Disadvantages of Minimum Wage Laws

[Wry Catcher]

So that means you're going to quit posting and go back to cocksucking?

FU Rabbi, you're such an asshole, as well as a liar and a Koch Sucker.

 

[The Rabbi]

So that means you're going to quit posting and go back to cocksucking?

FU Rabbi, you're such an asshole, as well as a liar and a Koch Sucker.

Are you really going to claim you never sucked a cock in all your years on the force? Really?

 

[itfitzme]

The total cost of production is wages plus capital. With low enough labor costs, inefficient [labor intensive] production can cost less than efficient, capital intensive, production. Often, labor intensive production requires higher skills then capital intensive production...

no ?

labor is employed intensively, in low-skill, low-capital, low-pay jobs; capital is employed intensively, with high-skill, high-pay workers, highly trained on the sophisticated equipment ?

Definitely not. The whole idea of manufacturing engineering is to automate or break the production process into simpler tasks that require less skill.

A cashier no longer needs to know the prices of product, or even how to make change. A lesser skilled cashier can now process more. With modern automated checkout systems, the now lesser skilled cashier can be replaced by one lesser skilled cashier.

A skilled seamstress is replaced by an automated machine and less skilled labor that simply loads the machine and pushes the button. Not only does it take less skill, but quality and output goes up dramatically.

That isn't to say that someone doesn't need to build the machine or maintain it, but once the machine is designed, the engineer can go off to designing new ones. To expand production, the original design is just duplicated. The original designer doesn't receive a royalty on his design. (Well, that kind of depends. There have been entire companies that have been a spin off of a design of a machine to replace skilled labor. Then there are manufacturing engineers on staff who's job is to design the tooling and processes to increase output with less skilled labor.)

Of course, it does take a tech to maintain and service the equipment. But even that process can be made simple by appropriately designed debug procedures and maintenance schedules. A single tech can service dozens, if not hundreds of production equipments.

Does residential garbage collection really require much higher skill now that they are using trucks that pick up the can and dump it, instead of running from house to house with a steel barrel and emptying it?

The biggest boom in production was when the manufacturing of screws and nuts were standardized and automated. What took highly skilled individuals to make matched sets of screws and nuts was replaced by machines that cranked out hundreds of pieces in the same time, requiring no more skill then to load the machine with raw materials and push the button. Not only could it be done with less labor at higher output, but the screws and nuts were all identical, no longer matched sets. Not only was the manufacturing simplified, but it also simplified the manufacturing and logistics down stream.

I was at the mall the other day. The Hat Store has this really nifty piece of equipment. The guy sticks in a hat, pushed a couple of buttons, and out comes a hat with my name on it. He can do this all day long, and the only skill required is knowing how to spell, or at least how to ask the customer how to spell his name.

Now that doesn't address some of the complications in the process of development and deploying capital. If the cost of capital is excessive, it's cheaper to just pay a bunch of unskilled labor to to the work. If a backhoe and the operator costs too much, just get a bunch of guys with shovels.

In the greater aggregate, the idea is to replace skilled labor with Kapitol and unskilled labor. Not only is output and quality increased, but the skill requirement is reduces, and with it the cost of the labor. At some point, perhaps, the process continues with a more complex machine requiring a bit more skill for even greater output, but that isn't the norm or the initial intent. That secondary process only comes into play when the demand for skilled labor has become so reduced that the cost of skilled labor declines.

Of course, over time, products have become much more complex and the skill to operate the machines is higher. The initial developers of the microchip, and the initial process, required considerable skill. As they became in more demand, equipment was designed to replace the original skilled labor, perhaps a scientist, with less skilled labor, a technician. Still, the direction of the trend continues with the equipment becoming more complex, even smarter, replacing the skilled technician with less skilled button pushers.

Merc had a machine developed to replace the "skilled" labor required to look at samples of bacteria growth in petri dishes with an automated vision system. The machine took batches out of the storage cabinet, put them under a camera, and then categorized different sample sets according to the growth rate.

In my experience, a considerable amount of manufacturing in the US has grown on replacing skilled labor by unskilled labor taken up from the surrounding farm laborers. I can think of business after business where the whole of the manufacturing floor is, how should we say, predominately of one particular nationality.

 

[Widdekind]

Jobs went away because manufacturing became much more efficient. Off shoring plays a small role in it... there are fewer jobs needed to produce the same amount of goods.

The total cost of production is wages plus capital. With low enough labor costs, inefficient production can cost less than efficient, capital intensive, production. Often, labor intensive production requires higher skills then capital intensive production....

the capital itself can off shored to a region with absolute advantage in wages, due to a lower standard of living. Then total production costs can be lowered even further.[/QUOTE]
the US is automating current production capacity, eliminating jobs

the US has been selling capital to Mexico, where wages are lower, due to NAFTA (Gore-Perot debate on Larry King Live in 1992)

so, there has been "out sourcing" or "off shoring" of jobs, in addition to domestic downsizing ?

often, to compete with capital, labor must be skilled, which would generally command higher wages ? So, to compete with capital, labor must be skilled, and work for low pay ?

what seems obvious, is higher wages are hired less -- Minimum Wages & Union Wages are "premiums" imposed upon private businesses, requiring that they pay more; which makes them hire less. If you want more jobs, then lower wages. (If lower-but-fairer wages (with more workers, working more hours) are Socially undesirable; then, separately, enact Public assistance programs for low-wage earners.)

i guess it would be problematic, if, even to earn low pay, young & poor workers still had to have high skills, and high-cost expensive training. Then, the only recourse for them, would be Public assistance, in the form of Publicly-funded worker training, i.e. Public education

 

[Widdekind]

the idea is to replace skilled labor with Kapitol and unskilled labor. Not only is output and quality increased, but the skill requirement is reduces, and with it the cost of the labor... a considerable amount of manufacturing in the US has grown on replacing skilled labor by unskilled labor taken up from the surrounding farm laborers.

i understand "replace labor with Capital" via automation. But when i think of construction, with operators driving sophisticated tractors, cranes, & dump trucks, that seems to require considerable training (skill). One driver does the work, today, of teams of bucket-brigades carrying dirt in baskets, in ancient times. Lots of unskilled labor (carrying baskets of dirt) has been replaced with one driver (and a super-automated super-basket).

i thought "Rabbi" was saying, that capital intensive production in the US has increased wages (from which i infer skill-level)

According to Wikipedia, Public education increases human capital (skill); computers require educated (skilled) labor. The former increases the supply, and the latter the demand, for skilled labor.

