defend them. Obviously kiosks are to cut costs, despite whatever else company might say. But this cost cutting at the expense of present jobs leads to creation of future jobs and economic expansion. Ample empirical evidence, such as major worldwide expansion of telecomm industry since elimination of those once-secure telephone operator jobs. Mickey Dees is a case study of a small family-owned California fast food restaurant expanding (under Ray Kroc) into a worldwide chain employing millions on the basis of restaurant automation begun by the McDonald brothers. Kiosks just continue the job-creating automation trend on which Mickey Dees was built. Plus many additional jobs created via fast-food imitators and vendors supplying McD. So to call automation a job-killer is just plain wrong, as Mickey Dees went from a dozen employees to millions in half a century BECAUSE OF automation. An inconvenient historical fact for automation opponents.
Calling 2017 USA a mature economy, in contrast to 1915, makes little sense to me. So, major disagreement with that premise. People in 1915 USA likely thought it was a mature economy then, and had little inkling of what was to come in 1920s and subsequent decades (e.g. airline industry, jet engines, rockets, nuclear power, outer space satellites, moon landings, radar, radio, television, talkie motion pictures, Internet, personal computers, etc.). From vantage point of 2117, 2017 will likely not seem like a mature economy, if technological advancement trend continues (as is likely, IMHO). But who knows, a lot can happen in 100 years; a few major wars and USA could be Stone Age rubble like Libya, Iraq and Syria.
This isn’t 1915. It’s 2017 and we have a mature economy. There are only so many jobs to go around. Not everyone can be a computer design engineer to program self-driving cars and kiosks at fast food restaurants. We have a HUGE underclass population in America that need menial jobs. It’s not that easy find a job at Walmart. The applications are 6 feet high. Start taking away all these menial jobs and you’re going to have a HUGE social problem on your hands. The table server jobs that they claim will absorb the displaced clerk positions is total BS. Those will be $15/hr jobs too. The reason Mickey Dee’s brought in the kiosks is to avoid paying $15/hr. This is not that difficult to understand.
I haven’t been to Mickey Dees in a coons age. But if I ever decided to eat there I would have no intention to sit at a table and get served like I’m at the Ritz Carlton. I would probably use the drive-though because all I’d want is a quick burger and a drink. Mostly, I’d want a good cash value for my food. And the only way Mickey Dees can offer a good cash value is by paying their workers LESS than $15/hr or going automated.
If we were living in 1915 your theory would make sense. But not in 2017.
I responded to your comment. But for some odd reason it was dumped into moderation. I simply responded to your comment with a viable counterargument. No obscenities and no reason to end up in moderation. I hope our opinions aren’t being screened to eliminate those that do not conform to the status quo.
No idea why it would end up there, noting to do with me mate, I respect your opinion, I just don’t agree with you on this.
Fair enough.
You could replace AUTOMATION below with UNCONTROLLED IMMIGRATION.
“Everybody raves over automation and claim it’s the engine to prosperity – but they fail to acknowledge all the unintended consequences that automation will foist on society down the road.”
Interesting point. The political right wants to automate, the left wants to immigrate. Looks like we’re screwed no matter what happens.
There is no doubt that immigration is about the cost of labor, as are imports and technology. We are continually trying to eliminate ourselves while believing that we are simply trying to eliminate others. This of course is why we tolerate taxation and health insurance as they consume ever greater portions of our wealth….under the assumption that no matter how high they go, someone else is paying even more…..which just HAS TO BE A WIN FOR US.
Unintended consequences? They know exactly what they’re doing and why they do it.
Even though you could, naively, “create” lots more jobs by banning automated carriages, so that for every Uber passenger traveling three miles, you would need 4 carriers; and for every 20lb package delivered from LA to New York, you employ some courier for a summer or so on foot; the notion that that kind of makework somehow makes “society” better off, is pretty far fetched.
Automated checkout kiosks are no different. Nor automated truck drivers. If a machine can do an acceptable job more efficiently than a human, wasting some human’s time on it, is nothing but plain make work.
Heck, if “we” are going to have people do makework for no reason, why not at least something nice? Pay them ($15-$hourly robot rent) to play video games, hike in nature or play on the beach (saves on heathcare, may even make them attractive enough to attract a mate so the population doesn’t go extinct like the Japanese….) Beats the heck out of wasting away at a McDonalds register all day long, if the latter is not needed at all.
Marshall Brain’s story, Manna, foretold exactly this back in 2003. Where the story leads is highly realistic, and chilling.
Kurt Vonnegut’s novel Player Piano foretold exactly this back in 1952!
Hi Roger. Don’t worry. Trump was also elected to end the misery of his target audience. He is going to build that wall to keep the Mexicans out (much more humane than gas chambers). He is going to turn back the clock to the 1950s and get the coal mines and steel Mills running again (of course he will). He’s going to get Ford to build the Focus in America, not Mexico. He’s going to get Apple to build their damn phones in the US. He’s going to cut all those social programs, and get those freeloaders off the health care system. He is going to put Trump Businesses First (they are part of America, right?). I suspect he is going to start telling US companies to stop using technology in order to save jobs. Nothing to worry about.
I notice there is no comparison to the eight-year Obama record…and it is for good reason…
Ideology enables suicide….and homicide.
The Trump cult members always want to talk about Hillary and Obama when the accomplishments of their messiah are questioned. Is that all you got? Nobody cares about the past – what have you done for me lately?
No one can deny that our society and economy have become more progressive, more social and economic justice driven, while we watch it careening towards disaster….so of course you wouldn’t want to talk about the past. The day progressives accept responsibility for our disaster is the day the world ends.
How long has Trump been in vs Obama?
How long does it take for policy to arrive as experience on the ground?
The past eight years policies are what helped put Donald Trump in office…
Isn’t this kind of an “our guy sucks a little less than your guy” discussion?
Ford announced this week, that it is moving Focus production to China.
And it will be fun if Donny Boy announces a 20% tariff, won’t it?
Still believing, huh? The Goldman Sachs boys in his administration are not going to let your little fantasies become reality.
Funny how progressives will pile on Trump for his Goldman picks, somehow inferring his corruption with Wall Street, yet Hillary received many millions from these institutions while claiming publicly that she would reign them in (while giving private paid talks explaining how she needed to maintain a “public” message apart from her “private” one).
You have not a leg to stand on.
There is room for plenty more than one corruptocrat in DC.
Everybody, even her “supporters,” already knew Hillary was corrupt. But in their case, their impeccable progressive credentials informs them, that this is a good thing. Since The Fed handing the guys at Goldman billions for nothing, means the guys at Goldman are some sort of “smaaaart” and stuff. They are eeexpeeertts! So if you don’t listen to, bend over for, fork over to, and worship them, you are just some stooopiiid American, clinging to guns and Gods. Instead of the eexpeeerts at Goldman and your eleecteeed reeepreseeentatiiiive, who you should be clinging to.
Not all Trump supporters were quite that well indoctrinated yet, going in. Hence the discord.
If he stops the country from being destroyed by illegal border crossers it will be a good presidency.
We are a herd animal and won’t survive by eating our children, regardless of financial theories.
