Ontario raising minimum wage to $15

[Crazy Eddie]

You're still not getting it. If you use the automation to increase productivity you end up with more goods on the market. The price isn't going to stay constant, your price per unit is going to have to drop considerably to sell that many...

Which results in the same final revenue that you had before, Mister Fail Math.

Simple arithmetic, it's easy:

I can make 100 handmade widgets and I know I can sell them for $30 each. Total sales: $3,000.

I can make 1000 autocad widgets and I know I can sell them for $15 each, but I'm a retard and I sell them for $3 each anyway (listening to your advice, I guess). Total sales $3,000. *

I have no reason to cut jobs now. I'm making the same money I was making before. Automation means my workers are no longer spending all of their time making widgets and can now focus on things like customer service, sales, cleaning the front desk, taking phone calls, meeting with buyers in the big box stores now that we are making enough widgets to reach more markets.

So quantify exactly what you're predicting. What level of automation would cause the overproduction problem and resulting job losses you're predicting?

* And again, I'm only slashing my prices that by 90% because I'm a retard. If I'm NOT retarded, I can cut my prices in half and still produce a thousand of them, which means total revenue would be about $15,000.

The only way you can have a world where minimum wage doesn't cause job loss is where there's no automation options...

This is false in two ways:
1) Minimum wage doesn't cause an increase in automation, it is one of MANY factors that raises the DEMAND for automation

2) "Increase in automation" isn't even the most common EFFECT of increasing the minimum wage, since most minimum wage jobs cannot be easily replaced by automation.

So TO the extent that raising the minimum wage can cause job losses under some circumstances, "increased automation" isn't far from the biggest reason for that.

 

[Jolly_Penguin]

So, Automation....

Automation replaces workers on an ever growing list of tasks. Some of those workers may be transferable to other tasks with the same business and keep a job. Others will not be, and those who are may not be well suited to the new task.

The best hand made widget maker may suck at sales, cleaning, answering phones, and everything else. What to do with them then? Is it then ok to lay them off because their job automated?

How many are and are not transferable and retained may depend on the direction in which the business decides to shift. Should employing or retaining workers be a deciding factor in what markets the business enters, etc?

Automation allows a business to increase production to, and only to, the point the market for what the business does or makes can absorb. As Loren pointed out, that isn't infinite.

 

[laughing dog]

Automation allows a business to increase production to, and only to, the point the market for what the business does or makes can absorb. As Loren pointed out, that isn't infinite.

That point is equivalent to saying that unicorns are not purple.
No one is claiming the market is infinite. And the notion that automation causes a net job loss is historically inaccurate. The notion that automation causes a net job loss for unskilled workers is belied by the historical record.

 

[Loren Pechtel]

It doesn't. It causes an increase in the DEMAND for automation.

I'm pointing out that there's no practical difference.

And you're wrong. Because an increase in the demand for automation will affect the PRICE of automation, not the supply. What would that affect be?

And why wouldn't that increased demand for automation be translated into an increased use of automation????

 

[Tom Sawyer]

It doesn't. It causes an increase in the DEMAND for automation.


And you're wrong. Because an increase in the demand for automation will affect the PRICE of automation, not the supply. What would that affect be?

And why wouldn't that increased demand for automation be translated into an increased use of automation????

It would probably be more efficient to automate the process of increasing the use of automation.

 

[Loren Pechtel]

Which results in the same final revenue that you had before, Mister Fail Math.

Simple arithmetic, it's easy:

I can make 100 handmade widgets and I know I can sell them for $30 each. Total sales: $3,000.

I can make 1000 autocad widgets and I know I can sell them for $15 each, but I'm a retard and I sell them for $3 each anyway (listening to your advice, I guess). Total sales $3,000. *

I have no reason to cut jobs now. I'm making the same money I was making before. Automation means my workers are no longer spending all of their time making widgets and can now focus on things like customer service, sales, cleaning the front desk, taking phone calls, meeting with buyers in the big box stores now that we are making enough widgets to reach more markets.