Generally, labor can have a range of skill-levels; capital can have a range of technology-levels (although technology-level is implied, by the current fair-market-value, of capital, so that the single statistic of "dollars of capital per worker" is an accurate indicator of current productivity enhancement; this does not work across time, e.g. a super-computer is defined as a computer currently costing nominally $1M, but "super-computers" today do allot more than $1M machines in the past). Over-simplistically, a Production Possibilities Frontier plot would be 3D, with axes corresponding to "unskilled labor", "skilled labor", and "capital (per worker)". you are confusing me -- i would have thought, that automation eliminates the simplest, lowest-skill jobs first (if they're easy for humans to do, then they're easy for machines to reproduce). no? And, i would have thought, that automation leaves behind only a few higher-skill "driver", "operator", or "technician" jobs ?

 

[itfitzme]

the idea is to replace skilled labor with Kapitol and unskilled labor. Not only is output and quality increased, but the skill requirement is reduces, and with it the cost of the labor... a considerable amount of manufacturing in the US has grown on replacing skilled labor by unskilled labor taken up from the surrounding farm laborers.

i understand "replace labor with Capital" via automation. But when i think of construction, with operators driving sophisticated tractors, cranes, & dump trucks, that seems to require considerable training (skill). One driver does the work, today, of teams of bucket-brigades carrying dirt in baskets, in ancient times. Lots of unskilled labor (carrying baskets of dirt) has been replaced with one driver (and a super-automated super-basket).

i thought "Rabbi" was saying, that capital intensive production in the US has increased wages (from which i infer skill-level)

According to Wikipedia, Public education increases human capital (skill); computers require educated (skilled) labor. The former increases the supply, and the latter the demand, for skilled labor.

Generally, labor can have a range of skill-levels; capital can have a range of technology-levels (although technology-level is implied, by the current fair-market-value, of capital, so that the single statistic of "dollars of capital per worker" is an accurate indicator of current productivity enhancement; this does not work across time, e.g. a super-computer is defined as a computer currently costing nominally $1M, but "super-computers" today do allot more than $1M machines in the past). Over-simplistically, a Production Possibilities Frontier plot would be 3D, with axes corresponding to "unskilled labor", "skilled labor", and "capital (per worker)". you are confusing me -- i would have thought, that automation eliminates the simplest, lowest-skill jobs first (if they're easy for humans to do, then they're easy for machines to reproduce). no? And, i would have thought, that automation leaves behind only a few higher-skill "driver", "operator", or "technician" jobs ?

It gets a bit complex when considering the changes over decades, even a century.

And, it doesn't negate what Rabbi was saying about increased wages on capital intensive production. Increased wages just means able to buy more stuff. And if we are outputting more stuff, there is more stuff to buy so wages increase, in real terms.

Nor are you wrong in terms of it leaving behind only a few higher skilled jobs, when you look at only a single product or company.

And I'm not ignoring the wiki quote of "computers require educated (skilled) labor". Do phones require educated labor? Keyboarding, formally called typing, is surely a skill. Sure, driving a car is a skill. Perhaps there has been an elevation of skill from the bottom up. More people can type and drive a car. Though, by skill, I was thinking more along the lines of skills that take years of training, not a summer typing course. I was thinking in terms of baker, cobbler, candlestick maker, brewer, wine maker, seamstress, machinist, etc.

Bare with me as I gave this some thought, so it's kind of long and detailed.

Basically, capital amplifies labor. It amplifies physical labor, it amplifies intelligence.

In the simplest terms, capital equipment is designed to increase output for the same or lesser skill level.

And you are right, in the very short term, a single production process in a single company, we start by automating the simplest tasks and work upward. But we are way beyond that. We have been beyond that for quite a while now. The sewing machine eliminated the skilled seamstress, making a perfect stitch a dozen times a second.

The whole process of transferring technology from the laboratory to manufacturing is a progression of transferring from higher to lower skill levels. The scientist transfers it to engineering. Engineering transfers it to manufacturing engineering. Manufacturing engineering transfers it to technicians (skilled labor). Eventually, manufacturing engineering manages to bypass the technicians and transfer it to unskilled labor. With each step, the process is automated, simplified, and scaled up. Fundamentally, this is how it goes.

And this doesn't just automate one or two steps here or there. The entire process is designed. The master "winers" are replaced by continuous process systems where the guys at UC Berkeley were tapped to figure out the exact nature of making wine so that Gallo can make it in thousand gallon stainless steal drums.

For the same amount of wine, we have more guys with less skill making far more than the same number of more skilled guys use to.

Over time, labor intensive, skilled processes are replaced by capital equipment requiring less skilled labor, as long as the savings in reduced wages exceeds the capital costs.

Now, it may be that considerable efficiency gains can be made by deploying capital that requires some higher skill level. Basically, the transfer process stops at the technician (skilled labor) stage where the process and capitol equipment just hits a wall and can't be further simplified.

Then there are existing processes, already passed down from the laboratory and engineering, that are then able to be further automated on advanced technology. Engineering, or manufacturing engineering, designs better automation that produce much greater efficiency. This is passed down to technicians (skilled labor) and may stop there, replacing the previous process that may very well have been done by unskilled labor with less sophisticated capitol equipment for less output.

These last two, the replacement of somewhat efficient capitol and unskilled labor with much more efficient machinery and skilled labor is just an intermediary point that is waiting for the improvement of the machinery so that it requires less sophisticated workers. Eventually, even this, especially with the development of computer technology, is able to eliminate the skills level necessary.