Burger flippers earn 15 bucks an hour? Recently, skilled nursing facilities in Pittsburgh were paying their college educated Registered Nurses a rate of $15.00/hr…
And yet, how many nurses line up for a job at McDonalds?
And yet the medical industry continues to complain that there aren’t enough LPNs to fill the need.
Interesting article about automation, including an interactive graphic on the likelihood of automation for different professions:
https://www.bloomberg.com/graphics/2017-jobs-automation-risk/
If I were working at the fake news Washington Post, I would be worried. Bezos is the automation king, and journalism could easily be automated – right now – with almost no capital investment. Bezos probably has enough spare capacity on his cloud servers as I write.
Kinda makes one worry when taken in the context of the $600 million Amazon-CIA contract. Instant, ubiquitous, automated deep state propaganda, if you get my meaning.
Their ideology allows them to meet their end with great joy. They already believe that their attempts to destroy our country is “saving” it. Suicide is an integral part of progressivism, a left wing division of radical Islam.
WaPo has already been cutting back its editorial staff. So, they are worried. Automated propaganda is already here, and nationwide USA reporting staffs are shrinking. Just look at Google News: Deep State leaks to WaPo are reprinted with minor revisions and quoted worldwide. It is a very effective propaganda network. Only problem is fewer believers of the DNC/Deep State “fake news” stories. USA Congress is the main consumer and user of “fake news.”
Mish I grew up as a libertarian. My mother was a libertarian, editor for the free market foundation and compiler of books on everything to do with social justice, liberal values and progress for the third world. She read every book in her school library and was a walking Wikipedia- and I wish she were alive today to have this debate. Her particular speciality was Russian history. Despite my capitalist libertarian upbringing and strong understanding of why a central bank is a socialist distorting structure there is no doubt to me that our future will be rocky because of automation and free movement of capital without free movement of people, not to mention tax laws, tax havens etc.
Morality seems to be very cultural. Likewise advertising works and indoctrinates people and propaganda is extremely effective- we must change our current thinking using education amd the tools of propaganda.
If we want to live in a civilised world with peace in the system we currently live in I only see a few option- the best one is indoctrinating people through education and advertising to understand that education and wealth decrease human suffering, that being nice to your fellow man and not being greedy is the way to sustainable growth, to elevate knowledge over assets, and to create a new value system that favours spirituality over imperialism. I’m sure you know the wonderful essay ‘The pitchforks are coming’. Well – either many people will need to be unjustly killed or we need to have minimum wages and social welfare and advertise and endocriinate our way to a third way socialist structure or we are doomed- because we are doomed anyway in this pretend crony capitalist farce anyway. As a capitalist i understand why capitalism creates growth and human progress but now we need to favour other qualities for survival- wellbeing, fewer children (which is a fund ion of affluence and happiness and entertainment) , and civil rest over
Unrest. Therefore we need taxes that favour small to medium enterprises that are job creators, to call for minimum wage, to educate people to be libertarian and fight government corruption and pillaging of wealth etc.
A morality based politics like Michael Sandal has discussed is essential s
Hi Victoria, great comments. After we get more people understanding the beauties of freedom, how do you overcome the problem of having to do that with each new generation since libertarians tend not to reproduce while religious folks and other mindless sheep tend to do all the reproducing and training up their children in the same buffoonery? Reproduction + indoctrination seems to win every time over re-education every generation. We’re fighting a losing battle.
Ha ha
Yellen has picked up Bernankes torch and will keep intereat rates low and capital investment high untIL employment improves.
Kind of like bombing the world into peace
Welcome to bizzaro world
Four rate hikes in the last 18 months under Yellen, with probably a couple more enroute. Bernanke cut to zero and then sat on his hands for eight years.
Guess which one wrote a book titled “Courage to Act” and then we’ll discuss what’s bizarro about the world. Yellen tried to normalize rates so she will be fired.
Kind of like the world’s fattest man “normalizing” his body weight by saving one of the 25 pounds of bacon lined up for breakfast,in case he should feel hungry later.
Heck, it’s even worse. As at least Fatso has an idea of what a normal caloric intake is. While noone at the Fed, nor anyone else, have the remotest idea what the interest rate is supposed to be. Instead just wantonly manipulating with blinders on.
The automation craze, is just that. It’s easy to fantasize about “The Jetsons” lifestyle, but practical application is vastly less achieveable.
Some things can be automated, such as ordering fast food. You will find that many people will prefer this over facing a dregged out, full face piercing, dope using, near brain dead teenager. The orders will be done right and change founded back properly.
Other jobs, even if technology can do it (and this is a bigger “IF” than most accept), simply will not be socially accepted from a robot.
The fact is that most low income wage earners are little more than migrant workers. They seldom work at the same job long, moving because their job is eliminated, they are fired for being pathetic or they improve their skills and abilities to be above that first job. So in a world where many of these jobs go away due to robots/automation, these workers will migrate to the next job. There will always be low income jobs that only humans can do.
Note we have about 20 million illegals in this country…there is your “low income” job takers. How was that put???? Jobs that Americans won’t do?
As others have said, this will lead to more government dependents.
The default way to order delivery pizza is an app on a phone or through a web site. Why should it be any different at a food trough like McDonalds?
Seems like a lot of people responding to this thread do not eat at McD. I rarely do, but I was passing through the little town of Ely, Nevada on my way to recon a possible site for lithium, was hungry for a quick meal, and stopped in the one McD in the town of 4,200 persons. I stood in line for a while before I noticed the free standing boards to order from… I did my order, swiped my card, and waited a few minutes to pick up my order to go. It worked very well.
As for nurses and teachers (and car washer assistants) that work for an ungodly low wage… all I can say is go do something else until they pay you what you want. As an exploration geologist, I have to back out of the market from time to time until my wage expectations (which are high) can be met.
We do have a free market system in the US…You don’t have to be a nurse all the time. I have heard that the local strip club is hiring and the gals do well there.
Interesting. The current minimum wage in Nevada is $8.25/hour and it still makes sense for McD’s to put in automated ordering booths. I’m just surprised they don’t have an app where you can order and pay on your phone and just pick up at the drive thru or inside (you choose).
Wages are only one component of employment costs. The problem most employers face is costs are increasing while employee performance is in decline. Simply having them show up is considered a win.
This is about indoctrination and trends. Modernity has created expectations of reward without effort, and especially reward without responsibility. We see this all the way from McDonald’s to Goldman Sachs.
And for every penny you pay someone, you spend at least as much on legal, regulatory compliance and the FIRE complex. So the poor burger flipper, “low skilled and lazy” that he supposedly is, is carrying an entire colony of abject, less-than-zero–value-add leeches on his shoulders.
The flexibility that Rod B talks about, is a very important component of free markets/societies. Absent both parties ability to negotiate rationally and freely, you don’t get a realistic market price. Of course, the zero-value-add, rent seeking dystopia beneficiaries want slaves to polish their knobs who are desperate enough to be grateful for the opportunity; not market prices. Hence have done, and are doing, a great job at dismantling this necessary freedom and flexibility in most of the country.
