Targeting Low-skilled Workers

I don't know what it's called either, but the other day my five year old called the long snaking line moving ahead of us into Target a "cart-erpillar."

Clever girl.

If only we could work or barter freely, keeping what we labor for. All of it.

If only we could work or barter freely, keeping what we labor for. All of it.

http://en.wikipedia.org/wiki/Spinning_jenny#Suc...

Hargreaves kept the machine secret for some time, but he produced a number for his own growing industry. The price of yarn fell, angering the large spinning community in Blackburn. Eventually they broke into his house and smashed his machines, forcing him to flee to Nottingham in 1768.

Yup, there were always productivity-hating Luddites.

Ban the spinning jenny, it puts hand-made weavers out of work! Oops...

You know what comes next right? Ban the machine.

Bonus points if you can tell me what the Butlerian Jihad was w/o Googling it.

A response to increasing automation in the Dune books. For what caused it, it wasn't just an economic problem that existed.

Gosh, I've not a clue. But it can't be good, can it?

Here's an even more efficient system for rounding up shopping carts that's been used in Alberta for decades -- place a locking mechanism on the shopping cart that requires patrons to deposit a dollar coin (or quarter in the US case) to use the shopping cart. To get the coin back, patrons have to lock the shopping cart back up at the station where they got it from. The result: no lose shopping carts in the parking lot and no need to pay someone to constantly round them up.

Apparently they use those in Europe too.

David Henderson, I believe it was, over at EconLog, has a humorous story about them. He says he saw an elderly lady pushing a cart back to the collection station. He thought he'd be a nice guy and offer to take it up there for him. Well, she started screaming and yelling, she thought he was trying to rob her of her cart to get her money!

I guess I should add that David, an American, didn't understand the cart collection system they have.

I think that was Mike Munger. Could have been David Henderson too I guess.

http://www.econtalk.org/archives/2009/08/munger...

Somewhere above, Randy said:

>> A leisure bias leads me to the idea of free traders creating a world in which necessities are so cheap that employment becomes largely optional - or directed mainly towards luxuries and leisure. No, we're not there yet, and we never will be as long as the Keynesians are establishing policy.


I disagree. We *are* there; it's just a question of where "there" is. Imagine an average European in the year 1000 AD. That person working full-time has his "necessities" met, as far as he's aware of them. A typical American in the year 2009 who wants that standard of living could work for probably 2 weeks out of the year and have the rest of his time devoted towards leisure. Of course, that person would be considered horribly poor by modern standards.

No one does this because innovation has made many items into "necessities" that were previously unavailable or unknown. And that trend will most likely continue. If we could flash forward 1000 years, we could probably buy a 2009 middle-class American lifestyle for virtually no labor, but we'd also be considered strikingly poor compared to society at the time.

We're never going to leave the rat race. We'll just keep consuming more and more as the years go by.

"We'll just keep consuming more and more as the years go by."

I agree. And I also predict that we'll find sustainable and less harmful ways to produce the increased goods and services we consume.

I remember when fast food workers filled french fry baskets by hand. Now they fill a hopper and press a button.
They used to have to monitor the drink as it filled, now they press a button and walk away.
Heck, they don't even flip burgers anymore. The clam-shell grill cooks both sides.

Each innovation allows completion of a shift with fewer workers.

"Each innovation allows completion of a shift with fewer workers."

When a given task can be completed with one less worker, that frees up one worker to perform other tasks in our economy. Our collective standard of living is determined for the most part by our collective output of goods and services. Increasing the productivity workers performing one task ultimately increases the standard of living of our collective population.

I was not arguing against that.

I didn't think you were. I was simply adding to your comment.

2 employees? I remember being extremely cold and wet in Buffalo NY in the winter of 1977 doing this all by myself without any special contraption. And I was happy for the $1.65 an hour. Ah, the days of cheap, teenage labor...

Yep. Been there done that. Lost the shirt...

I here I thought it showed how, by investing in capital, the market could turn what WERE low-wage jobs into higher-wage jobs by improving low-wage workers' productivity...

I work at target during the summer. the cart caddy doesn't improve your productivity. Its faster to just grab a line of carts and push them yourself than to creep along at 2 mph.

What I don't understand is this: If machinery normally benefits low-skilled workers by making them more productive and raising their wages, why would the case of minimum wage any different, and should it be viewed negatively?

Is this proof that, over time, low-skilled workers will eventually be obsolete--in which case, will we one day end up with a situation in which only high-skilled, highly intelligent and highly educated workers are employable?

" will we one day end up with a situation in which only high-skilled, highly intelligent and highly educated workers are employable?"

Almost 60 years ago, Kurt Vonnegut predicted such a world and developed an anti-capitalism novel, Player Piano, around that theme. Of course, Vonnegut was wrong. Human ingenuity - in an environment of economic freedom - has succeeded in removing much of the drudgery of work while simultaneously finding productive uses for everyone who wishes to work.