Of course, all this automation is simultaneously releasing labor and technology to produce new products. At the same time, education is progressing. And in the progression, new products are becoming more sophisticated, maybe requiring, initially, a higher skill level in the initial production stage. Eventually, even these will bend to the will of manufacturing engineers and technology in designing processes and equipment that replaces the skilled technician with less skilled labor. Where possible, skilled labor is eliminated all together.

Large companies, like Apple, don't begin with a process that initially requires high skill, they design low skill into the process from the outset. Plenty of start ups, in Silicon Valley, did begin with small quantities manufactured by skilled labor. The engineers begin in their garage. Then they move out to a small shop and employ some really smart techs. Then, as volume increased, the product was refined, automated, and less skilled labor used. There was a lot of initial high skill in the early days of hard drive manufacturing, but that was worked out.

I know what it looks like to some, in looking at a factory of robots being serviced by a few technicians. I've seen the images of the automotive factory floor and the narrator saying how the operators are more skilled than the factories workers of days gone by. They see higher skill level being employed.

As I look at numerous products and manufacturing, I see the manufacturing engineer now replaced by the technician in a process that has simply replaced the skilled labor and unskilled labor with the machinery.

The skilled labor was replaced by machinery and unskilled labor. The technician is still required. Unskilled labor is replaced with lesser unskilled labor and even more sophisticated machinery. The technician is still required. And, unskilled labor with machinery was replaced by machinery and no labor. The technician is still required. A hundred skilled workers becomes one skilled worker, now a manufacturing engineer or technician, capital equipment and 99 unskilled workers. That gets replaced by the same technician, even more sophisticated capital equipment, and no unskilled labor.

Sure, we look at agriculture with sophisticated machinery and a skilled operator replacing manual labor. Or we look at the backhoe operator replacing a team of ditch diggers. How about loading cargo ships with cargo containers. That seems like one requiring more skill then dozens of guys carrying boxes or fewer with forklifts. And in these instances, it is a bit higher skilled labor and equipment replacing a team of unskilled labor.

(I am not convinced that the skill level to run a fork lift is as great as prospective employers would like to suppose. Either that, or I am over estimating the intelligence of the average "unskilled" worker. It does get a bit difficult to draw the line as to where skill begins.)

Now we have a problem. We need to go through every single product and service and then balance the process of skilled labor with equipment against unskilled labor with equipment. And we have a generation problem, with one generation of skills replaced by a new generation of skills as output per capita goes from minimal to major to incredible.

Maybe I'm not counting them all correctly, in the aggregate.

But, here is a thing. So the farm had a highly skilled farmer with a team of laborers. Now it's the highly skilled farmer, who's skill also includes running a huge combine, and no laborers. Is that more skilled labor?

Well, there is a bit of the trick of it. Where manufacturing was outputting 100 units with 100 skilled worker, it then was outputting 1000 units with 9 unskilled laborers and a skilled worker with a different skill. Then, over time, it changed to 10,000 units with two skilled workers and no unskilled labor. Sure, in the close view, of just that factory, it looks like a more skilled workforce.

But, is it? Population grew. Consumption grew. Is the population now consuming more units per person? That many more units per capita? Is it proportionally more skilled labor? Or is it fewer skilled laborers per capita consumption with the previously employed unskilled labor eliminated?

What was one skilled worker per unit became 1000 units then expanded to 5000 units. That is a continuous tend of less skilled workers per unit, for sure. I tend to believe that is also a trend of less skilled workers per unit per capita as well, at least for a single product.

Where did all that unskilled labor go? Did it all get educated or did it just all go work somewhere else?

Well, it went to JiffyLube. Is the guy changing oil at JiffyLube skilled labor? It use to be a skilled auto mechanic that did that as part of the entire tune up and service.

What I see, in the bigger picture, is a larger number of skilled and unskilled labor released from farming to manufacturing, and now employed in services. First farming got automated so the farmer didn't need the labor. Then manufacturing got automated so the manufacturing engineer didn't need all that labor. Now, the farms got all bought up by corporations so what was once the farmer with his combine is now a team of combine operators working for the corporation.

Now, consider that backhoe operator. What was a foreman with a team of unskilled labor is now the foreman with a different skill, running a backhoe.

Initially, it took some modest level of skill to cook hamburgers. Now, unskilled labor can cook french fries and hamburgers in a process that has bent to the will of manufacturing engineering, designing automated equipment to manage the majority of the process. Timers "ding", light blink, the process has been refined. A cashier that knew all the prices and could make change is replaced by a lesser skilled cashier and a cash register with buttons for "Big Mac", "Lg Fries", etc. A script is memorized by the person at the drive through. She is no longer a skilled salesperson (or a not so skilled one) but has a pat response, "Would you like fries with that?", posted on reminder sheet. How long do you suppose it will be before that the person at the drive through is replaced by a voice recognition machine that replies, "Would you like fries with that?" When it proves out well enough in the I-pod, how long till McDonald's deploys it to take orders?

Services, which initially took little skill, now could expand and provide for more people. Now there is a Starbucks on every corner. And even then, today's barrister surely isn't the same level of skill of the fewer barrister of four decades ago. Sure, the name is the same, but that's just advertizing.

What I see, is the short run process, of replacing skilled labor with capitol and unskilled labor, playing out in the long run as well. In the medium term, instances of skilled labor with capitol is just a sticky point. And often, what looks like and increase in skilled labor is not what it seems.

Maybe my sample is limited. Maybe there is an upward skill creep that I'm not seeing. I can see it if I restrict my vision to just one or a few industries. Maybe I can see it if I restrict my vision to just parts of manufacturing, but as soon as I do, it just flickers away again as more comes into view.

Let me give you an idea of what I see. Take medicine. At one time, it was a doctor and a nurse, if it was a private practice, or a doctor and a team of nurses if it was a hospital. And nursing is not and was not an simple education. Now, it is far more output with a doctor a few nurses, a phebotomist, an x-ray technician, and a host of other medical technologists. What once was the job of the doctor and nurses is now a shorter education with less total skill. Same doctor, fewer nurses, better equipment, more technicians, less skilled labor.