I didn't fail math, you failed economics.

1) You are budgeting nothing for the automation. The fact that they hadn't automated before says it's a fairly close call on the costs, the automation isn't all that much cheaper than the workers.

2) You are budgeting nothing for the raw materials. Once again I'm looking at my former employer because I have the data. Our raw materials cost more than the labor. Lets figure nothing for the automation, hold all other numbers constant and double the output. How much could we reduce the price? 15%. (And holding all other costs constant isn't reality, either. Sales, delivery and installation costs would scale linearly with the volume sold.)

The only way you can have a world where minimum wage doesn't cause job loss is where there's no automation options...

This is false in two ways:
1) Minimum wage doesn't cause an increase in automation, it is one of MANY factors that raises the DEMAND for automation

2) "Increase in automation" isn't even the most common EFFECT of increasing the minimum wage, since most minimum wage jobs cannot be easily replaced by automation.

So TO the extent that raising the minimum wage can cause job losses under some circumstances, "increased automation" isn't far from the biggest reason for that.

At best you are arguing there wouldn't be as much job loss. You're not showing there wouldn't be any.

 

[Loren Pechtel]

Automation allows a business to increase production to, and only to, the point the market for what the business does or makes can absorb. As Loren pointed out, that isn't infinite.

That point is equivalent to saying that unicorns are not purple.
No one is claiming the market is infinite. And the notion that automation causes a net job loss is historically inaccurate. The notion that automation causes a net job loss for unskilled workers is belied by the historical record.

Your side is insisting that the market will absorb any increased supply. While you aren't technically arguing for infinity the only way it would work the way you think is if the demand were infinite. If it were finite you would have to compare the increased supply with the market's ability to absorb it, but you are simply dismissing this as irrelevant. Thus you consider it infinite.

 

[laughing dog]

That point is equivalent to saying that unicorns are not purple.
No one is claiming the market is infinite. And the notion that automation causes a net job loss is historically inaccurate. The notion that automation causes a net job loss for unskilled workers is belied by the historical record.

Your side is insisting that the market will absorb any increased supply.

I have no side, so I don't know what you are babbling about.

[
While you aren't technically arguing for infinity the only way it would work the way you think is if the demand were infinite. If it were finite you would have to compare the increased supply with the market's ability to absorb it, but you are simply dismissing this as irrelevant. Thus you consider it infinite.

That is utter nonsense. When the supply increases, the price falls. How much will be absorbed depends on the responsive of demand to changes in price. You are the one claiming that it is not possible - which is contrary to the basic "laws" of demand and supply you cherish, not me. All I am doing is showing your analysis is not based on economics or logic.

 

[Jolly_Penguin]

And the notion that automation causes a net job loss is historically inaccurate.

Do you mean net job loss for the particular skill set and set of employees with them, for a company as a whole, or for the economy as a whole?

Certainly as automation rises more engineering and maintenance jobs (requiring special skills) will open up, but the workers who were homemade widget makers aren't likely to have those skills.

Maybe those displaced workers can go get another job from another employer. Maybe they can be educated into skills to get them higher paying jobs too. Universal basic income as part of a social safety net would help that along. So would free (tax funded) education.

 

[Crazy Eddie]

The best hand made widget maker may suck at sales, cleaning, answering phones, and everything else. What to do with them then? Is it then ok to lay them off because their job automated?

That's the question of our generation, JP: To what extent is "retrain and adapt to survive" a viable strategy for everyone? Can widget makers transfer to widget DESIGNERS and can their design skills justify not just their original salary but a growing one in a constantly inflating and even more competitive industry? Can widget makers be retrained to maintain the widget-making machines, and is their skill as a craftsman relevant to quality control and computer-aided manufacturing?

There are no easy answers to these questions using economics alone. It's a very HUMAN question, and the issues surrounding it aren't going to be solved just by looking at it in terms of money.