Flexibility, for the non wealthy, requires the ability to live really, really cheap for awhile. Zoning law nonsense, bans on RV/tent living etc. prevents this. As does “mandatory” lawyer/FIRE welfare like “liability insurance,” ever more fixed sum fines and levies, etc. IOW, the whole host of progressive dystopias’ ways for the leeching classes to rob, harass and ensure the compliant slave status of others.
If you can’t walk away from a deal due to being banned from making other arrangements, you are no longer free. In America’s halcyon days, you had the frontier. Which was REALLY nice. No more of that now unfortunately, but the onus has to be on retaining as many of it’s salient features as possible. Not constantly doubling down on enslaving and harassing people, solely for the benefit of a gaggle of rent seeking leeches that serve no discernible purpose at all.
In my opinion job automatization is always good
Said by someone who believes they are immune.
Or someone whose back has ever used a power driver, after screwing down a 1000 sq ft deck without one….. Or a flushing toilet instead of a bucket.
The whole cockamamie notion that developing better tools for a job, is somehow a bad thing; has got to be up there with the equally ridiculous notion that “the economy” is better off by first digging a ditch, them filling it in, ad infinitum. Or by burying bottles of money, so that people can run around waste time trying to dig them back up. Pure silliness, and so obviously so that even a three year old would figure it out. At least pre indoctrination camp.
Said by someone who has never had absolutely no other way to feed his hungry children other than by burying bottles of money and digging them back up.
I know college grads making $15/hr. What’s the use taking on $50,000 in student debt then end up in the same income category as a burger flipper or a fry basket shaker?
I spoke to a guy who owns a financial services business in the area at the gym. He said that he only hires college grads. I asked him how much he pays them. He said $15/hr and turnover is low. He said his stack of applications are as thick as a phone book.
This society targets the needs of the lowest common denominator first and lets the motivated ones twist in the wind.
That strategy may work short term – but it’s only a short fuse.
Sooner or later the chickens come home to roost.
Credentialism is just silly from the get go. Having a “degree”, no matter how much one got scammed out of in exchange for one, just means one has a piece of paper. And not even one the Fed has arbitrarily decided to put Washington’s face on.
Also, the vast, (and by now vast, vast, vast ,vast……) majority of “financial services” jobs are worse than makework. Heck, 95% of that whole racket, is pure value destruction, kept alive and in splendor by Fed and regulatory welfare. At least if those guys prepared some food, they would do something useful with their lives. Not just keep contributing to, and underpinning, the rot.
The problem I have with your story is that you refer to “college graduate” like its a commodity.
The kid who majored in engineering and the kid who majored in gender normative studies are not synonymous. They shouldn’t be wedged into one category just because the morons in government statistics are too lazy to distinguish.
The number of children (and I use that term deliberately) who are graduating from Ivy league schools and still can’t write a letter, still can’t do simple word problems in math, and exhibit frighteningly low levels of reading comprehension — and the schools think its OK to charge tuition (even a penny) for this?
Then you have the young people who learn actual skills, instead of political slogans. They are a declining percentage of college graduates but some still exist.
Telling me that the lazy useless dipsh!t from Evergreen state or Berkely are “college graduates” is ridiculous. They have no skills, no education, too many entitlements — and quite frankly I wouldn’t pay those losers $1/hr much less minimum wage.
“can’t write a letter, still can’t do simple word problems in math, and exhibit frighteningly low levels of reading comprehension”
Since those are three things that you have to have already aced on your SAT’s/ACT’s in order to get into one of those schools, are you suggesting those were skills those kids had at 17 but lost somewhere in those four years at an Ivy?
But the system is sucking these kids into a diploma mill while feeding them with false hope that their degree has intrinsic value in the job market once they graduate – when they know damned well that it’s not much better than a HS degree yet costs $50,000 for a 4 year stint at a public university.
Now you can blame the kid for being gullible enough to buy the BS. That’s fine. But most 18 year old kids don’t know jack and believe what the “experts” tell them. That’s the reason your liberal arts colleges are packed full of poli sci, sociology, multicultural studies and anthropology majors. I place the onus of the blame on the liberal sharks in charge of these cognitive wastelands that lead the kids into a trap that they’ll never escape from. Student debt can’t be discharged in bankruptcy court. It’s like child support arrears and delinquent taxes. It follows the debtor to his or her grave.
Student debt should not be discharged… its definitely not the taxpayers fault.
Charge some it off to politicians (they get a pension that makes CEOs envious).
And charge most of it off to the political indoctrination camps that created the debt in the first place. Colleges should be required to put at least half of their endowments into student loan debt — AND they should absorb all the defaults. Its their crappy product
The problem with student debt is that the banker takes on no risk. He’s not a banker. He’s a salesman who entices 18 year olds to sign their lives away on the dotted line and take on $50,000 in debt for a pig in a poke. If the kid can’t pay the debt the loan is federally guaranteed so the banker gets his money one way or the other. And the university president gets his money too, Guaranteed. If the kid can’t find a job that pays over $10/hr with his sociology degree do you think the banker or the university president lose any sleep over it. They’re nothing more than sophisticated flim-flam men who prey on teenagers. Low-life bottom feeders with advanced degrees.
Why does everyone keep thinking that things are going to continue to be somewhat like they have been. We are very quickly heading towards a VERY different world and it’s any ones guess how it will play out. Highly unlikely the masses will be happy campers. Automation will be the least of any ones concerns.
Good point. Go to sleep for 25 years. You may wake to find that Africa has a population of a billion people, that retail banks have largely disappeared (due to CCs) and that there are only central bank exchange points.
Maybe I’m missing some sarcasm, but Africa already has a population of 1.2 billion, and retail banks are disappearing 😉
Africa already has a billion. Over 100 million in Nigeria alone. (Assuming their censuses are reasonably accurate – if humanitarian aid is based on reported population I think we can assume gross overstatements)
My error folks. I reckon it will be in excess 2 billion in 25 years. Could be the same as China + India combined based upon the land mass, which is enormous (Mercator projection greatly distorts this – I believe you could fit the land masses United States, Canada, China and Europe into the actual size). Nigeria alone is projected to be larger in population than the US, eventually.
On banks my thinking is that there could be an elimination of retail banking completely with all transactions directly with national central bank exchanges and also peer to peer.
Mish,
What do you think of the following points:
1. Artificially low interest rates benefits automation over humans given low cost of capital and low rates of finance. This has the result of speeding up the adoption of automation and giving society less time to adjust/retrain the population.
There are plenty of examples of marginal automation, where the process is automated but still requires plenty of human man-hours to fix all the stuff-ups one could doubt the original productivity gains.
2. Not all automation is efficient. Example 1:
http://www.news.com.au/finance/business/retail/coles-reduces-selfserve-checkout-to-12-items-months-after-crackdown-on-theft-and-underscanning/news-story/d04de3397b28b679dba78bccf1b3e3e8
Now the state has to cover the losses by providing Police to catch people making 5-finger discounts (sometimes only through sheer frustration). IMO the state should charge the business for patrol time.
3. Inflation. Despite this automation and so-called productivity, costs still rise (indeed the Fed actively encourages it). Even items where there is little human labour input, such as insurance, costs seem to rise yoy, despite the aforementioned automation which should be reducing risks?
I agree with one – hyper-finance leads to asset inflation for the benefit of the already wealthy while also making it easier to bowwow money to replace workers. Has stated so many times.