I cannot measure "more skill" in terms of the proliferation of certifications and specialty schools. That is just standardization. Automotive mechanics today are not more skilled. One might suggest they are less skilled. The on board computer in the car diagnosis itself. All the mechanic does is plug his computer into the car and it tells him which sensor has failed.

Really, certified pharmacy technician? To do what? Stock the incoming product, run prescriptions through the insurance, ring up the cash register, and ask the person if they need a consultation? That isn't more skill than in the 70's, that is just competition for jobs and standardization on corporate run pharmacies.

Why does B of A require a bachelor's degree now for a position as a teller? Is the job far more difficult, requiring more skill now? Or is it simply because we have more bachelor's degrees and they can require it, if for no other reason than to just weed out the applications?

I've gone over every product and process that I know and it is far more true than not. Spell checkers, phlebotomist, x-ray technicians, tax accounting, automotive mechanic, robotic manufacturing, electrical harnesses manufacturing, electronic product manufacturing of all sorts, phone operators, parallel parking a car, train operators, and on goes the list... A Boeing 747 can fly itself. The airline pilot is fully trained because we won't tolerate a computer failure or bird strike as an excuse. But, we actually don't need the airline pilot. The space shuttle lands itself, running on three on board computers that go with majority vote if they have to.

All in all, we take the skilled job. We break it down into part and employ unskilled labor to do the tasks, with some modestly skilled person assembling it all at the end. Then, we automate each of those tasks. Then we string it all together into one large machine, eliminating all the unskilled labor. What we had was the most skilled guy managing skilled labor. Then he was managing unskilled labor. Then he was managing a bunch of equipment. So, your right, we are leaving behind skilled labor, for that one process.

So, as I know the process, in the simplest terms, the overall trend is to employ processes and capital equipment that requires less skilled labor for more output.

Seldom is it designed to increase output while requiring a higher skill level. And when it does, it is either an interim step, awaiting the next design, or it is just the appearance of such as we forgot to count skilled guy that was managing the unskilled team and then forgot to follow the unskilled team as they went on to do some other unskilled service.

Maybe I'm wrong. Maybe there has been a general increase in skill level across the total population that offsets major decrease in skill levels to produce each product.

Maybe the total skill at the Hostess bakery is higher now then it was for all the combined smaller bakeries that Hostess replaced. I don't see it. I don't see Hostess employing as many skilled bakers as there were when it was a baker on every corner.

Rather, what I see is a lot of skilled bakers replaced by an automated process requiring far less skill. I see the process improved to require even less skill and even fewer workers per loaf. Then all that high school, even college graduated, otherwise unskilled labor is producing a host of other unskilled service products. I mean, really, it takes a high school education to make coffee at Starbucks?

 

[Wry Catcher]

the idea is to replace skilled labor with Kapitol and unskilled labor. Not only is output and quality increased, but the skill requirement is reduces, and with it the cost of the labor... a considerable amount of manufacturing in the US has grown on replacing skilled labor by unskilled labor taken up from the surrounding farm laborers.

i understand "replace labor with Capital" via automation. But when i think of construction, with operators driving sophisticated tractors, cranes, & dump trucks, that seems to require considerable training (skill). One driver does the work, today, of teams of bucket-brigades carrying dirt in baskets, in ancient times. Lots of unskilled labor (carrying baskets of dirt) has been replaced with one driver (and a super-automated super-basket).

i thought "Rabbi" was saying, that capital intensive production in the US has increased wages (from which i infer skill-level)

According to Wikipedia, Public education increases human capital (skill); computers require educated (skilled) labor. The former increases the supply, and the latter the demand, for skilled labor.

Generally, labor can have a range of skill-levels; capital can have a range of technology-levels (although technology-level is implied, by the current fair-market-value, of capital, so that the single statistic of "dollars of capital per worker" is an accurate indicator of current productivity enhancement; this does not work across time, e.g. a super-computer is defined as a computer currently costing nominally $1M, but "super-computers" today do allot more than $1M machines in the past). Over-simplistically, a Production Possibilities Frontier plot would be 3D, with axes corresponding to "unskilled labor", "skilled labor", and "capital (per worker)". you are confusing me -- i would have thought, that automation eliminates the simplest, lowest-skill jobs first (if they're easy for humans to do, then they're easy for machines to reproduce). no? And, i would have thought, that automation leaves behind only a few higher-skill "driver", "operator", or "technician" jobs ?

It gets a bit complex when considering the changes over decades, even a century.

And, it doesn't negate what Rabbi was saying about increased wages on capital intensive production. Increased wages just means able to buy more stuff. And if we are outputting more stuff, there is more stuff to buy so wages increase, in real terms.

Nor are you wrong in terms of it leaving behind only a few higher skilled jobs, when you look at only a single product or company.

And I'm not ignoring the wiki quote of "computers require educated (skilled) labor". Do phones require educated labor? Keyboarding, formally called typing, is surely a skill. Sure, driving a car is a skill. Perhaps there has been an elevation of skill from the bottom up. More people can type and drive a car. Though, by skill, I was thinking more along the lines of skills that take years of training, not a summer typing course. I was thinking in terms of baker, cobbler, candlestick maker, brewer, wine maker, seamstress, machinist, etc.

Bare with me as I gave this some thought, so it's kind of long and detailed.

Basically, capital amplifies labor. It amplifies physical labor, it amplifies intelligence.

In the simplest terms, capital equipment is designed to increase output for the same or lesser skill level.

And you are right, in the very short term, a single production process in a single company, we start by automating the simplest tasks and work upward. But we are way beyond that. We have been beyond that for quite a while now. The sewing machine eliminated the skilled seamstress, making a perfect stitch a dozen times a second.

The whole process of transferring technology from the laboratory to manufacturing is a progression of transferring from higher to lower skill levels. The scientist transfers it to engineering. Engineering transfers it to manufacturing engineering. Manufacturing engineering transfers it to technicians (skilled labor). Eventually, manufacturing engineering manages to bypass the technicians and transfer it to unskilled labor. With each step, the process is automated, simplified, and scaled up. Fundamentally, this is how it goes.