Automation allows a business to increase production to, and only to, the point the market for what the business does or makes can absorb. As Loren pointed out, that isn't infinite.

Sure, but it also isn't near the saturation point for all industries either. There are ALOT of industries that have a huge amount of untapped growth potential, which is exactly why things like Walmart and fast food franchises exist.

In a market with "infinite growth potential" it would be possible for the supply of a product to exceed demand to the point that that product's price would trend ever constantly towards -- without actually reaching -- zero. In the real world, the market has a saturation point where supply exceeds demand to the point that everyone already has one it is no longer possible to make a profit selling a given product because the price to make it will always be higher than the price to sell it. This sets an upper limit to how productive ALL manufacturers collectively can be, but it doesn't actually tell you how much any one of them or any group of them will raise their own productivity or how much they need to. Only that there's an upper limit.

Of course, this again overlooks the fact that supply/demand curves do not intrinsically set prices. Businesses charge what they think they can get away with for a given product, and alot of that has to do with marketing, exposure, and estimates of cost and benefit. This is the reason it has now become fashionable to sell a product that is imperceptibly smaller (assuming, correctly, that customers won't notice the difference) for the exact same price. This is a sneaky way of raising profits WITHOUT actually raising productivity.

And again: businesses that do not depend on minimum wage labor aren't going to purchase automation systems in response to that sort of increase. The widget makers are probably earning ALOT more than minimum wage, being skilled professionals. If making widgets is so easy that a min-wage high school dropout could do it, then the economy and society is better off giving them something better to do anyway.

 

[Crazy Eddie]

It doesn't. It causes an increase in the DEMAND for automation.


And you're wrong. Because an increase in the demand for automation will affect the PRICE of automation, not the supply. What would that affect be?

And why wouldn't that increased demand for automation be translated into an increased use of automation????

Because the increased demand results in an increase in PRICE. Not everyone can afford that automation system at the newer price.

 

[Crazy Eddie]

I didn't fail math, you failed economics.

1) You are budgeting nothing for the automation.

i didn't budget anything for payroll either. We're discussing revenue, not costs.

Stop shifting the goalposts, dude.

2) You are budgeting nothing for the raw materials.

I budgeted NOTHING AT ALL, because we are discussing REVENUE, not costs. Your premise was that automation making those companies more productive would cause them to cut workers from their payroll because greater volume means lower price. I just showed you your premise is false. Not only that, it's counter-factual: the company has no reason to lower its prices proportional to the increase in productivity. Revenues would either increase or stay the same, but they would NOT decrease.

If the company projects that the cost of automating its manufacturing process exceeds the increase in revenue, it will not automate the process, because it doesn't make economic sense to do so. It will not, in other words, actually drop prices the way you're claiming they will; they will keep those prices where they are, to make sure that the increased revenue will cover their expenses.

Once again I'm looking at my former employer because I have the data. Our raw materials cost more than the labor.

Cool story, bro.

OUR labor costs more than our raw materials by a factor of 20. Automating some of the tasks done by personnel increases efficiency and drastically helps to increase sales. We haven't laid anyone off since we started modernizing our sales systems 10 years ago (I know this because I'm the one who designed half of them). We actually have more employees than we had when we started and our revenues have gone up 45% since then (averaging 2% per year).

None of the automated systems we implemented had anything to do with minimum wage increases. Why do you think that is?

At best you are arguing there wouldn't be as much job loss. You're not showing there wouldn't be any.

Never claimed there wouldn't be ANY. Only that the downside (loss of low-skilled job positions) would be vastly outweighed by the broader economic benefits, benefits which ultimately benefit those who initially lost their jobs in the shuffle. Our low-skill widget makers whose jobs are so simple they can be replaced by robots? Some of them get to learn how to use computer-aided machinery to make widgets. All of a sudden, they are no longer "unskilled labor" and their skills can transfer to other things. And the ones who just lost their jobs? They get to put "former widget maker, laid off due to minimum wage increase" on their resume and really impress the hell out of their Trump-supporting boss at their next interview.