I hate self-checkout and presumed it would indeed increase fraud. If fraud exceeds the savings self-checkout will vanish until it doesn’t. In grocery stores, two steaks swiped in one move will cost the store lots of money.
Monetary inflation is so bad that prices are rising despite automation
Questions – if the end is higher unemployment and social problems what is optimum population and should large scale immigration be allowed?
Not only is labour being made redundant but tptb are increasing that pressure on services (and wages) by adding more people.
Would be ironic if closed off Japan, sith all its problems, comes out tops in terms of social stability and ultimate quality of life.
Automation feeds into the whole set of current thorny issue.
I suspect average Joe six-pack already knows this and Trump is a result. A shout to put Americans first and stop further dilution of the power of Labour. Automation won’t be stopped but other things adding to the pressure can.
Yes, that would be part of the irony and paradox of history.
Similar to the way the former widely held belief in “the great moderation” disappeared rather quickly!
According to the Georgia guidestones optimum population ~1/2 billion. If ‘they’ get their way there will be no national boundaries so illegal immigration as we understand it will not exist. Average Joe hath no understanding, he is but a fool. You mention ‘TPTB’, they are already zagging when Average Joe Herd is zigging.
All the while the US and others dig themselves further into debt to pay for unsustainable social programs whilst adding more demand for those programs.
Something will give-way and it won’t be pretty locally and globally.
How many in government are even thinking about this?
They’d rather investigate Russia influence on the last election that pales into insignificance in comparison.
We all have shit Government unfit for purpose. Automate that!
Automated government. Now that would definitely be preferred over the current model.
“Unsustainable social programs”. I’ve been shopping lately. Everywhere I go there is more stuff to be purchased than I can possibly imagine actually getting purchased. I bet you could double the money put into these programs and the amount of wares for sale would just double with it.
What is not worth $15/hour is not worth feeding and must die of starvation. Let the Democrats extrapolate to their just end.
Hi Galbraith. I take it that you are an advocate for survival of the fittest (Darwin).
Please correct me if I am wrong (as I’m not American) but I was under the impression that statistically, the members of the Democratic party had more education and higher income levels. I was also under the impression that Trump appealed to the lower skilled blue collar worker (many of whom lost their jobs) like in coal mines and steel Mills.
You’re comment seems at odds with my impression.
Higher education as determined and rewarded by liberally dominated institutions giving degrees in studies that provide high wage employment in government jobs.
Minimum wage people are democrats, vote Democrat and believe their survival is dependent upon redistributionist democrats.
Conservatives still make things, you know, the people you depend on for your production. It is their jobs that automation threatens….threatens to force them to become democrats sucking on the collectivist tit.
Minimum wage people and other “losers” in the current economy did not vote Democratic. If they had Hillary would be president. The people who produce and do well in this economy largely voted Democratic. Each of my seven children and their spouses all earn in excess of six figures. None of them voted for Trump and I can’t see any of them ever voting Republican. Of course they are young.
So those receiving entitlements are losers?
The losers who voted for Trump are those not winning from the current corruption that increasingly rewards fewer and fewer, and of course those winners WOULD vote democratic. That’s how corruption works.You are correct that there are lots of WINNERS voting democratic….Soros, Styer, Buffett, Gates, Bezos, and on and on. Winners all. And each and every one is wining by watching the American middle class worker decimated. And 90% of all government workers from local to federal are democratic voters, each and every one of them dependent upon the corruption and their employment base growing.
So keep the faith, those dependent upon the corruption that rewards those at the top and the bottom are growing in number and their ONLY threat is TRUMP….which they are committed to removing from office regardless of what it does to our constitutional republic.
Amazing, that some simpletons are still arguing about the left-right paradigm.
“Minimum wage people and other “losers” in the current economy did not vote Democratic. If they had Hillary would be president.”
The overwhelming issue of the 2016 campaign was the repealment of the Affordable Care Act (ACA) i.e., “Obamacare”.
It was destroying household budgets for millions of mostly middle class American families, just as the Republicans claimed it would do. These families were referred to as “deplorable” by Hillary Clinton, one of the most corrupt figures in US political history.
As for your seven children, are they running businesses? Accepting risks in pursuit of rewards? Meeting payrolls, employing their neighbors and complying with regulations? As part of the producer class of society, are they aware that President Obama was referring to them when he infers that “you didn’t build that” when he would ramp up his rhetoric for wealth redistribution?
I bet every single one of your kids works for the government! Directly employed or contracted with, their entire sustenance is completely tied into the status quo of governing entities. The poor no longer stop by their Kool-Aid stand and now they’re pissed off about it.
Some stats to back this up? We know that the most educated counties voted for Clinton and the least educated swung from Obama to 45 (source: http://fivethirtyeight.com/features/education-not-income-predicted-who-would-vote-for-trump/).
But you claim that the people who get paid most only work for the government. Seems odd – care to provide a source?
There is no doubt that many “educated” (progressive indoctrinated) people WOULD vote for Hillary. If not it would be the greatest failure of progress agenda yet!
But if your claim is correct, when considering the red/blue voter map of counties, there must be very very few “educated” counties.
Hi madas. You said “Conservatives still make things, you know, the people you depend on for your production. It is their jobs that automation threatens”
I agree. That’s what I was saying too. Republicans are the lower paid, lower skilled workers whose jobs are threatened by automation. Democrats are the more highly educated, higher skilled workers whose jobs are perhaps less in jeopardy (like tech jobs). That’s why Trump appealed to these low skilled workers and promised to turn back the clock to 1950 and get them back their coal and steel jobs. And they fell for it and voted for him in droves. Sadly for them, he can’t turn back the clock.
Why are US cities in the shape they are in?
For decades all the highly educated folks have been governing them. Maybe they should turn back the clock twenty, thirty or forty years and then the municipal pensions could still be saved.
Progressive dystopias make much more sense, once you realize that in newspeak, “education” most closely mirrors what is referred to as “indoctrination” in plain English.
So yes, the most highly indoctrinated receive the most perks. As a reward for so diligently performing their main duty: ensuring the current and future dystopianness of Dystopia. While those who produce value; only to have it debased, taxed, regulated, mandated and sued away by the above more thoroughly indoctrinated; receive less. This place wouldn’t be much of a proper Dystopia if things weren’t that way, now would it?
It appears to me that US cities and states are in a world of hurt, not because of the people they employ, but because of the US political system. Both parties spend so much time fighting each other and reversing each other’s policies when in power, that nothing gets accomplished and they spend extraordinary amounts of taxpayer money to actually make things worse. The government employees are merely doing what their political masters instruct.
You are blaming the foot soldiers for the general’s mistakes.
They are in a world of hurt because people are not incentivized to create added value. Because there is no longer much of a connect between the value one creates, and the value of what one is able to consume. So you end up in a state where the wealthy; those who can afford to consume the most, are lawyers, banksters, realtors, public unionistas and others who, as often as not, have produced, at the very best, a big fat zero of added value their entire life
Along with people who, literally, even de jure, produce nothing. And instead just sit on their rear, while their so called “assets,” whose “value” is generally due entirely to artificial and regulatory mandated scarcity, is being pumped up by The Fed. With money stolen via debasement from those few saps who still bother to make a productive effort.
