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Arguments For The Low Skilled Worker

Peter Schiff recently created a video asking people at Walmart to pay 15% higher prices to pay $15 per hour to Walmart's employees. Peter got many death threats and hate mail for this video and I would like to defend his position on minimum wage. Most people he asked wanted Walmart to pay their employees higher wages but would not agree to pay higher prices. There are three groups of people affected by the minimum wage. These three groups are the employees, the employers and the customers. Many of the Walmart customers shop at Walmart for the low prices because they have a low income themselves. The employer has to find a way to cover the cost of employing the people who work at their business. The employee has to worry about the rising cost of living.

When it comes to wages, I look at the source of the problem. In a healthy economy, A new product or service has a high cost. For example, I payed $800 for a new 32 inch LCD HDTV years ago when they were new. Now, I could buy the same TV for $200 or $300. In general, the prices of HDTV's have fallen over the years. If the cost of living had not increased, the cost of an HDTV would be even lower. For this example, lets assume there is no inflation and the cost of living is consistent. When the HDTV was new and the supply was low, the cost of these TV's were high. As more people bought the TV's and more were produced, the price has decreased. By the price of goods and services decreasing, our wealth is increased because our money can buy more. This same principle is applied to all products and services. Competition decreases prices of goods and increases the wealth for workers. Price controls for wages, like goods, never work because not one person is smart enough to know what price or wage is appropriate for every product or industry. Ask yourself if you can make a pencil. Not one person on earth today has made a pencil. The free market makes pencils.

If minimum wage is increased, non-essential jobs are eliminated. The cost of employing people has increased as well as the cost of living for those who still have a job. The cost of living always balances out with wages and usually the wages don't keep up with the cost of living for various reasons. The people who lose their jobs because of the minimum wage, are the people who it intended to help in the first place because wages are based on skill. For a low skilled individual, higher wages are a hurtle that one must overcome to even get a job. Ever wonder why we don't see full service gas stations or why we see self check-outs at the grocery store? These jobs were intended for kids or college students and not careers.

Why is the average age for a low skill job 35 years old? The answer to this question is pretty simple. Andrew Jackson, who led the charge to abolish the second central bank in America, once said that it is to be regretted that the rich and powerful often bend the acts of government to their selfish purposes. This is still true today. Government rules and regulation are often sold as in the public interest but are completely the opposite. For example, San Francisco now requires a dog walking license to receive money for walking a dog. A occupational license or regulation is often pushed by those in the industry to eliminate competition and create monopolies. This is how we got the Federal Reserve System. A monopoly is not just a big business, but a business with government protections. The Federal Reserve has a monopoly over money in the USA. Money cannot be fiat (fiat money is money declared by a government with no intrinsic value) because the creators of money cannot be trusted. Money is decided by you and me in a free market. Gold is referred to as money because of its history but money is whatever we deem valuable and easy to divide. The middle class is being eliminated by the fiat money. As I said earlier, people use the government to advance their own selfish purposes. The private control of money and government regulation is the reason for the increase of living and the loss of personal Liberty. When money is created and given to the banks, the banks loan it to the richest people and businesses who will return the largest profits for the banks. By the time the middle class and the poor get the new money, the value of the money has decreased and the cost of living has increased. This means that the wages are not the problem, the issuance of the money and the government regulation is the cause of less higher wage jobs, more debt and a higher cost of living. Profits are beneficial to an employee because it shows that the company is successful and can expand by buying capital goods and equipment.

Also take into consideration that many of our resources are wasted by the minimum wage. Instead of people doing these jobs, machines and equipment are their replacement. These are resources better used in other areas of our lives to do things that humans cannot do. Instead, they are used to bypass the regulations that have been set for humans. Since a certain class of people cannot get into a low skilled job to work their way up in the world, they must rely on welfare to survive. Minimum wage is the contributing factor to the increased welfare state in America.