Perhaps we should distinguish between "highly skilled" and "highly intelligent/highly educated". Neither high intelligence nor higher education is required to perform most of the work in our highly productive economy. The reason for that is very simple: work has been designed to fit the available workers. IMO, that will always be the case.

"why would the case of minimum wage any different, and should it be viewed negatively? "

Consider this explanation:

Machinery (technological progress) increases the real value of workers (increases their productivity), and employers can then hire more of them. That's because there are always more value-producing opportunities available for workers as their productivity increases.

Minimum wage by itself does nothing to increase the real value - to increase the productivity - of workers. Some value-producing opportunities are not pursued because the price of low-skilled labor is artificially raised too high. That is, raised above the level at which the value-producing opportunity can produce value.

Only so many of us can be scientists, engineers, economists. That's about 5% of the population? What are the other 95% supposed to do - twiddle?

Economists!? They can twiddle their thumbs with the 95%!

It's always been clear that you have no need for them.

What would do economist for a living a free market? "Free the market! Free the market! Polly wants a cracker! Free the market!"

Eh?

"What would do economist for a living a free market?"

When are you going to learn to not operate your keyboard while stoned? Sleep it off before you try to communicate.

what do you mean exactly by 'at the margin'?

i mean in this context specifically

Why must labour be necessarily cheap? Why would a idyllic hi-tech society have human labourers at all and have robots doing all the manual labour? Maybe it's evidence towards that expensive labour creates technological innovation which in turn makes people better off. (I'm sure there's plenty of dirt-cheap labour to be found in Africa.)

Interesting observation. I pondered a similar reality in a Wal-Mart parking lot today. I wondered how much it would cost to install a higher powered motor and stand so that employees could just drive the thing through the parking lot. It would make the job even easier. Course, might need some type of insurance. So you just install an extra safety brake, rubber stoppers on the fenders, and train the operator.

In his book The Power of Productivity, Bill Lewis demonstrates how this phenomenon explains French productivity stats, which shows the country to be equally productive as the U.S. The stats, he says, are skewed because French laws which make it unattractive to hire low wage, low productive workers such as baggers at grocery stores. Instead such labor is either not hired at all -- the French tend to bag their own groceries -- or the process is mechanized. Thus, the French receive a boost in productivity stats as the low productive jobs are mostly eliminated via regulation.

Yes, and the unemployment rate among the young and inexperienced is something like 25% in France.

Also consider the probable reduction in injuries.

Observations like this, and others I work on, create confusion in my otherwise Smithian brain.

The historical movement of agrarian workers from 90+ to < 5% is interesting, the assimilation of workers by concentration of production is interesting, and the continuing employment of technology is interesting.

Where I personally have a problem wrapping my mind around the progress I've seen in the last forty years is knowing if there's an end-game that's workable.

Today, existing computers are increasingly responsible for the development of newer and better computers -- robots are increasingly responsible for building better and better robots. While these processes require human interaction -- human labor is increasingly becoming dispensable.

There is a part of me that sees continuation of this process leading to the ultimate end -- minimal labor and maximum leisure. What could be better? Or worse.

Edit: What to do with the people?

Maybe it's a nit, but the computers and robots are not responsible for anything. They are tools used by the people who are responsible.

It's true that increased use of technology allows fewer people to do the same work, but for example engineers have been (in effect) trying to make themselves obsolete for generations and the need has never been higher. Previously unforseen things keep coming up that require people. Speaking of people, I say let each person decide what to do with him/her self.

"speaking of people, I say let each person decide what to do with him/her self."

Many will fail. Very many. That was my question, "What to do with the people?" I would like to believe that charity and relief agencies will fill that gap, but we could be reaching a point where that model doesn't work.

I can envision a number of new economic models developing spontaneously -- but our current legal/tax/zoning/nanny structure is working hard to contain any alternative models.

I agree that the enemy is us.

Oh, I took your question as “what should we do” as opposed to “what can we get done” – they are very different questions. You’re absolutely correct that government intervention is a great enemy of the people and IMO that’s where the real battle is. The solution needs to include removing barriers to entrepreneurship, but that’s much easier said than done when you have such a large portion of the population that looks to the government every time they get a runny nose, and way too many idiots defending government intervention for whatever reason they think they have.

But even in the scenario we face, we can't know how many will fail or succeed, but it's not a static condition. Many of those who fail will keep trying in spite of the obstacles. Those who succeed will create opportunities for others, so it’s not completely bleak.

You're right. It was clumsy wording.

"What to do with the people?"

If you believe in liberty, "we" don't have to decide what to do with the people. They'll decide for themselves what to do with themselves.

