I spoke to a large business executive about a week ago. They do manufacturing. He said, “If they pass the minimum wage hike, we’ll be able to afford to automate several parts of our production.”
What? Afford to automate? What he meant was, since the cost of business would go up? They would have the financial excuse to invest in machines and software to replace workers. After explaining this he added, “...especially if they ever get around to enforcing Obamacare.” They think their ROI would be 3 years against the potential cost of doing business if minimum wage is increased and Obamacare is enforced. He wouldn’t say how many workers would be replaced. But he did say it would be transitional over 18 months.
This is how minimum wage and Obamacare work in concert to destroy our economy. His biggest concern is the penalties that are being written up for employers who cut the work force to save costs under the Obamacare law. (I’m not sure what exactly that meant).
It was pretty revealing.
My presumption is the current delay for businesses that are being coerced into 'swearing' that cuts are not caused by the ACA. Otherwise, they incur a penalty.
“If they pass the minimum wage hike, we’ll be able to afford to automate several parts of our production.”
Yes, not only is the cost of manual labor doubling, the price of automation is coming down, fast. They are on par now, without increased minimum wages, and without obamacare, the only thing missing is the initial investment. When your exec says “we’ll be able to afford to”, he is saying “it will pay for itself in one year”.
In the near future, the population of unemployed, propertyless underclass will explode to 60%-80%. We will either embrace eugenics, or becomes a walled society in the style of Brazil. No third option.
This is what happened in the Central Valley of California. The United Farm Workers Union drove up farm workers’ wages to the point that it became possible to replace them with machines. (Turns out they had to replace the tomatoes being picked to a tougher-skinned, less tasty variety to survive the picking machine’s rough treatment). So raising the workers’ wages too much ended with the workers being replaced.
Occasionally we visit family in Costa Rica. Going into a Costa Rican supermarket is amazing. There might be 100 employees deployed through the store—giving out samples, explaining the product, basically waiting on you. At least 25 behind the butcher counter. But their wages are low. In an American supermarket, they’re starting to eliminate the checkers with self serve checkout. If the minimum wage is increased enough, you will certainly see that job disappear (along with countless other low-skill jobs as well).