The once middle class worker is now working for low wages at a low skill job. If you ask someone who works at Walmart, chances are they have a college degree. What we are seeing today is the middle class worker taking the jobs that kids or low skilled workers would take. Since the kids cannot get a job out of high school, they are sold that in this economy, you need a college education. Once they graduate from college with loads of debt, its off to Walmart or a low skilled job because there are no jobs in the field they got their degree. Thus, the debt based monetary system and over reaching government power has created the problem that the business man/woman is being blamed for.

Remember, inflation is the expansion of the money supply and deflation is a decrease of the money supply. Inflation destroys savings and increases debt because the purchasing power of the money decreases. Deflation destroys debtors and helps savers because the purchasing power of the money has increased. Deflation is only destructive when a nation is full of debt. Also, we have a right to the pursuit of happiness as written in the Declaration of Independence. Lets not confuse this with the right to happiness. We do not have a right to be happy, rather a right to pursue happiness even if we never achieve happiness. In our pursuit of happiness, I may want to take a entry level job at a wage lower than the minimum wage. According to the laws that contradict our rights, it would be illegal to do so. Take a look at this quote below. The quote is said to be one by Thomas Jefferson, but is not confirmed. Whether the quote is by Thomas Jefferson or not, the quote still has a valid meaning.

“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.” - Thomas Jefferson

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THought provoking article; but I could not make this out:...

... "There are three groups of people effected by the minimum wage. These three groups are the employees, the employers and the customers."

How does the minimum wage cause these groups to come into being? I would rather say the wages situation is brought into being by the existence of these 3 groups.

Or did you mean "affected".

Thanks landsberge

I did mean to write "affected" in that sentence. I'm not one to use excuses, but wireless keyboards often miss letters and spell check picks the wrong word. That has happened to me many times. I should have payed more attention. Thanks for catching that error.

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Cheap labor lobby and tresspassing

make the argument that much tougher when a significant and vocal faction do not believe in borders (rejecting the Rothbardian, HH Hoppe along the way.)

Yes, min wage is labor protection, and people pursue it when all other avenues to protect existing laws on property rights are ignored.

The focus, as this post tries to start, is to come up with novel political solutions.

Longtime Internet Poster

on the other hand...

This article ignored the fact that there is a huge subsidization of low skilled workers. To some extent, increasing the minimum wage would disqualify some people from receiving food stamps, subsidized school lunches, need-based scholarships, etc.. That would cut government spending; a better measure of big government. It would give a boost to automation, computerization, and robotization. That would boost productivity. Family businesses would benefit assuming they keep their own books and hire relatives.Cheating employers who hire illegal aliens would no longer have such the advantage of hiring people who work for less.

I don't think anyone with a very basic understanding,

or even a rudimentary amount of common sense about economics could disagree. That being said, the political power of the minimum wage is mothers milk to the socialistic politicians. It grows voter roles, creates dependency on big government, creates the departments of government for administrators, even feeds the need for law enforcement and provides a pool of volunteers for the military. Having a law that makes it illegal for the lower skilled worker to be employed is flat out evil.

The future doesn't need us.

The more automated by machines things become, the less people are needed to produce goods and services. I have heard people say that workers will simply be displaced into other jobs, but I believe there will be, and already has been, a net loss in jobs.

Example: grocery store self checkout. Also soon fast food restaurants will all have touch screens to order on. A few jobs will be created to service those automated systems, however hoards of low skilled workers will become unneeded. A net job loss.

When robots become as sophisticated as a human, then humans will only be needed to perform work a robot can't do, like a psychologist. This will occur just as soon as it is more cost effective to employ a robot over a human. We are not there yet, but we will be. The military is a large employer that will drastically reduce the number of humans it needs as well. Why have your kid come home in a pine box when you can have a machine go to war?