Also, even if eventually we have machines with artificial intelligence far superior to ourselves, comparative advantage informs us that the machines will still be more productive with us than without us.

As long as liberty is protected, I don't see a problem. Get rid of liberty though, then there'll be problems.

What are your thoughts on Paternalism or maybe Libertarian Paternalism? Econtalk 11/6/2006 (I think).
I feel we have to give some guidence for those who can't or simply don't want to decide for themselves. This is largely education, educating people on their options.

Re; What to do with the people.

I had a similar thought while reading Keynes who seemed to assume that "full employment" is inherently good. His idea that it doesn't really matter what people do is in part based on that assumption, and he goes so far at one point as to state that he has no reason to believe that people prefer leisure to employment. Its cultural, I suppose, the idea that employment is better than leisure. Perhaps we could call it "employment bias". Certainly this bias has had utility throughout human history, but I see no reason why it should necessarily continue. To borrow from Marx, "labour" has created a "surplus", and the "surplus" has been redirected into political activities (ala Keynes), but there is no necessary reason for this - it could just as easily have been redirected into leisure.

the difference between what Keynes observed, which is the basis of his theory, and today is that there are more women in the workforce.

Prior to the second world war women tended to stay at home and raise a family. This meant that unmarried women and men had more jobs available to them.

A lot of women today would prefer to be at home. In other words instead of encouraging women to use childcare centres the women should be encouraged to stay at home with their children. They can still be productive doing arts and crafts.

Also there is a rise in the number of part time jobs as well as temporary jobs.

You raise an important point -- and I would guess that because sexual stereotypes have been somewhat eliminated, we could now refer to the "stay-at-home-spouse" --

In either case, what was true in the past is true in the present -- and that is, the fact that your spouse has no earnings does not mean that they are poor.

Does anybody know how skewed unemployment figures are by people whose earnings were marginally near zero? Is it possible that a preference toward leisure will show up in the unemployment figures but not represent real unemployment?

A drastic shift from dual-income households that were marginally beneficial to a single earner household could produce 50% unemployment figures that have no real meaning to the well being of the populace...

By employment, I assume you mean participating in the economy as a producer and consumer.

Personally, I always spend my leisure time working -- I simply work on different things. I set aside projects that I want to do, that have little or no possibility of earning me income, and I work on them in my leisure time. The only reason I don't give these projects more priority in my life is because some of them are really expensive. Leisure, to me, costs a lot of money. I realize that it doesn't have to be -- as mikeikon says, "We can enjoy creating and consuming more things like music and art" -- but where do people get the money for food and rent? Where do people get the money to consume?

We have a large leisure class in the US -- but I'm pretty sure the unemployed don't feel as if they're a part of it.

Re; Your last line.

An employment bias would lead toward the Keynesian concept that everybody must be employed - and that government force should be used to achieve that objective.

A leisure bias leads me to the idea of free traders creating a world in which necessities are so cheap that employment becomes largely optional - or directed mainly towards luxuries and leisure. No, we're not there yet, and we never will be as long as the Keynesians are establishing policy.

On that we agree.

By way of example, why not let productive people retire in their early 50s? Doing so would create room for others to fill the positions that they vacate. Instead, our Keynsian inspired government holds them hostage until their late 60s by extracting enormous rents from them during their productive years, and then uses the rents to create useless government jobs for the same people who could have been doing productive work.

"Doing so would create room for others to fill the positions that they vacate."

I don't see why one person needs to retire in order for another to work. When left alone, the entrepreneurs of this nation find work for everyone who wants it. The U.S. population has doubled in the 58 years I've lived here. The number of paying jobs have increased to accomodate the additional workers.

What determines our collective standard of living is the amount of goods and services we produce. A larger workforce will produce more goods and services. When the proportion of working to total population falls, we produce fewer goods and services available for consumption by the same number of consumers. If we want to increase our collective standard of living, we should encourage older workers to remain employed rather than retire.

John Dewey,

I have no interest in forcing people to retire, or even encouraging them to retire. I'm just talking about not extracting so much rent from them during their working years, and manipulating the time frame under which they can become wards of the state, so as to let them make their own plans.

Nor do I have any interest whatsoever in our "collective standard of living". That's a Keynesian thing - an employment bias. I think many, if given the choice, would display a leisure bias, and I believe that they should be allowed that bias. And of course, leisure is also an element of "our standard of living".

"Nor do I have any interest whatsoever in our "collective standard of living". That's a Keynesian thing"

I do not understand at all that raising our collective standard of living would be "a Keynesian thing".

I'm not meaning that we should force anyone to work. I'm not meaning that we should implement Keynesian policies to artificially create work. I am meaning that we should remove government incentives for workers to retire or to not work.