Cost-benefit analysis, dude.

 

[laughing dog]

And the notion that automation causes a net job loss is historically inaccurate.

Do you mean net job loss for the particular skill set and set of employees with them, for a company as a whole, or for the economy as a whole?

Certainly as automation rises more engineering and maintenance jobs (requiring special skills) will open up, but the workers who were homemade widget makers aren't likely to have those skills.

Maybe those displaced workers can go get another job from another employer. Maybe they can be educated into skills to get them higher paying jobs too. Universal basic income as part of a social safety net would help that along. So would free (tax funded) education.

Look at the history of unemployment rates. Increased automation has not caused increased unemployment rates. If they did, unemployment rates now would be much higher than in the past.

 

[Loren Pechtel]

That is utter nonsense. When the supply increases, the price falls. How much will be absorbed depends on the responsive of demand to changes in price. You are the one claiming that it is not possible - which is contrary to the basic "laws" of demand and supply you cherish, not me. All I am doing is showing your analysis is not based on economics or logic.

You sure like tilting at strawmen.

I'm simply trying to show that automation leads to job loss. Nothing you have said rebuts that.

 

[Loren Pechtel]

And why wouldn't that increased demand for automation be translated into an increased use of automation????

Because the increased demand results in an increase in PRICE. Not everyone can afford that automation system at the newer price.

Logic 101 failure.

What you are showing is that there wouldn't be as much automation installed as the demand for it that was created. That does not show that none of it is installed, though.

You keep trying to quibble over sizes--but you are in effect conceding every time you do that because my position only requires it to be non-zero.

 

[laughing dog]

That is utter nonsense. When the supply increases, the price falls. How much will be absorbed depends on the responsive of demand to changes in price. You are the one claiming that it is not possible - which is contrary to the basic "laws" of demand and supply you cherish, not me. All I am doing is showing your analysis is not based on economics or logic.

You sure like tilting at strawmen.

No, that is you. You are the one babbling about "infinite" demand.

I'm simply trying to show that automation leads to job loss.

And failing miserably.

Nothing you have said rebuts that.

Other than showing your economics was bs and that history shows that automation does not lead to job loss, you are absolutely correct.

 

[Loren Pechtel]

i didn't budget anything for payroll either. We're discussing revenue, not costs.

Stop shifting the goalposts, dude.

2) You are budgeting nothing for the raw materials.

I budgeted NOTHING AT ALL, because we are discussing REVENUE, not costs. Your premise was that automation making those companies more productive would cause them to cut workers from their payroll because greater volume means lower price. I just showed you your premise is false. Not only that, it's counter-factual: the company has no reason to lower its prices proportional to the increase in productivity. Revenues would either increase or stay the same, but they would NOT decrease.

1) You need to look at costs if you want to know net revenue. And gross revenue is of no value in considering whether they can afford the increased labor costs.

2) They won't lower their prices in response to the automation, but in response to the competition caused by their competitors automating.

OUR labor costs more than our raw materials by a factor of 20. Automating some of the tasks done by personnel increases efficiency and drastically helps to increase sales. We haven't laid anyone off since we started modernizing our sales systems 10 years ago (I know this because I'm the one who designed half of them). We actually have more employees than we had when we started and our revenues have gone up 45% since then (averaging 2% per year).

And we didn't lay anyone off due to automation, either--but we destroyed various competitors and they laid people off.

Never claimed there wouldn't be ANY. Only that the downside (loss of low-skilled job positions) would be vastly outweighed by the broader economic benefits, benefits which ultimately benefit those who initially lost their jobs in the shuffle. Our low-skill widget makers whose jobs are so simple they can be replaced by robots? Some of them get to learn how to use computer-aided machinery to make widgets. All of a sudden, they are no longer "unskilled labor" and their skills can transfer to other things. And the ones who just lost their jobs? They get to put "former widget maker, laid off due to minimum wage increase" on their resume and really impress the hell out of their Trump-supporting boss at their next interview.