Robot technology is owned in the hands of a few, it is there private property. So what is to be done when 80% or more of us are seen as just useless eaters? I have heard many here on the DP talk about the already existent useless eaters as disgusting scum. Especially when those that see us as useless eaters have the machines to deal with the problem and not personally get their own hands dirty? The top of the food chain is populated by sociopaths, they wouldn't be there if they weren't.

http://www.wired.com/wired/archive/8.04/joy.html

AHHHHH

ROBOTS are good! For everyone! even the low skilled.

http://www.youtube.com/watch?v=gjC-S6pobE0

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That's only the tip of the iceberg

The march toward what you warn of started long ago. The technology has been advancing for a couple hundred years and the net job losses began around 1997. However, it was briefly interrupted with the tech boom in 1999-2001. Then it stagnated until 2008, when the economy moved the goalposts. Since then, it's been steadily rising with no end in sight.

Here's a video showing how every market is already being affected and how quickly it can get taken over almost completely.

http://www.dailypaul.com/307371/will-work-for-food-movie-tec...

The good news, however, is that you're not exactly accurate in saying that robotics is owned in the hands of the few. One of the great benefits we're seeing is that it's probably more available (acceptable) to a garage business than to the larger companies. And it's mostly the younger generation that's taking that ball and running with it.

If robots make everything who will buy their products?

Come on guys people here need to be a little more economically literate.

Automation isn't bad per se, it's bad when it happens rapidly and it happens rapidly because of government interventions like minimum wage but also more importantly regulations which add arbitrary costs to the price of labor.

Yes, over time, the most unpleasant jobs will be automated. But unless it happens rapidly people will find other ways to provide value.

In a freed market the jobs that will be automated will be those that are least desired.

You didn't watch the video I linked to, did you?

It shows very clearly how automation is happening already and poised to dramatically lower the ratio of workers to non-workers in all of society. This may be affected in brief bumps and valleys by laws but it's been a steady march for longer than either of us have been around.

So your last statement should have been, "...the jobs that will be automated first will be..." That's true but it won't end there. In just 1-2 decades, the vast majority of jobs will be automated everywhere.

If so, you ask who will buy their products? That's the key issue here. It depends on which path we take to get there.

If we base our thinking on the assumption that "they own the robots and we just beg for work to pay them for goods", then you are correct in thinking we will outlive our usefulness to them.

If we recognize that we hold just as many cards in the automation game and can create the businesses of the future and can out compete them in making the goods we desire, then it is OUR wages that will increase, not theirs. For this to work, however, we need to recognize that wages need to rise very high during this time. That's the only way each family can support their expenses. What it boils down to is less work time for each employee to earn the same amount. Viewed another way, earlier retirements.

If we skip the transition and look at this working down the road, we'll see families with only one worker who then retires by age 30 or so. His ~8 year long career is now filling 1/5th of the usual 40 year one so 4 more workers can earn a living from the same position. Comparing that to today, it means one position supports 20-25 people, not just one. (Today each position only supports that worker while the rest of his family members each need their own job.)

So, how do we get it to begin going this way? We have to remove the waste expense in both the family's budget and the company's. Then we have to ensure that the company's excess is directed towards wages, not just the owner's pockets. The first is easily done by eliminating banking costs in all forms (they account for 40% - 70% of family lifetime expenses and corporate expenses).

The second is done by keeping companies small enough and local so that community accountability puts peer pressure on the owner. To be clear, neither of these should be done by government force or mandate. There are numerous ways to create incentive via the free market to ensure both happen.

As you might already guess, this means we have to move our support from global conglomerates to locally owned and locally financed businesses and let the behemoths die off. And it's precisely that automation that can make this happen.

I didn't watch it at all

This is an old argument, centuries old. It was wrong then and is wrong now. The reason jobs are being automated at an uncomfortably rapid rate is because political forces at the behest of labor has 'protected' labor into being priced out of the market. The only way to stop it is to stop 'protecting' labor.

There is no problem with automation that is not the result of fascism. End the fascism and automation is zero problem.

In a free market, without licensing laws elevating the price of white collar labor, less pleasant jobs will command a premium. It is the jobs whose labor commands a premium who will be automated first, but it won't be rapidly because there won't be price shocks.