And this doesn't just automate one or two steps here or there. The entire process is designed. The master "winers" are replaced by continuous process systems where the guys at UC Berkeley were tapped to figure out the exact nature of making wine so that Gallo can make it in thousand gallon stainless steal drums.

For the same amount of wine, we have more guys with less skill making far more than the same number of more skilled guys use to.

Over time, labor intensive, skilled processes are replaced by capital equipment requiring less skilled labor, as long as the savings in reduced wages exceeds the capital costs.

Now, it may be that considerable efficiency gains can be made by deploying capital that requires some higher skill level. Basically, the transfer process stops at the technician (skilled labor) stage where the process and capitol equipment just hits a wall and can't be further simplified.

Then there are existing processes, already passed down from the laboratory and engineering, that are then able to be further automated on advanced technology. Engineering, or manufacturing engineering, designs better automation that produce much greater efficiency. This is passed down to technicians (skilled labor) and may stop there, replacing the previous process that may very well have been done by unskilled labor with less sophisticated capitol equipment for less output.

These last two, the replacement of somewhat efficient capitol and unskilled labor with much more efficient machinery and skilled labor is just an intermediary point that is waiting for the improvement of the machinery so that it requires less sophisticated workers. Eventually, even this, especially with the development of computer technology, is able to eliminate the skills level necessary.

Of course, all this automation is simultaneously releasing labor and technology to produce new products. At the same time, education is progressing. And in the progression, new products are becoming more sophisticated, maybe requiring, initially, a higher skill level in the initial production stage. Eventually, even these will bend to the will of manufacturing engineers and technology in designing processes and equipment that replaces the skilled technician with less skilled labor. Where possible, skilled labor is eliminated all together.

Large companies, like Apple, don't begin with a process that initially requires high skill, they design low skill into the process from the outset. Plenty of start ups, in Silicon Valley, did begin with small quantities manufactured by skilled labor. The engineers begin in their garage. Then they move out to a small shop and employ some really smart techs. Then, as volume increased, the product was refined, automated, and less skilled labor used. There was a lot of initial high skill in the early days of hard drive manufacturing, but that was worked out.

I know what it looks like to some, in looking at a factory of robots being serviced by a few technicians. I've seen the images of the automotive factory floor and the narrator saying how the operators are more skilled than the factories workers of days gone by. They see higher skill level being employed.

As I look at numerous products and manufacturing, I see the manufacturing engineer now replaced by the technician in a process that has simply replaced the skilled labor and unskilled labor with the machinery.

The skilled labor was replaced by machinery and unskilled labor. The technician is still required. Unskilled labor is replaced with lesser unskilled labor and even more sophisticated machinery. The technician is still required. And, unskilled labor with machinery was replaced by machinery and no labor. The technician is still required. A hundred skilled workers becomes one skilled worker, now a manufacturing engineer or technician, capital equipment and 99 unskilled workers. That gets replaced by the same technician, even more sophisticated capital equipment, and no unskilled labor.

Sure, we look at agriculture with sophisticated machinery and a skilled operator replacing manual labor. Or we look at the backhoe operator replacing a team of ditch diggers. How about loading cargo ships with cargo containers. That seems like one requiring more skill then dozens of guys carrying boxes or fewer with forklifts. And in these instances, it is a bit higher skilled labor and equipment replacing a team of unskilled labor.

(I am not convinced that the skill level to run a fork lift is as great as prospective employers would like to suppose. Either that, or I am over estimating the intelligence of the average "unskilled" worker. It does get a bit difficult to draw the line as to where skill begins.)

Now we have a problem. We need to go through every single product and service and then balance the process of skilled labor with equipment against unskilled labor with equipment. And we have a generation problem, with one generation of skills replaced by a new generation of skills as output per capita goes from minimal to major to incredible.

Maybe I'm not counting them all correctly, in the aggregate.

But, here is a thing. So the farm had a highly skilled farmer with a team of laborers. Now it's the highly skilled farmer, who's skill also includes running a huge combine, and no laborers. Is that more skilled labor?

Well, there is a bit of the trick of it. Where manufacturing was outputting 100 units with 100 skilled worker, it then was outputting 1000 units with 9 unskilled laborers and a skilled worker with a different skill. Then, over time, it changed to 10,000 units with two skilled workers and no unskilled labor. Sure, in the close view, of just that factory, it looks like a more skilled workforce.

But, is it? Population grew. Consumption grew. Is the population now consuming more units per person? That many more units per capita? Is it proportionally more skilled labor? Or is it fewer skilled laborers per capita consumption with the previously employed unskilled labor eliminated?

What was one skilled worker per unit became 1000 units then expanded to 5000 units. That is a continuous tend of less skilled workers per unit, for sure. I tend to believe that is also a trend of less skilled workers per unit per capita as well, at least for a single product.

Where did all that unskilled labor go? Did it all get educated or did it just all go work somewhere else?

Well, it went to JiffyLube. Is the guy changing oil at JiffyLube skilled labor? It use to be a skilled auto mechanic that did that as part of the entire tune up and service.

What I see, in the bigger picture, is a larger number of skilled and unskilled labor released from farming to manufacturing, and now employed in services. First farming got automated so the farmer didn't need the labor. Then manufacturing got automated so the manufacturing engineer didn't need all that labor. Now, the farms got all bought up by corporations so what was once the farmer with his combine is now a team of combine operators working for the corporation.

Now, consider that backhoe operator. What was a foreman with a team of unskilled labor is now the foreman with a different skill, running a backhoe.