Cost-benefit analysis, dude.

You're claiming no job loss.

And it comes down to how we value the various outcomes. You are after a scenario in which total wages go up but inequality goes up also due to all of those forced out of the labor market. I consider the harm of forcing someone out of the labor market to be a lot greater than the benefit of raising someone else's wage.

 

[bilby]

 

[Crazy Eddie]

Because the increased demand results in an increase in PRICE. Not everyone can afford that automation system at the newer price.

Logic 101 failure.

What you are showing is that there wouldn't be as much automation installed as the demand for it that was created. That does not show that none of it is installed, though.

"None of it is installed" was not my claim.

"More of it is installed than would be" was your claim, which I am responding to, in saying that increased demand for automation would raise the price of automation.
Companies that are dependent on minimum wage labor to keep their profit margins in the black will no longer be able to afford those systems.

Have you noticed yet that the companies that are beginning to replace workers with automation are companies like McDonalds and Walmart whose quarterly profits are already in the high billions? A company that is on the margins and can't afford a wage hike isn't going to be able to afford a switch to automation either, especially if the demand for those systems goes up and the price of IT support services for those systems does as well.

you are in effect conceding every time you do that because my position only requires it to be non-zero.

Is THAT your position now? That "raising the minimum wage will cause at least one person to be fired by an employer who can no longer afford his salary?"

Well it took 15 pages, but it looks like you have finally moved the goalposts to a position where you might actually be right.

 

[Crazy Eddie]

i didn't budget anything for payroll either. We're discussing revenue, not costs.

Stop shifting the goalposts, dude.


I budgeted NOTHING AT ALL, because we are discussing REVENUE, not costs. Your premise was that automation making those companies more productive would cause them to cut workers from their payroll because greater volume means lower price. I just showed you your premise is false. Not only that, it's counter-factual: the company has no reason to lower its prices proportional to the increase in productivity. Revenues would either increase or stay the same, but they would NOT decrease.

1) You need to look at costs if you want to know net revenue.

That's not what "revenue" means, idiot.

2) They won't lower their prices in response to the automation

Then your argument is invalid.

And we didn't lay anyone off due to automation, either

Then your argument is invalid.

You're claiming no job loss.

No, I'm claiming -- and have demonstrated clearly -- that 1) increase in the minimum wage does not by itself lead to increased automation, that 2) increased automation does not by itself lead to the loss of unskilled labor, and that 3) the loss of unskilled labor is not by itself damaging to the labor market or the economy as a whole.

1) Is demonstrated by the fact that marginal companies cannot afford to implement complex automation systems sophisticated enough to replace their employees.
2) Is demonstrated by your own admission that your company (and mine) did not fire people as a result of increased automation. Your objection that it caused layoffs in OTHER companies is irrelevant; it is innovation and efficiency, NOT the minimum wage increase, that caused those job losses.
3) Is demonstrated by the fact that unskilled laborers lack transferable skills in the first place and therefore cannot parlay their minimum-wage jobs into gainful employment later on. A worker who cannot earn more than minimum wage is actually better off staying on welfare and taking unpaid internships and/or vocational training in order to make himself more attractive to employers.

The best you can do is claim that rising wages -- WHATEVER the cause -- pressure businesses to be more innovative and more efficient. Companies going out of business because of changes in the marketplace is something we EXPECT to happen because that's just the way of the world.

You are after a scenario in which total wages go up but inequality goes up also due to all of those forced out of the labor market.

It is not possible to be "forced out of the labor market." If you have labor to sell, you're in the market.

Please do go on pretending you actually give a flying fuck about income inequality. We both know you don't, and will never offere anything resembling a solution to it.