Monday, January 18, 2016

Rise Of Minimum Wage Will Eliminate More Than Five Million Jobs Worldwide

by JASmius

Yes, absolutely, robots and automation and technology will be involved in the process as well - as will Big Labor, so don't bet the farm on this process reaching its full fruition - but think of $15 an hour minimum wage laws as the eight-hundred-pound proximate cause gorilla in the room nobody is supposed to notice or mention:

Over five million jobs will be lost by 2020 as a result of developments in genetics, artificial intelligence, robotics and other technological change, according to World Economic Forum research.

About seven million jobs will be lost and two million gained as a result of technological change in fifteen major developed and emerging economies, WEF founder Klaus Schwab and managing board member Richard Samans said in "The Future of Jobs." The findings are taken from a survey of fifteen economies covering about 1.9 billion workers, or about 65% of the world’s total workforce.

The blurred lines between physical, digital and biological spheres amount to a Fourth Industrial Revolution, according to the WEF, which will address the idea at its annual meeting of policy makers, academics and economists in Davos, Switzerland. It’s already a hot topic thanks in part to books such as ‘The Second Machine Age’ and ‘The Rise of The Robots,’ while Bank of England Chief Economist Andy Haldane has warned that the millions of jobs at risk from automation are creating issues officials need to address.

"To prevent a worst-case scenario -- technological change accompanied by talent shortages, mass unemployment and growing inequality - re-skilling and up-skilling of today’s workers will be critical," the authors said. "It is simply not possible to weather the current technological revolution by waiting for the next generation’s workforce to become better prepared."

Upward-spiraling minimum wage laws will only succeed in spiking the demand for such automation in order to control labor costs, and it's not difficult to understand why.  Allow me to put my rusty but still viable accountant's hat on for a minute to explain.

Labor costs are ongoing - salaries and wages, employee benefits, etc.  They don't stop at a set maximum.  If a company has employees, they need to be paid, because the employment relationship is the selling of skilled services in exchange for a paycheck.  And given inflation and, yes, government interventions like minimum wage hikes that constantly push labor costs upward, labor costs will continue to rise unless companies can take corrective measures to bring those costs under some degree of at least predictable control.  But if that same company replaces some of those employees with automation, that is what is known as a sunk cost: a one-time purchase price of a fixed asset that can then be depreciated over time on a set schedule and time frame.  A not just predictable cost, but a set one as well, and one that, the longer the period of depreciation, becomes an inflation hedge as well.

Since a company's core mission and purpose is to provide a return on investment for its owners - whether mom and pop or a herd of stockholders - not provide jobs for aspiring workers - and since an inanimate tool can be programmed and doesn't have to be talked or related to or negotiated with or performance-reviewed, you can begin to see why automation, where it is practical and viable, is such an attractive option.  And technology, demand-spurred by government interventions that drive labor costs ever insanely skyward, is expanding that option all the time.

Most especially in my professional bailiwick:

Administrative and office jobs will account for two-thirds of the losses, with "routine white-collar office functions at risk of being decimated," and there will be gains in computer, mathematical, architecture and engineering-related fields. [emphasis added]

What does this mean for me?  Simple; that even if this big, fat f%&k....

.....hadn't betrayed, screwed, and all around ruined me, my career was on a collision course with the ground without a parachute anyway, and indeed, I may have simply been on the very tip of the leading edge of the decimation.

I suppose there's some solace in that.  Imagine if I had been ten or twenty years younger.  Though a few more years' worth of paychecks would still have been nice.

The downside of that is that advanced middle age (i.e. one's fifties) is about the all-around worst time of life to have to "re-skill" oneself, given that I spent, between schooling and experience, thirty years "skilling" myself the first time around.  That having been said, there is this little blogging and radio gig I've been working on for almost nine years, and which had actually appeared to be nearing paydirt, until this dick jockey....

....pulled the plug on it at the last minute with no plausible explanation and a full-fledged communications embargo.  And did I mention that I'm not a computer tech, mathematician, architect, or engineer?  And that I went to college and earned the equivalent of a masters degree in a tangible field for the express purpose of the words "minimum wage" never entering my vocational lexicon?

The bitterest irony is that my dear and sorely missed mother, when I went off to college, gave me this piece of advice (in addition to the one about always "keeping that thing in your pants"): "When choosing a major, always make sure you select one for which there will always be an employer demand."  That is why I opted to go into accounting, and wound up in a branch of that profession that is ceasing to exist.

I wonder what the logistics are of becoming a big fat f%&k.

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