So, entirely predictably, less and less value is being produced. Simply because; why bother? Why not instead join the party and be a leech? As that is, after all, what allows one to live the high life?
Fake news propagandists confuse education with conformity. Thus a conforming Christian is an educated Christian. Thus one who condones socialism is an educated socialist. Mish is not an educated economist. Mish is a heretic. Some Republicans conform to fiscal conservatism and limited government. Some Republicans conform to fundamental Christian superstitions. Some Republicans condibe to free market capitalism.
Customers have to be able to afford their burgers. They can’t just drive prices to the moon the way medicine has. Customers can’t afford to pay megabucks for a burger any more than they can for Epipens.
The real problem for restaurant workers is bankers, who keep confiscating their wages by printing inflation.
In the new paradigm you will find anyone that managed to stash assets during the old paradigm will have them confiscated.
The masses will vote for it once proposed. Take it, take it, take it.
Can democracy work in future?
Automation will raise this fundamental question.
Change how we run countries voluntarily or let chaos do it for us via major upheaval leading who knows where.
If there is one element desperate for AI, it’s politics.
The carbon based life form of politics is just not up to the job.
In fact – news collection/dissemination & politics. Put a machine in charge and it would improve them. Get rid of the partisanship and excess emotion.
Suddenly well paid libtards in the MSM would wake up and smell THE FEAR of the masses and might understand how someone like Trump can get into power.
There is a lack of FEAR in the MSM and Deep State. They need to feel it like millions of others.
Depends on who does the “programming”, doesn’t it?
AI I won’t be used for politics. It will be used on us.
At the push of a button, the AI masters will be able to select “genocide mode” or “war mode” or “serf mode”. Completely ubiquitous and completely invisible to the general population. We will not see it coming and will inflict it on ourselves.
Not that I’m pessimistic or anything.
Everything our government does is premised on efficiency….as it grows ever more dysfunctional…so I’m sure everything will be fine.
Well, that’s what they tell us at least. Like most things political, what they say and what actually happens are unrelated at best and probably directly the opposite of each other. Orwell called it newspeak. Proof that the politicians thought 1984 was a how-to book.
More likely that someone like Google or Amazon implements this capability. There is a race underway and whoever gets there first will be more powerful than the Federal Reserve.
It hasn’t in the past. I can’t see any reason why some better power tools would change that.
Reblogged this on World4Justice : NOW! Lobby Forum..
Please think about the statement from Dudley at the Fed, below, and the implications of Automation and immigration.
He sees high EMPLOYMENT as a problem. He wants to use rates to create more unemployment. Leave rates alone, machines will do the heavy lifting. Make Dudley et al redundant and replace by AI.
“If we were not to withdraw accommodation, the risk would be that the economy would crash to a very, very low unemployment rate, and generate inflation,” Dudley said. “Then the risk would be that we would have to slam on the brakes and the next stop would be a recession.”
“HOW CAN A HUMAN JUSTIFY ASKING TO BE PAID $15 TO WORK?”
Pretty simple, really:
1. The minimum wage was introduced in 1938 at $0.25/hour.
2. Inflation adjusted that is $4.34 in today’s money (https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=0.25&year1=193805&year2=201705)
3. The economy has grown 16x (inflation adjusted) since 1938 (https://www.thebalance.com/us-gdp-by-year-3305543), making the equivalent minimum wage in economic terms 16 x $4.34 or over $50/hour.
Since the average wage is $50,700 (or about $27/hour) there is some explaining to do – why are most people getting paid about 1/2 of what the *minimum* wage was in 1938? (Hint: power of capital vs. labor)
Would the Federal Reserve and Federal Income Tax Acts have anything to do with this outcome? (purchasing power completely destroyed along with government parasitism)
No idea. Here are some numbers on the cost of living in 1938 (not inflation adjusted).
http://www.businessinsider.com/the-cost-of-living-2014-10
The average wage in 1938 was $1731 = $30,000 today. The average wage today is only $50,000, yet the country is 16x richer. Somebody’s getting the raw end of this deal 🙂
Richer? What does that mean? More useless crap?
Yeah, richer, you know, like better food, nicer and more cars, vacations, and houses. More time off to enjoy them. Better medical coverage (if you have insurance), safer streets, the ability to retire with a longer post-retirement life waiting for you, etc. etc.
Useless crap like that.
OK, mea culpa – I should have adjusted for population.
1. Minimum wage in 1938 was $0.25 = $4.34 inflation adjusted
2. Economy has grown (in real terms) 16x
3. Population has grown 321/130 =~ 2.5x
Thus equivalent minimum wage adjusted for GDP growth per person = $4.34 X 16/2.5 = $27.50 (or about $50,000/year).
1. The average wage in 1938 was $1734 = $30,000 inflation adjusted
2. Economy has grown (in real terms) 16x
3. Population has grown 321/130 =~ 2.5x
Thus equivalent average wage adjusted for GDP growth per person = $30,000 X 16/2.5 = $192,000
Guess what I’m getting to is that prior to 1914 there was price stability for at least 50 years (probably longer except for the impact of the civil war). A loaf of bread cost the same, effectively, from the start to the end of this post-war interval.
In 1914 the federal income tax was introduced initially at about 1 percent above $100,000 earnings (with a promise it would never exceed 3%, from memory). One had to be quite well heeled to pay taxes.
But during the 1930’s under Roosevelt this dramatically shifted downwards to the lower income brackets to around 30 to 40 percent, from memory, and reached almost 100% for the highest income bracket by 1940. From memory this went to the Supreme Court and was overturned, eventually Roosevelt had to agree to a lower top rate to somewhere in excess of 90%, but not 100%, however.
So here’s my point, if not for the Federal Reserve and Federal Income Tax Acts we could have had price stability and preservation of purchasing power. In addition, there would be little federal debt as there would be taxation to underpin it. In essence this is a credit, not debit based system, a system that was first envisioned by Lincoln and one that many countries operated up until 1968 when Canada shifted to a debt based system, I believe.
Therefore there would have been no need to increase minimum wage, is that a possible outcome?
…little federal debt as there would be taxation to underpin it… -> …little federal debt as there would be No taxation to underpin it…
Your price stability sounds a bit like Adam Smith’s invisible hand. It certainly is possible that that’s what happened in that period.
I’m mulling over the idea of Roosevelt having anything get overturned by the Supreme Court since his administration packed the court. That was the “new” part of his New Deal agenda.
Not to mention FDR threatened to add more justices to SCOTUS if he didn’t get his way. F’ing despot.
FDR issued an Executive Order in 1941 I believe to set the top rate at 100%. This was overturned however – I have read that the Supreme Court was involved (which surprised me too knowing Roosevelt) but it could have been Congress – was writing off memory.
Do any of you have a clue of what you speak?!
Do you have any idea what the minimum wage life was like in 1938?
SERIOUSLY!!!
Hang on, you just condemned the riches we have acquired since 1938 as “useless crap”. What is going on here?
He’s an angry elf…
OK, here is a link to prices in 1938:
http://www.businessinsider.com/the-cost-of-living-2014-10
Let’s copy the economist and do the “big mac” test, but with a movie ticket instead of a burger.
