There is a myth among those suspicious of technology that technology steals jobs. On top of that, they believe that businesses that desire to survive government-mandated higher wages by creatively applying technology and automation are evil enterprises.
Those who express these concerns were absent during Economics 101, took the course from a rabidly socialist professor, or weren’t paying attention.
First of all, government-forced wages, no matter how noble they may appear, grossly distort the labor market. This is little different than price controls on goods or services or housing. Such futile exercises also distort the market, reduce supplies, bring about shortages, and ultimately end poorly with a result opposite the desired outcome.
A business is in business to survive and make a living for the owners, stockholders and employees of that business. When the cost of labor is forced to increase by government dictate, the business is obligated to look at alternatives to the unsustainable labor costs.
Labor costs may increase so much that one of two things will occur:
1) There will be less demand for the higher priced product which reduces the customer base and the amount of product or service purchased. This in turn damages the economy of scale and the optimal level of production of the company. One might suggest that all restaurants will be impacted the same, so it all evens out. Wrong. Consumers will be forced to consider between eating out and eating at home. Grocery stores are not part of the restaurant labor equation unless an “all-knowing” socialist government inserts itself in dozens of other business that are affected by restaurant-worker minimum wages. So what’s the next step? Government dictating the price differences farmer get for product sold to restaurants versus products sold to grocery stores? Or taxing food at grocery stores more? This is a slippery slope.
2) The company will seek ways to maintain the competitive price of his product. If the cost of human labor becomes excessive due to government-dictated wages, the prudent business will find more economical ways of performing the services performed by humans. Technology and automation is an obvious alternative. This is prudent and wise.
Technology and automation have advanced the level of production and standard of living throughout the last two centuries. Farming is one example. Production per acre has multiplied many-fold due to technology and automation of farm labor. The automobile industry, in fact all manufacturing businesses, have substantially increased productivity through automation and technology.
Instead of lamenting the loss of jobs worth $8.00 an hour for which the government mandates an unsustainable $15.00 and hour, how about looking at more positive potentials?
Every piece of automated equipment that allegedly takes away jobs requires several interactions of additional workers at wages higher than that of the jobs they replaced.
Technology and automation require systems experts to help designers and engineers to create the appropriate technology and automation for the appropriate tasks. Then there are the additional manufacturing jobs required to build the automation equipment. On top of that are the installers. And then the ongoing work of maintaining, servicing and repairing the equipment. And finally is required personnel to train others in the use and operation of the equipment.
All of these jobs are higher paying than the jobs the technology and automation replaced. Costs to the business will be held in check, at least below the cost mandated by the arbitrary minimum wage that bore no relationship to the supply, demand, and productivity of the labor market.
Yes, technology and automation take away the lowest paying jobs that can be accomplished more efficiently and for less cost than human labor. The benefit is not only higher productivity but the creation of more jobs that are higher paying for more workers.
The answer to the alleged problem of technology and automation is re-training, technical education, and developing a worker mindset that rewords change, challenge and adaption to changing work conditions and requirements.
Businesses must adapt to the needs of their customers more than feeling obliged to passively suck up and endure government meddling in unrealistic wages they must pay while they go broke. The most successful employees, even low wage employees, are the ones who understand and buy into serving the business’s customer more than serving themselves. That is, unless one believes it should be the role of government to dictate wages across all types of businesses and industry. That, folks, is socialism verging on communism.
The inadvertent good that may come of inappropriate government meddling with minimum wage requirements my very well be the automation of tasks currently performed by overpaid and less efficient minimum-wage workers.
The anti-technology attitude of some reminds me of the demise of the Swiss watch industry several decades ago. The special interests of the Swiss watch makers influenced their government to subsidize their mechanical watch industry in the face of the burgeoning electronic watch technology coming out of Asian nations. Instead of adapting, the mechanical Swiss watch industry all but died. Should the world be angry at the technologically savvy businesses that took away the watch business from the Swiss?
Hardly. Virtually all business and economic texts fault the Swiss for their failure to adapt to changing technology – a literal textbook example.
Today’s restaurant workers, and other low-wage employees and related businesses need to likewise remain vigilant to similar changes in their industries or else the same demise may befall them.
Bemoaning technology and automation is not the answer. Keeping government out of wage controls is my first choice. And if that won’t happen, then the next best alternative is businesses adaption to automation to optimize their productivity so they can at least exist as places that more productive people can work.