Over time the least pleasant jobs should always become automated. There will always be least pleasant. That is a good thing. Why do you want to plow a field just to survive, when you can work a spreadsheet, or cook, or sing, or write code, or hand out coffee and have not only enough to eat, but watch TV hours a day, or read, or go online and post on the dp.

In other words you won't have the government mandating, or effectively mandating ie with protective labor law, higher wages all of a sudden which causes all sorts of resources to be diverted into figuring out how to disemploy those people asap.

Minimum wage is a perfect example. It will make some unskilled labor uncompetitive with a touch screen.

That's just the labor side. At least as much harm is done to the economy by government restricting people from becoming entrepreneurs and employing people.

Why can't a worker with a tidy nest egg simply start business? Because he has to pay off the government to do so. The reason is because old business doesn't want competition so they use government to make it hard.

Automation is only a problem in the short term and so far as it is it is because we have a fascist economy that makes arbitrary economic policy decisions which technology stands ready to address as soon as it is cost effective to do so.

Are you too good to learn something new?

Did you think I was merely spouting a centuries old argument unaltered? While that was certainly true for a long time, as I said in a comment above, it started failing from 1997 to 2008. Since then, productivity has been increasing WITHOUT creating the new jobs it usually requires. There's a net job loss when both sides of that are considered.

Said another way, those new creative jobs are increasingly starting out as being automated.

So while your protection concerns are valid, that's only up to a point and we've passed that point. From here on out, we'll see the robots get the majority of the good jobs.

Watch the video.

It's not a new argument. You

It's not a new argument. You don't understand economics, you should rectify this asap. If you support liberty the very first thing you should do is study economics. Without a working knowledge you are a babe in the woods.

Markets clear.

Everything is in those two words. Once you understand that I won't need to explain anything to you.

Or, if you think markets don't clear (other than government intervention keeping them from doing so) then you need to explain that. Good luck.

Your argument, though you don't know it yet, is merely that, in this case markets won't clear.

They will.

When they do not clear it is because they are not allowed to.

When markets are not allowed to clear there is wealth transfer going on. Always on net, to the rich.

This is the stage we are in. Yes it is making workers poorer and corporations and embedded capital richer. But there is nothing different about this than any other market. That is what governments do.

When the market intervention is removed, there is again a large wealth transfer. On net almost always to the rich.

This is no reason not to remove the intervention however, at least in removal everyone has a chance to get some, and moving forward the market will be stable and no longer reward the few at the expense of the many.

There is nothing fundamentally different about automation and labor that negates these two assertions. It exaggerates them, it makes them easy to see and makes the results more sharply felt and seen.

But all that isn't the main problem. The main problem is there is nothing you can do with government policy that will help. The only thing you can do is remove the market interventions which caused the problem. That will be painful for many also, but moving forward there won't be massive and quick market shifts which disemploy many people at once.

Here's a good example. When the automatic elevator was invented, almost no buildings used it. It was too expensive compared to having a person there. Having a person there had other benefits after all, it added a personal element to the elevator ride, and it made elevators safer from mischief.

It is without doubt the availability of automatic elevators put downward pressure on elevator operator wages. But this was slow and gradual. There was no mass market shift happening.

But some economic ignorami in New York thought the elevator operators were not getting paid enough and passed a minimum wage law. Within a couple of years there were practically no human operated elevators. I say economic ignorami, my cynical side suspects if one researched it, it was the elevator manufacturers that got the law passed. I would bet money in fact.

Everything labor has gotten the government to do to 'protect' it drives up wages as surely as minimum wage law. This speeds up automation rate to a painful level.

That is the problem.

Automation is not only inevitable it is beneficial. It's the rate that is the problem, just as the rate of change in any market is the problem.

Fcuking with the rate of market change is fundamentally what governments do to enrich the rich and enpoor the poor.