Initially, it took some modest level of skill to cook hamburgers. Now, unskilled labor can cook french fries and hamburgers in a process that has bent to the will of manufacturing engineering, designing automated equipment to manage the majority of the process. Timers "ding", light blink, the process has been refined. A cashier that knew all the prices and could make change is replaced by a lesser skilled cashier and a cash register with buttons for "Big Mac", "Lg Fries", etc. A script is memorized by the person at the drive through. She is no longer a skilled salesperson (or a not so skilled one) but has a pat response, "Would you like fries with that?", posted on reminder sheet. How long do you suppose it will be before that the person at the drive through is replaced by a voice recognition machine that replies, "Would you like fries with that?" When it proves out well enough in the I-pod, how long till McDonald's deploys it to take orders?

Services, which initially took little skill, now could expand and provide for more people. Now there is a Starbucks on every corner. And even then, today's barrister surely isn't the same level of skill of the fewer barrister of four decades ago. Sure, the name is the same, but that's just advertizing.

What I see, is the short run process, of replacing skilled labor with capitol and unskilled labor, playing out in the long run as well. In the medium term, instances of skilled labor with capitol is just a sticky point. And often, what looks like and increase in skilled labor is not what it seems.

Maybe my sample is limited. Maybe there is an upward skill creep that I'm not seeing. I can see it if I restrict my vision to just one or a few industries. Maybe I can see it if I restrict my vision to just parts of manufacturing, but as soon as I do, it just flickers away again as more comes into view.

Let me give you an idea of what I see. Take medicine. At one time, it was a doctor and a nurse, if it was a private practice, or a doctor and a team of nurses if it was a hospital. And nursing is not and was not an simple education. Now, it is far more output with a doctor a few nurses, a phebotomist, an x-ray technician, and a host of other medical technologists. What once was the job of the doctor and nurses is now a shorter education with less total skill. Same doctor, fewer nurses, better equipment, more technicians, less skilled labor.

I cannot measure "more skill" in terms of the proliferation of certifications and specialty schools. That is just standardization. Automotive mechanics today are not more skilled. One might suggest they are less skilled. The on board computer in the car diagnosis itself. All the mechanic does is plug his computer into the car and it tells him which sensor has failed.

Really, certified pharmacy technician? To do what? Stock the incoming product, run prescriptions through the insurance, ring up the cash register, and ask the person if they need a consultation? That isn't more skill than in the 70's, that is just competition for jobs and standardization on corporate run pharmacies.

Why does B of A require a bachelor's degree now for a position as a teller? Is the job far more difficult, requiring more skill now? Or is it simply because we have more bachelor's degrees and they can require it, if for no other reason than to just weed out the applications?

I've gone over every product and process that I know and it is far more true than not. Spell checkers, phlebotomist, x-ray technicians, tax accounting, automotive mechanic, robotic manufacturing, electrical harnesses manufacturing, electronic product manufacturing of all sorts, phone operators, parallel parking a car, train operators, and on goes the list... A Boeing 747 can fly itself. The airline pilot is fully trained because we won't tolerate a computer failure or bird strike as an excuse. But, we actually don't need the airline pilot. The space shuttle lands itself, running on three on board computers that go with majority vote if they have to.

All in all, we take the skilled job. We break it down into part and employ unskilled labor to do the tasks, with some modestly skilled person assembling it all at the end. Then, we automate each of those tasks. Then we string it all together into one large machine, eliminating all the unskilled labor. What we had was the most skilled guy managing skilled labor. Then he was managing unskilled labor. Then he was managing a bunch of equipment. So, your right, we are leaving behind skilled labor, for that one process.

So, as I know the process, in the simplest terms, the overall trend is to employ processes and capital equipment that requires less skilled labor for more output.

Seldom is it designed to increase output while requiring a higher skill level. And when it does, it is either an interim step, awaiting the next design, or it is just the appearance of such as we forgot to count skilled guy that was managing the unskilled team and then forgot to follow the unskilled team as they went on to do some other unskilled service.

Maybe I'm wrong. Maybe there has been a general increase in skill level across the total population that offsets major decrease in skill levels to produce each product.

Maybe the total skill at the Hostess bakery is higher now then it was for all the combined smaller bakeries that Hostess replaced. I don't see it. I don't see Hostess employing as many skilled bakers as there were when it was a baker on every corner.

Rather, what I see is a lot of skilled bakers replaced by an automated process requiring far less skill. I see the process improved to require even less skill and even fewer workers per loaf. Then all that high school, even college graduated, otherwise unskilled labor is producing a host of other unskilled service products. I mean, really, it takes a high school education to make coffee at Starbucks?

Let me see if I understand this. As more and more 'jobs' become automated, the process becomes cheaper and there is more output. When there is more output, and less workers, the value of the goods or services drops for fewer consumers can afford to make purchases.

As the formerly employed workers spent less, Starbucks sells less coffee and lays off more workers, who themselves can no longer afford the product they once sold.

Henry Ford had a different idea, pay those who made his cars a wage allowing them to buy the product they made. Seems to make more sense and why I believe we must elect officials able to save Capitalism from the Capitalists.

 

[Supposn]

Political Chic, for another viewpoint refer to the topic
“Consequences of repealing minimum wage rates”.

Respectfully, Supposn

 

[ccravens]

Henry Ford had a different idea, pay those who made his cars a wage allowing them to buy the product they made. Seems to make more sense and why I believe we must elect officials able to save Capitalism from the Capitalists.

Henry Ford? Ask yourself what the consequesces were of Ford keeping wages artifically high during the start of the depression, while prices were dropping through the floor.

Any ideas?

 

[Wry Catcher]

Henry Ford had a different idea, pay those who made his cars a wage allowing them to buy the product they made. Seems to make more sense and why I believe we must elect officials able to save Capitalism from the Capitalists.

Henry Ford? Ask yourself what the consequesces were of Ford keeping wages artifically high during the start of the depression, while prices were dropping through the floor.

Any ideas?

No, explain it to me.

 

[Wry Catcher]

Henry Ford had a different idea, pay those who made his cars a wage allowing them to buy the product they made. Seems to make more sense and why I believe we must elect officials able to save Capitalism from the Capitalists.

Henry Ford? Ask yourself what the consequesces were of Ford keeping wages artifically high during the start of the depression, while prices were dropping through the floor.

Any ideas?