Fortunately, most humans on this planet are interested in improving their standard of living. Collectively, we do share that goal. IMO, our education system should encourage potential workers to improve their standard of living. Our government should do nothing whatsoever to discourage citizens from working productively in order to achieve a higher standard of living. That means no social security early retirement, no medicare for 55 year olds, no unemployment benefits, no welfare, no public make-work programs, no progressive income tax.

"Our government should do nothing whatsoever to discourage citizens from working productively in order to achieve a higher standard of living. That means no social security early retirement, no medicare for 55 year olds, no unemployment benefits, no welfare, no public make-work programs, no progressive income tax."
Are you saying that gov't should not provide these programs and that these programs discourage productivity?
I would have to agree to some degree, but not go so far as to say to not have any of these programs. Take social security for example, my parents think it is great that the "gov't is saving and taking care of them when they get old" they work hard and don't mind paying into the system. So they are productive because they know they will receive their money back. I would say they are not by anymeans a minority, I believe many people believe this without knowing what the gov't spends the money on and there are better options.
Welfare I am sure discourages work for some who abuse the system, but it is also needed in many cases, how to weed out the bad apples is too costly.

surfisto,

Do you feel the privatized pension system in Chile is working well? It's a program I wish the U.S. had adopted instead of continuing our social security Ponzi scheme.

Your pension system is not mandatory for all workers, is it? I've read that some self-employed workers in Chile have chosen not to participate, and enter their retirement years with no source of income.

I am US Citizen living in Chile and worked last year and contributed to my AFP (Private Social Security). I am not sure about self employed, but most people seem to like the system. There are 5 funds in degrees of risk run by 5 separate companies.
You can change between funds and receive guidanse based on your age, income and investing style.
Obviously a huge positive is the gov't can't dip its hands in for spending. It is a good example for other countries as well as a stable banking system.

surfisto,

Sorry if I wasn't clear. I was referring to the early retirement provision of the U.S. social security program. Normal retirement age is now 66 years for someone who, like me, was born in 1951. The U.S. government will allow me to retire four years earlier, at age 62, but my social security benefit will be reduced by 25%.

As I see it, the early retirement provision creates an unnecessary burden on the remaining workers.

If U.S. social security retirement benefits had been pre-funded - if funds actually existed to pay for early retirement - then I would not object to workers choosing when they wish to retire. But the money contributed by today's workers for future retirement was spent long ago.

"Our government should do nothing whatsoever to discourage citizens from working productively in order to achieve a higher standard of living."

Agreed. But neither do I want government to discourage leisure, which is also a component of a higher standard of living. Sheetwise's question is, what to do with the people? and I think we need to avoid employment bias in answering that question.

Sorry for the confusion, Randy. When you wrote:

not let productive people retire in their early 50s?"

I assumed you meant "allow them to collect Social Security' in their early 50's". I made that assumption because the alternative interpretation of your question - Why not let 50 year old workers have the freedom to not work? - is available to anyone right now.

Yes, but it would be a much more feasible option for many more workers had they not been exploited by government during their working years. High rent extractions by government are effectively a mandate to work.

We can enjoy creating and consuming more things like music and art. We'll be more free to be productive in ways that we personally enjoy, and we'll be able to do a lot of those things for money, whereas before they wouldn't have been valued as highly because the more basic needs took precedence.

As we shifted from an agrarian society, people demonstrated that we're pretty good at finding ways to spend our time productively, for the most part. I have faith that will continue.

I see a tremendous amount of people that stop looking for work the moment they find a job.......and the sad part is they are counted among the employed.

In other words, having a job is not the same thing as working or as being productive.

I bet any amount of money that I could go to Don's target store and interview the low level employees and I'd find some that have been acclimated to the wonderful little cart pushing machine (which takes the labor out of the act) and who will now tell me it is too hard to go out into the heat and guide the thing around as it pushes the carts and how they wish something could be done to make it easier.

Just thought I'd throw that in the discussion.

Great point. I don't know if its the influence of going through 13 years of education or what, but a large part of the population does seem to be what I call assignment seekers. They can do what they're told well, but don't seem to have the initiative or drive to truly find their own work.

This is true. But, the question is the balance currently right or we need more self-starters? Because if everyone is an assignment-creator that can lead to chaos and uncompleted projects. You can't have everyone being an inventor/innovator.

"You can't have everyone being an inventor/innovator."

Well now, we'll never know about that one will we.

well, if it can make your job easier, it can make your job irrelevant. "It" refers to innovation....

I've seen those too and thought the same thing.

Walmart, at least the Walmart here, uses a different strategy. They've apparently decided that instead of paying somebody to keep going out and collecting carts it's cheaper to just have a whole lot more carts.

Our local Wal-Mart also uses self checkouts where one cashier spans 4-6 lanes.

Marcus: Thanks! The number of different ways that costly labor can be displaced with substitutes is huge.