You can continue to spout the old crap and label my as lacking

in economics but until you watch the freakin' video, you just aren't going to get the point I'm making. This is proven by your continued argument for points I myself hold. I have not said that markets wouldn't clear. That wasn't even on the table. Nor was government intervention. I have never advocated that the government do anything different. In fact, I contend that if WE do things right, we can ultimately circumvent government policy regardless of where they go. In short, I couldn't care less about the government on any level anymore. They are moot and it won't be long before the people make them so.

What was on the table is that since '08, there has been a net job loss to automation and that it is accelerating. This is proven fact and indisputable. It is also indisputable that its happening regardless of government intervention. The cause now is self sustaining. Think of robots that make more robots that make robots and you'll get an idea. That's just a thought exercise but the reality is much more perpetuating. This is what the video shows in every sector of society. Only engineers and artists have so far escaped the encroachment of automation.

My question in all this is as society 'approaches' full automation, do you want to become a useless eater or a member of an equally valued free-market based society?

The thing about it... the

The thing about it... the march of technology ensures that every 18 months processing power will double and the costs will remain about the same (this is known as "Moore's Law"). Applied to robotics, consumer electronics, home computers, etc., the very best computing will eventually be available to nearly everyone at very low cost. This raises the issue... What will we do when computers are more powerful than every human brain on the planet? "Working professionals" will be a relic of the past. Robots will ensure low and no-skill workers are easily replaced at costs far less than hiring a high-skill employee at low-skill prices.

It would be helpful for people to start thinking now about how they plan on fitting into a world that values brain and muscle power very differently from how it is valued today.

That's just one factor

Moore's Law only applies to the hardware advancement. Other factors, which include open software development, crowdfunding and milestone breakthroughs, will act as exponential multipliers to Moore's Law.

In a nutshell, what we see today as fast development (1 year vs 10 years in the 1970's) will begin happening in weeks. There lies another possibility that something called 'pre-development' will occur quite a bit. That's where the code is written to do something before the hardware makes it possible. With global cooperation running concurrently on literally EVERYTHING, this could make a century's development take place in 1 year.

So, yes, you hit the nail on the head by saying that we need a plan for the coming change in values. I've been doing this now for 3 years with a free market based plan that moves us toward a Resource Based Economy. Fortunately, it doesn't HAVE to go the whole way to eliminating money but could just stop at the ultimate capitalist scenario. To see more on this, see some of my last comments and posts. I think 80% of my last 3 year's posts were on this exact subject.

Overy simplistic and outmoded but great for yesterday's problems

This conversation was relevant two generations ago.

Now the game has shifted. With population growth, the present condition of all land and productive assets being privately owned and increasing automation is creating a class of persons permanently disenfranchised and unable to enter the ownership (thence rights) class.

The decision will be simple: will the priority be to support this disenfranchised class, let them starve or shorten the process by killing them off?

There is nothing strange about having a bar of soap in your right pocket, it's just what's happening.

I agree.

We need to be facing reality and answering the questions you raised more than theoretically.

As for Walmart, it's galling how they treat employees - no less when they apparently get a tax break for hiring those with disabilities. I have to imagine that the break is to cover accommodations that might need to be made. Hah! I have a friend with cerebral palsy who lives in New England, a Walmart employee. Now this woman walks at a SNAIL'S PACE, so-o-o slowly moving one crutch... then one foot... then the other crutch... then the other foot... and then a brief rest... to take ONE STEP. There aren't enough employee and/or handicapped spots, so this means she often has to find a spot in the giant lot among the rest of the masses, sometimes needing to walk quite a distance - once she can even find a spot (which could take 15-30 minutes). She has to get there early because "three lates" while a relatively new employee and you get fired.