Well, I read a short bio on Henry Ford (Link: Henry Ford - Wikipedia, the free encyclopedia) and I have no clue what you meant by the Consequences of Ford keeping wages artificially high, if you meant negative consequences.

 

[Supposn]

...
...
a. Consider filet mignon and chuck steak. For argument’s sake, and in reality, consumers prefer the former.

b. Now ask, then why does chuck steak sell at all? And, in fact, why is it that chuck steak outsells filet mignon?? It is less preferred…yet competes favorably with something more preferred??

c. The answer is in what economists call ‘compensating differences.’ In effect the chuck says to you: “I’m not as tender nor tasty, but not as expensive,either! I sell for $4/pound, and filet mignon sells for $9/pound.”

d. Chuck steak, in effect, offers to ‘pay’ you $5/pound for its ‘inferiority,’ a compensating difference.

e. What if filet mignon sellers wanted to raise their sales against the less-preferred competitor, but couldn’t get a law passed forbidding the sale of chuck, what should they aim to do?

f. Push for a law establishing a minimum steak-price, say, $9/pound for all steak.

g. Now…chuck steak says: I don’t look as nice, I’m not tender or tasty as filet mignon, and I sell for the same price….Buy me!

h. Prior to legislation, the cost of discriminating against chuck steak was $5/pound…Now?



5. Thus, any mandated minimum lowers the cost (encourages) indulging in racial preference, or increases the cost of training unskilled labor.

6. Now, if there are mandated minimums, employers will seek the more highly qualified candidate. Due to a number of socioeconomic reasons, white youths have higher levels of educational attainment and training.

7. It should be pointed out that minimum wage increases gives employers an economic incentive to make other changes: substitute machines for labor; change production techniques; relocate overseas; and eliminate certain jobs altogether.
See "Race & Economics," Walter E. Williams

Political chic, refer to:
Gresham's law - Wikipedia, the free encyclopedia
"Bad money drives out good (money from circulation")
>>>>>>>>>>>>>>>>
Bad money drives good money out of the market” is a generally accepted axiom.
Similarly if the price of chuck steak is artificially increased to match the price of filet mignon, filet mignon will be effectively driven out of the market place.

Your comparison of increasing the federal minimum wage rate to artificially increasing the price of lesser meat cuts is a bad analogy.


The minimum wage to some extent affects ALL of our nation’s wage rates although it doesn’t proportionally affect them all equally. The affect of the FMW’s rate upon any task’s rate is inversely related to the difference between the task’s rate and the FMW’s rate; (i.e. the less your task pays, the greater benefit you derive from the FMW rate).

When the purchasing power of the minimum rate is increased, ALL wage rates are increased but they are not proportionately increased equally. Superior labor will not be driven from the market and it will not induce superior labor to compete for lower income jobs.

Refer to
http://www.usmessageboard.com/economy/232006-consequences-of-repealing-minimum-wage-

Respectfully, Supposn

 

[PoliticalChic]

...
...
a. Consider filet mignon and chuck steak. For argument’s sake, and in reality, consumers prefer the former.

b. Now ask, then why does chuck steak sell at all? And, in fact, why is it that chuck steak outsells filet mignon?? It is less preferred…yet competes favorably with something more preferred??

c. The answer is in what economists call ‘compensating differences.’ In effect the chuck says to you: “I’m not as tender nor tasty, but not as expensive,either! I sell for $4/pound, and filet mignon sells for $9/pound.”

d. Chuck steak, in effect, offers to ‘pay’ you $5/pound for its ‘inferiority,’ a compensating difference.

e. What if filet mignon sellers wanted to raise their sales against the less-preferred competitor, but couldn’t get a law passed forbidding the sale of chuck, what should they aim to do?

f. Push for a law establishing a minimum steak-price, say, $9/pound for all steak.

g. Now…chuck steak says: I don’t look as nice, I’m not tender or tasty as filet mignon, and I sell for the same price….Buy me!

h. Prior to legislation, the cost of discriminating against chuck steak was $5/pound…Now?



5. Thus, any mandated minimum lowers the cost (encourages) indulging in racial preference, or increases the cost of training unskilled labor.

6. Now, if there are mandated minimums, employers will seek the more highly qualified candidate. Due to a number of socioeconomic reasons, white youths have higher levels of educational attainment and training.

7. It should be pointed out that minimum wage increases gives employers an economic incentive to make other changes: substitute machines for labor; change production techniques; relocate overseas; and eliminate certain jobs altogether.
See "Race & Economics," Walter E. Williams

Political chic, refer to:
Gresham's law - Wikipedia, the free encyclopedia
"Bad money drives out good (money from circulation")
>>>>>>>>>>>>>>>>
Bad money drives good money out of the market” is a generally accepted axiom.
Similarly if the price of chuck steak is artificially increased to match the price of filet mignon, filet mignon will be effectively driven out of the market place.

Your comparison of increasing the federal minimum wage rate to artificially increasing the price of lesser meat cuts is a bad analogy.


The minimum wage to some extent affects ALL of our nation’s wage rates although it doesn’t proportionally affect them all equally. The affect of the FMW’s rate upon any task’s rate is inversely related to the difference between the task’s rate and the FMW’s rate; (i.e. the less your task pays, the greater benefit you derive from the FMW rate).

When the purchasing power of the minimum rate is increased, ALL wage rates are increased but they are not proportionately increased equally. Superior labor will not be driven from the market and it will not induce superior labor to compete for lower income jobs.

Refer to
http://www.usmessageboard.com/economy/232006-consequences-of-repealing-minimum-wage-

Respectfully, Supposn

Wrong.

 

[The Rabbi]

Henry Ford had a different idea, pay those who made his cars a wage allowing them to buy the product they made. Seems to make more sense and why I believe we must elect officials able to save Capitalism from the Capitalists.

Yeah, Ford was such a good hearted man.

Actually the real story is that Ford could not find people willing to work in his factories, which was considered demeaning work. They would rather work in the local machine shops instead. So he raised wages to where people were willing to do it and he put the machine shops out of business. Then he dropped wages.