We can see from the link that a movie ticket cost $0.25 in 1938 – basically one hour of minimum wage work.
Today the minimum wage is about $8-9 across the country (some places it is $7.25, a few $15, work with me). This is about the same price as a movie ticket most places I go to (NYC and SF are ridiculous however).
Thus in 1938 and in 2017 the cost of a movie ticket is about one hour of minimum wage work. And I’m not sure the movies are any better today but I’m an old cumudgeon as my family frequently remind me.
Themo, you claimed there was massive wealth disparity and then point out how society is so much richer than 1938. All the things you point out are available to even the poorest today.
So which is it? Are we richer or poorer? Stop bitching about minimum wage people being screwed compared to 38 when they have so much more and do so much less.
And yes, we do spend a significant percentage of our earnings on useless crap and entertainment. Hardly a financially “oppressed” society.
Fair enough – you value monetary stability more than I do. Frankly I see 3-4% inflation in a currency as a feature, not a bug. Firstly it rewards recycling money – leaving it out of the system is punished, so wealth is put to use rather than hoarded.
But more importantly is that people have a software bug that let’s them ignore low levels of inflation so they feel as though they are getting richer over a decade timeframe (they remember their salary history) while prices of big things seem to remain constant, except for their houses, that they also view over decades.
This allows for the depreciation we have seen in the real cost of cars to net out at level prices, it allows cheaper airfares to be level, and other improvements in productivity to have a net zero price impact (the cost of computers has been so deflationary it swamps inflation).
Since our money’s value is really just a reflection in our trust of the systems and laws that ensure that everybody else is forced to value it the same way, allowing this 3-4% inflation into the system takes advantage of our software bug for the benefit of society.
Take my neighbor – he bought his house in 2006 and now it is finally “worth what he paid for it”. I’m not going to explain nominal vs. real worth – he is a f’n hedge fund manager so if he wants to believe that his house is worth the same value as he paid for it, good for him (but I’m definitely not investing in his hedge fund). In reality it is currently worth about 20% less than he paid for it, but houses and salaries fall into the part of the software bug that blinds us in decades.
Yes I would prefer to maintain purchasing power rather than suffer inflation and hope that the interest rate paid by the bank will offset that loss. It seems immoral to work very hard, be frugal enough to save it for future investment, only to see the value of savings be destroyed by inflation. That seems a form of robbery to me.
If the purchasing power is maintained, then an increase of income (say a pay raise) represents a real improvement, not just something that might compensate for inflation.
I really don’t understand why economists seem so scared of our currency being a store of value. Maybe it is because they would lose a bit of power, I don’t know.
“Since the average wage is $50,700 (or about $27/hour) there is some explaining to do – why are most people getting paid about 1/2 of what the *minimum* wage was in 1938? ”
Why do you assume the growth has been evenly distributed through the economy such that every business (sector) has benefited equally from the growth and can afford to increase wages at the same rate?
What were our expenses in 1938? What was our cellular bill, car insurance, entertainment costs, health insurance, income taxes, and how much of the cost of everything we purchased was transfer costs of hidden taxes imposed upon employers? And what was our mortality rate for workers? How many died building GOVERNMENT projects, not to mention private employment.
This is simply stupid. There is no way to compare wages to 1938. If people were able to revert to 1938 spending, we would be RICH.
Simply look at our economy, look at what we spend our money on. Look at the massive revenues in sports and entertainment, much of it coming from lower wage people. And then look at the actual work being done to earn these wages….and then tell us how terrible we are doing.
Our threat is in expectations and what we are willing to do to meet them.
That was sort of my point.
Gassing of one certain population group was introduced in 1938 as well. So, I assumed by now, going by “inflation” and all; it should now be OK to gas another 50-odd population groups as well?
“Whilst workers will usually resist a reduction of money-wages, it is not their practice to withdraw their labor whenever there is a rise in the price of wage-goods.”
-John Maynard Keynes, The General Theory of Employment, Interest and Money Page 7.
Right there’s your answer. Anyone who’s ever had any interest in economics could get at least to page 7 of that horrible work of fiction. The guys who want to be in charge read that stuff and get all excited about inflation.
I was automated out of my job… resulted in an improvement of my tennis game. What’s the big deal?
Dunno – you were not good enough at your job and you will never be great at tennis?
Dunno, you weren’t good enough at your job and will never be great at tennis?
“What’s the big deal”
– probably the one you cut when you left.
Translation of McD press release :
no current employees will be laid off, but given the high rate of turnover at our restaurants, 90% will leave voluntarily within 20 omnths. They will not be replaced.
Just re-label burgers as medicine. Then they can charge $500 for a Big Mac. Each clerk can make $200,000 per year. Add another $500 to get a prescription to buy the Big Mac to prevent customers from using the automated kiosks to self medicate. Forbid anyone else from selling burgers to prevent competition Forbid importing food from Canada. That proven system works just fine for Epipen. It can work for burgers too. We just need to get creative to solve problems.
I think you have just described Monsanto’s business model.
I would rather that the Financial Accounting Standards Board (FASB) simply provide us in the working class with what FASB Rule 157 did for the banker class.
That is, a way to value assets on a mark-to-model basis and not be tied to the frivolities of economic ebb and flow that mark-to-market accounting demands, As a worker, my asset is my labor and it is measured in wages.
According to model, a holder of a Bachelor degree should be making 1.5x what a HS diploma holder is earning. Never mind if I am functioning as a coffee barista and barista duty barely requires the HS diploma, I have to be paid as the model for Bachelor degrees dictates.
Just because the market says I get barista wages, I want FASB to implement the rule whereby I get my wages marked-to-model. They can do away with the business cycle, they can do away with all this market based stuff, too. After all, they’re FASB are they not?
Government intervenes in markets for the express purpose of defeating markets, so any discussion of “markets” is farcical. A market would imply that there is a production component that relates to wage, and that does not exist. A government declared “wage” implies NO such connection, and given the hurdles they create to prevent any employee from being held to ANY performance standards, for anyone to suggest that wages can be compared historically, completely ignores reality….and facts.
If we want to see a more prosperous society, we need more prosperous PRODUCTIVE people, and productivity is NOT an entitlement. It is NOT dependent upon a college degree in humanities. It is dependent upon EFFORT…something that is universally lacking. After all, why would we when government insists we DESERVE a good wage, and food housing and healthcare…not to mention a framed diploma, and there is nothing mentioned anywhere from the left or even the middle that implies effort is required beyond the effort to demand or protest for MOAR.
America was never dependent upon entitlements of any kind. It was always about the OPPORTUNITY to TRY.
Maybe if we scream and cry and threaten to hold our breath, maybe they will promise us more….that THEY have NO means to provide.
Whenever I get a McD counter order for my family something is routinely left out of the order, there’s never anything extra added in, all mistakes are to the downside, I assume they are getting some encouragement to short customers. I have to loop back to the counter to request the missing item and they always give me the item without questioning.
People who get large drive up orders must get stiffed all the time if they aren’t willing to hold up the line to audit their orders.
McD’s might actually lose money with an accurate automated order filling system.