Here's the accommodation Walmart is making for her later this FRIGID week. Three days in a row her full-time shift ends at 11 pm. And while she'll do it in rain or snow - walk at night in cold inclement weather - she *can't* do it when it's icy out. Last week, when it was ice pellets coming down, she had to invest in a taxi. Yeah, minimum wage goes real far taking cabs for transportation to and from work because Walmart doesn't supply even its handicapped employees sufficient parking. She won't say anything because she's afraid of losing the job. I don't know how Walmart executives sleep nights. Glad you posted what you did. I needed to get that off my chest!

When we try to pick out anything by itself, we find it hitched to everything else in the Universe.
~ John Muir

legalizing competition

Until this is done...forget about it.

Local politicians should be held to task here imo. For example only so much square footage should be allowed in each municipality of one retail chain or number of stores for that matter imo.

Regardless, property taxes and natural gas prices should really take off in the future so it will all even out eventually imo. More fed programs will most likely be downloaded to locals and I think natural gas will become more scarce.

donvino

Until businesses are willing

Until businesses are willing to fund "counter-programming" to fight the commonly held notion that minimum wage laws are somehow beneficial, expect more asinine artificial wage increases that will push businesses to automate low-skill workers out of their jobs permanently.

They can't

until the day comes that they can fund their business without debt (and hopefully inflation as well - bitcoin??), all businesses will still be subjected to the infinite growth paradigm. If they were to make enough profit to pay higher wages (to fight the problem as you cite), the banks would take more and more. And by doing so, they ensure the owners stay at the same or lowering rung on the social ladder. It's by design. By tying social status to financial wealth, they have stacked the deck against anyone (employee, worker, non-working human, government and corporations) ever supporting ethics over financial gain.

However, if businesses were to be funded by non-interest, non-stock methods, their expenses would be limited to real-world costs like labor, materials, overhead and sales. If so, the entire process could easily run without growth, inflation or a promise of perpetual existence. Gone would be the days when company interests carry more weight than its members making a decent living.

People here so often discuss how bad it is for the banks to use this game or that to enslave individuals by moving the goalposts, but I've never yet heard how that affects businesses and their moral imperative. I think it's time.

I'm talking about

I'm talking about propaganda-fighting propaganda that small, medium and large-scale business coalitions should fund to protect their investments. Minimum wage laws are anti-competitive federal gangsterism.

I understand but

I'm talking about another aspect. Because of the debt structure we've grown acclimated to being 'normal', the system can't work as you would have them promote. You even said it above with regard to technological unemployment. Unless you think the banks will continue funding small businesses that are half as profitable as automated ones down the street.

In short, minimum wage law issues are a moot point and nothing but a distraction from the real problem. End inflation (in all its forms) and the problem vanishes by itself.

Letter: Listen to local

Letter: Listen to local owners, not union bosses on wage issues
Local restaurant owners pay a fair wage
http://www.wausaudailyherald.com/article/20131224/WDH06/3122...

While I agree with just about everything in this post

My take on the uproar over the minimum wage this time is more about a growing percentage (NOT ALL) of minimum wage workers who somehow believe they have arrived because they've worked a few years at the same entry level job.
I know there are MANY people who work extremely hard at their jobs and many of them have plans to progress with training and education.

But there seems to be a growing group who are blind to the fact that they need to enhance their value and or start their own business.
Many in this category seem to think longevity alone will get them increased prosperity. Another way to say it is there is a sense of entitlement as if they are owed special treatment despite the fact that they just want to be comfortable without growing like most people do. Work is an interruption of their personal lives and pursuits.

Add the fact that unions are drooling over the sheer numbers of potential dues paying members.
These corrupt union parasites have been caught paying people to protest who aren't even involved in the fast food industry for instance.
http://seiumonitor.com/scandals/shocking-video-seiu-members-...

National Labor Relations

National Labor Relations Board lawyers okayed a major union’s practice of paying people to protest against Walmart in a legal memorandum earlier this month. The federal labor law enforcement agency said the practice of paying workers $50 apiece to join protests “did not constitute unlawful … coercion of employees.”
http://lonelyconservative.com/2013/11/nlrb-gives-unions-the-...