 

[Wiseacre]

Henry Ford had a different idea, pay those who made his cars a wage allowing them to buy the product they made. Seems to make more sense and why I believe we must elect officials able to save Capitalism from the Capitalists.

Yeah, Ford was such a good hearted man.

Actually the real story is that Ford could not find people willing to work in his factories, which was considered demeaning work. They would rather work in the local machine shops instead. So he raised wages to where people were willing to do it and he put the machine shops out of business. Then he dropped wages.

The story I've heard is that Ford needed reliable workers to show up every day, high turnover in personnel meant higher training costs and slower production, and Ford wanted to mass produce cars so he could price his cars lower than the competition. So he paid his people much higher wages than standard to keep 'em from leaving. Plus he expected much higher standards of behavior than most workers of the day would've balked at.

The idea that Ford paid his people those high wages so they could buy his cars is nonsense, if you look at how many employees he had vs how many cars he was selling. Obviously he sold a heckuva lot more cars than he had employees, and it's doubtful that all that many of 'em could afford to buy a car, maintain it, and use it.

 

[EdwardBaiamonte]

Henry Ford had a different idea, pay those who made his cars a wage allowing them to buy the product they made. Seems to make more sense and why I believe we must elect officials able to save Capitalism from the Capitalists.

Yeah, Ford was such a good hearted man.

Actually the real story is that Ford could not find people willing to work in his factories, which was considered demeaning work. They would rather work in the local machine shops instead. So he raised wages to where people were willing to do it and he put the machine shops out of business. Then he dropped wages.

The story I've heard is that Ford needed reliable workers to show up every day, high turnover in personnel meant higher training costs and slower production, and Ford wanted to mass produce cars so he could price his cars lower than the competition. So he paid his people much higher wages than standard to keep 'em from leaving. Plus he expected much higher standards of behavior than most workers of the day would've balked at.

The idea that Ford paid his people those high wages so they could buy his cars is nonsense, if you look at how many employees he had vs how many cars he was selling. Obviously he sold a heckuva lot more cars than he had employees, and it's doubtful that all that many of 'em could afford to buy a car, maintain it, and use it.

Most importantly Ford was a true super hero. He gifted the automobile to most Americans. He put huge huge wealth in the hands of the average American. It was nothing less than a capitalist miracle.

 

[Supposn]

Political chic, refer to:
Gresham's law - Wikipedia, the free encyclopedia
"Bad money drives out good (money from circulation")
>>>>>>>>>>>>>>>>
Bad money drives good money out of the market” is a generally accepted axiom.
Similarly if the price of chuck steak is artificially increased to match the price of filet mignon, filet mignon will be effectively driven out of the market place.

Your comparison of increasing the federal minimum wage rate to artificially increasing the price of lesser meat cuts is a bad analogy.


The minimum wage to some extent affects ALL of our nation’s wage rates although it doesn’t proportionally affect them all equally. The affect of the FMW’s rate upon any task’s rate is inversely related to the difference between the task’s rate and the FMW’s rate; (i.e. the less your task pays, the greater benefit you derive from the FMW rate).

When the purchasing power of the minimum rate is increased, ALL wage rates are increased but they are not proportionately increased equally. Superior labor will not be driven from the market and it will not induce superior labor to compete for lower income jobs.

Refer to
http://www.usmessageboard.com/economy/232006-consequences-of-repealing-minimum-wage-

Respectfully, Supposn

Wrong.

Political Chic, wrong how?

Respectfully, Supposn

 

[Supposn]

...,
... Henry Ford had a different idea, pay those who made his cars a wage allowing them to buy the product they made. Seems to make more sense and why I believe we must elect officials able to save Capitalism from the Capitalists.

Rabbi and Wiseacre, you’re both correct. Henry Ford’s labor problem and his solution were motivated by self interest rather than altruism. Certainly self interest and profit are not indecent or unusual goals.

Wry Catcher correctly described the consequences of the example that Ford set. Regardless of Ford’s motivation, greater purchasing power of the median wage is the defining characteristic of a robust middle income population segment.

I’m among those that believed the exorbitant concentration of wealth of the extremely fortunate few and the extremely slim segment of middle income earners of the 1920s’ heralded the poorer economic conditions that followed. I shudder when I consider that the NY Stock market is at historic high while the purchasing power of the median wage hardly increases and too often it has actually decreased.

The difference between the “roaring twenties” economy and that of today is the “New Deal” policies that were enacted during the great 1930’s depression. The excesses and the deliberate financial frauds of the “Roaring Twenties” that was rampant then is very similar to the saving and loan fiasco and the credit crunch that we’ve have witnessed. A major difference between then and now is the “New Deal” policies that were enacted during the great 1930’s depression. Due to those laws our economy is much better than otherwise.

It’s been 68 years since FDR was buried and the Republican Party is still trying to reverse history. There are always those confusing their own best interests and that of our nation’s economy. Consider if Wall Street political donors had succeeded to induce the privatization of Social Security system. Within normal cycles of commerce there are recessions. What if your retirement occurred simultaneously with a depression of stock market prices?

Wry Catcher, what do you mean by saving "Capitalism from the Capitalists"?

Respectfully, Supposn

 

[Supposn]

I wasn’t a witness to that the 1930’s depression but I’m old enough to have read of it, listened to the first hand stories and to have witnessed the depression’s affects upon those that survived it.

What I heard, seen and read all led me to be a populist. I perceive conservatives are proponents of policies they hope will replicate the Coolidge’s “Roaring Twenties" (without consideration for what followed). We should profit from the lessons of history.

Respectfully, Supposn

 

[editec]

1. In 1938 the Fair Labor Standards Act (FLSA) established a federal minimum wage law for all employees engaged in interstate commerce.($7.25 as of 2009) When Social Security and medial benefits are included, the wage must be considered to be over $10/ hour. This governmental intervention in the labor market makes it impossible to argue that there is a free market in this respect.

You don't get social security or medical benefits just because you're making minimum wage.

How can you not know this?

Read a book!