Thursday, May 26, 2016

Robots, Globalization, Employment, and Government Mandated Beginning Wage Levels

My first payroll job in the late 1950s was as a 14 year old carhop at a local drive-in restaurant. It paid 35 cents per hour and tips.

It was 'good money' for a teenager and I thought myself fortunate to have such a good job. Of course, that was 'way back when' and before the McDonald's drive-through facilities.

And one more element of luck helped me land that first work experience --- I was not 'helped' by government minimum wage legislation.

Government may soon be requiring McDonald's and other fast food and related outlets to increase their beginning wages to $12-$15 per hour, and that will prevent many young people from landing their first 'good job.' In fact, I wonder how many young people WON'T get their first jobs as a result of this legislation-aided-by-labor unions 'help.'

In other words, will raising the minimum wage level be a good or bad thing for the employers and many would-have-been employees? Of course, that 'good or bad' thing answer will depend on the prices free-to-choose customers are willing to pay as well as the cost/benefit analysis for employers after fully considering the cost of automation compared to the higher wages.

In that regard, Foxconn replaces 60,000 humans with robots in China contains much food for thought:

"The first wave of robots taking over human jobs is upon us.

Apple Inc.supplier Foxconn Technology Co. has replaced 60,000 human workers with robots in a single factory, according to a report in the South China Morning Post . . . .

This is part of a massive reduction in headcount across the entire Kunshan region in China’s Jiangsu province, in which many Taiwanese manufacturers base their Chinese operations.

Roughly 600 companies are reportedly looking to reduce headcount with robots, as part of an effort to accelerate growth and reduce costs . . . .

While (it) does present higher upfront costs, machines are seen as more predictable and stable over the long term versus humans, potentially leading to personnel cost savings over the long term. With such high pressures placed on these manufacturers, which assemble much of the world’s consumer technology products and are often under strict deadlines, it also alleviates some of the ethical issues that arise when working people too hard for too long to meet demand....

The trend of replacing humans with more efficient robots is not confined to China.

As of February, there were more than 260,000 robots working in U.S. factories, according to industry trade group Robotic Industries Association. A total of 31,464 robots, valued at a combined $1.8 billion, were ordered from North American companies in 2015, a 14% increase in units. Inc. is one such U.S. company that has been increasingly employing robots, with thousands shuffling around and sorting items in its fulfillment centers. Auto manufacturers have used robots to assemble cars in the U.S. for years.

At the moment, robots are expected to be used for lower-paying jobs that require less sophisticated skills, such as product assembly. But they are increasingly targeting more sophisticated and social roles that require customer service skills.

SoftBank Group’s humanoid consumer robot Pepper was rolled out to several Chinese retail stores over the last year. This week, Pepper also got a job at Pizza Hut, with the pizza chain unleashing the robot at certain stores in Asia to take customer in-store orders. . . .

Also read: Donald, Hillary and Bernie are lying to us about those lost manufacturing jobs "

Summing Up

Gasoline .... In the old days, attendants pumped our gas, washed our windshields and checked our tires.

Now we engage in DIY 'self service.'

Fast Food .... DIY 'self service' may be in our future sooner than later. Inside McDonald's perhaps we'll have self ordering and kiosks where we can pick up and pay for our order.

The higher the minimum wage, the easier to cost justify and the quicker the payback for investments in automation. And the fewer entry level jobs for teenagers and others needing that 'low paying' job which the government intends to make disappear.

Entry level jobs for teenagers and others in need of work are in serious jeopardy due to government 'help,' and which 'help' is being aided and abetted by labor unions seeking greater unionization.

At least that's my take.

Thanks. Bob.

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