McD’s service quality has been in a downward spiral since social engineering was given priority over customer service.
(In low wage Philippines there are two neatly uniformed attendants at each line, one girl writes the order slip, hands it to the second girl who runs to pick up the order items, all smiles, “thank you sir”s and polite bows from both when you take your order. Refreshingly old school.)
And they probably still deep-fry the apple pies (in lard, like the good Lord intended).
I was hoping McD’s would invest profits from automation into better quality food.
ROFLMAO!!! Hilarious!
I seldom go to the food boxes for a mean. Haven’t had a big mac in thirty years and i don’t drink soft drinks. So you can replace all those unskilled jobs in the food boxes with machines. don’t care. As for self check out, I hate them. The exception handling is piss poor. Skew not in the computer, tough luck, can’t continue until the issue is resolved. That is when I just leave the goods at the counter and let management take care of it. If an item is slow in being recognized and you end up doing a double swipe, no way to correct the problem without waiting on some clerk to come over and do it. Want to buy something like spray paint, you have to wait until clerk comes over to check your ID. And some of the big box stores that have the self check out tend to have a long line of customers waiting for the convenience of self check out. Give me a live checker, I’ll pay a few extra cents per item just to employ them. Of course if they automated the local and state and federal government jobs then i would applaud that decision. I figure a machine can do a better job than most of the humans we employ as “civil servants”.
Mish loves getting people excited about automation of jobs. It certainly brings out a lot of panic in the posts.
However, it’s been going on for hundreds of years, and it’s going to continue. You can’t stop human ingenuity and innovation.
It also results in more and better jobs and higher standards of living overall.
As I have said before, “200 years ago, almost everyone worked on farms to grow food. Now it’s less than 2%. 50 years ago, almost half the workforce was in a factory. Today that is less than 20%. 100 years ago there were less than a billion people on the planet. Today there are over 7 billion, and the vast majority of adults are employed in many billions of jobs. We are not shrinking the total number of jobs, we are creating more and more all the time. We are simply changing what the jobs are. We are replacing repetitive, boring, and dangerous jobs with better jobs.
The problem for the future is not the elimination of jobs. The problem is not enough highly skilled workers to match the type of jobs being created.
The secondary jobs problem is one of demographics. Most developed economies have aging populations, and an increasing number of retirees (this problem is most acute in Japan, but the US is already experiencing it as well). As the percentage of retirees increase, the percentage of people working decreases. This exacerbates the shortage of skilled workers.
Japan is trying to solve their shortage of skilled workers by automating everything they can. But they can’t keep up. Worker shortages continue.
The US is using a combination of automation and immigration to alleviate the skilled workers shortage. Yet skilled worker shortages continue.
Many posters on this site have bought into the “fake story” that automation will destroy all jobs and that we are all doomed. Time to wake up to the reality. Automation has eliminated back breaking jobs like pulling a plough with a horse, ditch digging by hand, etc etc. And it has created far more jobs than it has ever destroyed and increased living standards.
If you want your children / grandchildren to have a good future, make sure they have as many Skills as possible to be able to be able to satisfy the job requirements.
The winners of the future will embrace automation, not fight it.
The winners of the future will embrace automation, not fight it.
Absolutely – and I never said otherwise.
We are not shrinking the total number of jobs, we are creating more and more all the time
I have said similar things. Indeed I have stated many times, jobs will come but I do not know from where. My only problem is when.
We are in a period of creative disruption where losses now exceed the gains.
We agree Mish. We have both stated the same thoughts and ideas many times. I’m simply saying that every time you bring this topic up, that people tend to get pretty excited. I know that this is probably a good thing for your blog, so I understand.
I take it that you now believe that we have reached a tipping point, where technology will start to eliminate more jobs than it creates (at least in the near term)? I have wondered when or if such a tipping point might be reached. I’m not sure if we have reached this point, but even if we have, then the same logic holds true. The countries that embrace the new tech will be the winners, as they will dominate the countries that don’t embrace it.
We may be at that tipping point. I do not know.
Driverless cars and especially trucks are coming possibly faster than I project. But demographics will have boomer masses retiring.
And driverless opportunities may exist such as chauffeurs for kids. As some have pointed out, parents will not let young kids get in a car by themselves.That’s not a lot of jobs but it is non-zero. Historically, every wave of invention creates new jobs, even if we do not see them yet. Is it different this time?
I do not think it is different this time. I continue to believe that automation will continue to create even more jobs than it will displace.
I agree with you on the net benefits of driverless vehicles in spite of the job dislocations. In fact I think that driverless will be a huge positive to the entire world, bringing us to the next plateau of productivity.
The key thing for us to do as individuals is to prepare as best we can for the technological future. That’s my personal focus in my semi-retirement; helping people to acquire as many Skills as possible.
Look at iOS and the rise of the app economy. Apple lets anyone who wants it (if they buy a Mac computer) install the developer kit, called X Code. I have it installed on my Macs and I’ve done a little bit of playing around with it. A lot of the hard work is already done, with standard code for things like buttons and dialog boxes. I could probably design a fairly basic app because of the tools available for free. The app store has generated over a billion dollars in revenue. Yes, a lot of it is a few popular apps, but there are plenty that are extremely specialized. The developers aren’t the next Bill Gates, but they earn a decent living.
Now image that same model applied to 3D printing and micro manufacturing. Someone will develop an easy to use system that will allow anyone with even a little bit of creativity to build custom parts, do custom painting and even details like tire tread will be able to be customized. Think about the motorcycle industry. There, people take a mix of off the shelf and custom parts and build a totally unique bike for a very high margin. Oh, they’re not jetting off to Aspen for the weekend, but they are able to do pretty well for themselves. Image that happening for everything you own. You want a chair? You want it to look like a throne made of the skulls of defeated warriors? Cool, it will be delivered on Thursday. You want a refrigerator with an ice maker that makes cubes exactly 1 cubic CM? Sure, that’s a stock design. How about an Italian fresco on your bedroom ceiling? That’s a 2 hour job.
Spot on. And indeed there is nothing to worry about. New occupations in entertainment and personal care will dominate the future.
The poop is about to hit the fan. From environmental degradation, over population, fracking poisoning our water supply, to warmongering from US, Russia, China, Ukraine, Middle East, etc.
40 years ago we had NATO and Warsaw Pact. We had some close calls but each side knew that the other side wasn’t crazy enough to push the button. That assumption holds no longer true. With the rise of extremism we have many players willing to push the button. The only thing holding them back for now is that they don’t have a button to push as of today (Iran, NK). As the fight for the dwindling resources becomes more desperate the number of potential button pushers will increase.
Once we develop robots/AI that are capable to think and program the next generation of robots, humans are no longer needed. The machines will eventually take over and eliminate unnecessary resource suckers. Watch Ex Machina, excellent movie that shows how it could happen.
Of course, people will have to be paid to eat there.
One angle to this story that is being missed entirely in the comments is that big businesses typically like high minimum wages, and I suspect McDonalds is no different. Why? It kills off nascent competition. McDonalds is big enough that they can develop and deploy kiosks for ordering, and robotic cooks in the kitchen. What happens, though, to Joe’s burgers? Or Speedy taco? (i’m making up names here – any resemblance to actual fast food restaurants is purely accidental). A small shop, or a small chain is doomed in this environment.
