A few months back, in Dystopia in Seattle and the Perverse Productivity Effect, I described the logical flaws on both sides of the $15 minimum wage debate:
Developments related to Seattle’s recent decision to raise the minimum wage to $15 per hour epitomize the ineptitude of our political discourse from both the right and the left, and reveal a dangerous disconnect from reality.
Those on the right are sort of “upside down Luddites.” I say this because they implicitly have a negative view of breakthroughs in productivity. They project that McDonald’s workers should be made to suffer with the introduction of kiosks to replace cashiers. In their worldview, the cashiers should be paid poorly enough to forestall the use of kiosks.
And those on the left? They may have an equally unrealistic worldview. The principle that guides their fight for a $15 per hour minimum wage — that we should not have working poor in America — is unassailable. But the underlying vision — that we can continue to generate jobs at the pace we have in previous decades — is delusional. In the past 17 years, the total number of hours worked by Americans has not budged, while our productivity has increased by 35% and our population has grown by 40 million.
We’ve reached an inflection point where productivity advances are eliminating jobs at a faster pace than they are creating them. The Luddites were not completely off base in their thinking. They were just a couple of centuries premature.
Yet the dangerous disconnect from reality I described remains front and center in the 2016 Presidential campaign. Bernie Sanders is all about the $15 minimum wage. His heart’s in the right place, but he lacks either the foresight or the political courage to address the real issue. The Republican candidates are in the upside-down Luddite mold I described. Hillary has taken a sort of “worst of both / no man’s land” approach: Raise the wage to $12 per hour. That would be enough to accelerate the replacement of jobs with technology, while leaving the wage so low that the remaining workers still find themselves at or below the poverty line.
It’s too late for this campaign, but progressives need to write a new battle plan, and soon. It’s not (and never was) about the jobs of a few McDonalds cashiers in Seattle. Rather, it’s about millions of jobs on the verge of being mechanized out of existence.
Andrew F. Puzder, CEO of the parent company of Carl’s Jr., has announced he’s investing in machines in part because the American government, he says, is making it too difficult to afford employees. Puzder, who was an economic adviser to Mitt Romney, contends that the costs of President Obama’s Affordable Care Act to employers has led to the cutting of workers’ hours across the country.
The focus of the article is what a creep Puzder is. Probably true. But he’s also acting entirely rationally. If a machine can do the same job as a human, but at a lower cost, the machine is the rational choice.
Puzder used his decision as an occasion to take a swipe at Obama, which places him firmly in the camp of the upside-down Luddites. But only at a superficial level. He’s a businessman first and a conservative ideologue second. His decision was based not on his emotional problem with Obamacare, but on an unemotional cost-benefit analysis.
Were Puzder a progressive, here’s what he might have said:
It’s with great sadness that we at Carl’s Jr. will be replacing the great majority of our workers with machines. We understand well that workers should receive a living wage, and have strived to pay our workers as well or better than have our competitors. But we can’t control the realities of the marketplace. Regrettably, the continued use of workers at today’s wages can’t be justified when the competition is moving to increasingly more cost-efficient machines to perform the same tasks.
Had Puzder used the progressive framing I’ve outlined to explain his action, would the left demonize him for taking it? I doubt it. But the impact on jobs in America would be the same.
As the jobs continue to vanish, Americans will need to waken to three realities: First, while many jobs have been off-shored, we’d still have a growing job shortage even if we brought all those jobs back. Second, the minimum wage doesn’t matter much to those who don’t have jobs. Third, the number of us who can’t find jobs will continue to climb.
The time for a basic income guarantee in America has arrived, and it’s the fight progressives should be fighting. In a country as wealthy as ours, the avoidance of poverty can’t be based on one’s ability to find work, when it’s an economic certainty millions will not be able to do so. In a country as wealthy as America, nobody should live in poverty. The logic behind justifying poverty with value judgments about the laziness of the impoverished never really existed, even when America supposedly was awash in jobs. As today’s jobs give way to the machines of tomorrow, the absurdity and outright meanness of that thinking will become crystal clear.
But the basic income guarantee only is part of the answer. America and the rest of the modern world must recognize that advances in productivity have benefitted almost exclusively the very rich since 1980. That must end. Advances in productivity should benefit society at large. Had we not allowed that very basic principle to be violated so completely over the last three decades by a tiny group of billionaires and multi-millionaires, we would be living in a much different and better country today.
The redistribution of productivity gains can take many forms, from increased taxes at the top, to minimum income guarantees, to infrastructure projects that make life better for all (and create jobs in the process) to the reduction of the hour threshold for overtime pay. The exact shape of policy change is not nearly as important as the principle, which is so fundamental yet has proven so elusive, that technological advancement must be for the betterment of all, not a select few.