If minimum wages rise, we’ll see McDonalds, Burger King, and perhaps Wendys, Hardees, and a few others automate and survive and become more profitable, while many small chains have little choice but to raise prices rapidly and die.
Well WalMart and other such big box stores have already driven the mom-and-pop businesses out, and the employees didn’t even have the benefit of a higher wage. So, no, nobody is going to fall for your fearmongering.
Didn’t Walmart just raise its minimum wage and accelerate the process of giving wage increases?
Who doesn’t want better paid customers? The employees are customers too.
Won’t Walmart employees be better disposed towards shopping at Walmart if they have a pay rise?
Won’ there be some positive advertising pay back too?
Makes sense to take care of your employees as best you can.
Yes, but the idea of a state/corporate monoculture as some kind of Hegelian eutopic efficiency somehow evades my sense of the meaning of ‘worthwhile’.
Regulation always benefits the ones who can spread compliance costs across the largest revenue. Meaning, the biggest operators. No fear mongering about it.
It’s why giant chains dominate grocery shopping in over regulated societies like the US, while people left more to their own devices, buy their groceries from small vendors in market stalls.
Of course, financialization, which has been the most lucrative of the rackets in the US over the past 4-10 decades, also pulls in the same direction. So we have a double whammy here. Whereby the connected first regulate everyone else out of the ability tot earn a living. Then make up for the loss, by printing themselves another pile of dollars. While promising an occasional breadcrumb to those amongst the former, who cheer for them and show proper gratitude for being allowed to give BJs for breadcrumbs.
Simple mind, simple answer.
You are right that the “low cost” consumer may have fewer choices, but look at In’n’Out – their model is to charge a bit more for great service and better quality food and there is a line of cars just about all day trying to get in to their restaurants.
Also, these pay booths are really simple – a touch screen, probably a Raspberry Pi-type motherboard and a small printer and some very simple software – my guess is that a Chinese company could build one for under $250 – let’s say $1,000 just to give them some outrageous profit – an upfront cost that is probably in the same area as a new cash register.
…but think of all the videos on you tube we will lose without these employees. Some advances just come at too high of a cost…
REAL LIFE I went to my local McDonald’s and they have the new kiosks. One line is available if you need to order normally. That line is extremely long. Drive through is backed up. I order with the kiosk. I look around and notice far fewer employees than normal behind the counter and kitchen. Result, my normal five minute wait for food was 20 minutes. Yes I think kiosks will work very nicely indeed.
A college degree is not a commodity. Learning engineering is not the same as learning gender normative studies even though government statistics treat one college degree as the same as any other.
Asking what a McD’s burger flipper “should” be paid is the wrong question. The correct question is “what skills does an employee have?” and “what skills are required for this position?”
In theory (not reality), a McD’s cashier could sooth an angry customer, encourage them to order an extra side or desert, help a mom coralle her kids so she can order, etc… those are things many customers would appreciate, and things a robot can’t do (and probably never will be able to do).
The jobs got redefined from “customer service” to “just flip the burger and fling it at the customer”. The jobs got dumbed down to meet the low quality of education.
A generation ago (maybe two?) people with a high school diploma had employable skills. The price of education skyrocketed, and now most “college grads” have no marketable skills. Why are people supposed to pay more and more and more for education that increasingly doesn’t happen?
Education costs are going to come down to meet the value of the education provided — and in most public school systems (and many colleges), the value is close to zero. Discussing $15/hr wages and robots are treating the symptoms instead of the underlying disease.
G7 countries (especially the USA) have failed education systems, period. That is the real underlying problem, not robots or minimum wages.
The fact is the robots got an education (programming), and they have more skills. Entities that have more education (not more degrees) and more skills are going to get paid a lot more than kids who got a “college” indoctrination.
A human with an education can demand a lot more than $15/hr. A human with lots of participation trophies, certificates of completion, and political indoctrination are not worth anything at all.
I agree with most of your post Medex (though I had no idea political indoctrination was part of the American curriculum!) The future belongs to those with Skills. We need to help people acquire the necessary skills. When I am training people, the question often comes up, “what types of skills should I acquire for the future?” I often answer these three skill sets, in no particular order:
1 STEM
2 trades
3 any job that requires human empathy and understanding
We can always pay welfare and other benefits…because, one way or another we will pay in order the system doesn’t shut down.
Or concentrate the welfare crowd into liberal utopias like Chicago and let them murder each other.
The USA is the land of opportunity. If you study, if you are willing to work hard — there should be a place for you. It is not, and never was the land of endless free sh!t.
That is why Jerry Brown failed as governor in the 60/70s, its why he is failing today, its why Obama failed as President, and its why Chicago is rapidly descending into the same mess that is Venezuela.
Same inputs as Venezuela –> same outputs.
Inner city kids deserve opportunity. They don’t deserve endless free sh!t paid for by taxpayers
Had these kiosks in Spain 10 years ago. It made the overall ordering experience a little quicker, but I didn’t see a reduction in employees. Some people don’t like to use them, and employees needed to help folks who had didfficulty navigating the menus.
It is really a mechanism for increasing the number of orders that can be taken at one time, not a mechanism for reducing employees. And they did not have people delivering to tables.
Why do conspiracy theorists and ideologues congregate around Mish’s site here?
Automation can definitely replace human workforce if the work is mundane and routine. Case in point: as a programmer, I was handed a monthly manual routine work based on emailing the recipient asking for dates on running monthly report which I would then set the dates on IE browser before they’re generated automatically. Suffice to say that the manual work was mundane (data entry) and routine (monthly). Automate the work using VBA and….2 hours of manual work shrank to a few minutes of clicks followed by verification after the automation is completed.
NERD!!!
While yuze was learnin’ to VBA stuff, we was out protestin’ and bustin’ windows and lightin sh!t on fire!!! We boosted the TVs from the school library and sold ’em to buy $400 sneakers ’cause we thinks we can all be NBA stars without practicin. Hell, most of us so fat from eatin twinkies and tacos and school lunch pizza we can’t run accross a basketball court! We ain’t got time for dat anyway; gotz to go shoot my homie so we can stay in the hospital ER tonight — dey got air conditionin and free cable TV!!! Dat TV is chained to da wall, we already tried a steal it last visit.
And here you be programmin your VBA stuff and gettin paid to work!!
I guess the above went into moderation because I put and wordpress decided it was embedded HTML ?
NERD!!!
While yuze was learnin’ to VBA stuff, we was out protestin’ and bustin’ windows and lightin sh!t on fire!!!
I had (/sarc) at the end of that, but with greater than / less than signs…
Evidently, wordpress decided it was embedded html and kicked it into moderation
You were that guy in Office Space, right?
Tom Smykowski: Well-well look. I already told you: I deal with the (expletive deleted) customers so the engineers don’t have to. I have people skills; I am good at dealing with people. Can’t you understand that? What the hell is wrong with you people?
Once again, Idiocracy was a documentary from the future:
[youtube https://www.youtube.com/watch?v=wW-4LU79qbU&w=560&h=315%5D
Enough with creating more jobs and serving the society.