July 14, 2014

When unions took over the public sector

Filed under: Bureaucracy, Business, Economics, Government, USA — Tags: , , , , — Nicholas Russon @ 09:09

Dmitri Melhorn says the union movement is missing an opportunity to be more relevant in the private sector, because public sector unions don’t help poorer workers (because public sector union members are middle class professionals, not working class):

Progressive hostility to [Harris v. Quinn], however, is shortsighted. Harris and decisions like it have the potential to revitalize progressive politics by restoring the relevance and political potency that labor held in the early-to-mid-20th century. The great labor leaders of that era — AFL-CIO President George Meany, President Franklin D. Roosevelt, and the like — agreed with the majority in Harris: it was both impractical and inadvisable to afford public employees compulsory collective bargaining rights.

Roosevelt said that collective bargaining and public workers’ right to strike would be “unthinkable and intolerable.” Meany said it would be “impossible.” In the view of these leaders, civil service laws from the Progressive Era of the 1890s to 1920s had made government jobs good and safe. Labor and progressives, therefore, needed to focus on blue-collar workers’ need to fight collectively for basic safety, dignity and living wages. Through this focus, the United States saw historic gains in the well-being of workers and the country’s middle class.

That labor heyday lasted through the 1950s, but starting in the late 1960s labor lost ground. Public-sector unions grew rapidly, but private-sector unions shrank. By 2012, public-sector workers had union membership rates more than five times higher than rates among private-sector workers.

Essentially, the public-sector unions sucked up all the oxygen. Talented labor organizers opted to work with government workers: their members were relatively prosperous and well connected, so they were easy and lucrative to organize. As explained in Jake Rosenfeld’s book What Unions No Longer Do from earlier this year, this shift to public-sector unions meant that unions no longer fought primarily for the working poor. Instead, much of their muscle was devoted to improving the status of middle-class professionals.

July 12, 2014

QotD: Work

Filed under: Humour, Quotations — Tags: , , — Nicholas Russon @ 00:02

I rather pride myself on my packing. Packing is one of those many things that I feel I know more about than any other person living. (It surprises me myself, sometimes, how many of these subjects there are.) I impressed the fact upon George and Harris, and told them that they had better leave the whole matter entirely to me. They fell into the suggestion with a readiness that had something uncanny about it. George put on a pipe and spread himself over the easy-chair, and Harris cocked his legs on the table and lit a cigar.

This was hardly what I intended. What I had meant, of course, was, that I should boss the job, and that Harris and George should potter about under my directions, I pushing them aside every now and then with, “Oh, you—!” “Here, let me do it.” “There you are, simple enough!” — really teaching them, as you might say. Their taking it in the way they did irritated me. There is nothing does irritate me more than seeing other people sitting about doing nothing when I’m working.

I lived with a man once who used to make me mad that way. He would loll on the sofa and watch me doing things by the hour together, following me round the room with his eyes, wherever I went. He said it did him real good to look on at me, messing about. He said it made him feel that life was not an idle dream to be gaped and yawned through, but a noble task, full of duty and stern work. He said he often wondered now how he could have gone on before he met me, never having anybody to look at while they worked.

Now, I’m not like that. I can’t sit still and see another man slaving and working. I want to get up and superintend, and walk round with my hands in my pockets, and tell him what to do. It is my energetic nature. I can’t help it.

Jerome K. Jerome, Three Men in a Boat (to say nothing of the dog), 1889.

July 9, 2014

QotD: British nepotism, old style

Filed under: Britain, History, Humour, Quotations — Tags: , , — Nicholas Russon @ 00:01

A problem constantly before the modern administration, whether in government or business, is that of personnel selection. The inexorable working of Parkinson’s Law ensures that appointments have constantly to be made and the question is always how to choose the right candidate from all who present themselves. In ascertaining the principles upon which the choice should be made, we may properly consider, under separate heads, the methods used in the past and the methods used at the present day.

Past methods, not entirely disused, fall into two main categories, the British and the Chinese. Both deserve careful consideration, if only for the reason that they were obviously more successful than any method now considered fashionable. The British method (old pattern) depended upon an interview in which the candidate had to establish his identity. He would be confronted by elderly gentlemen seated round a mahogany table who would presently ask him his name. Let us suppose that the candidate replied, “John Seymour.” One of the gentlemen would then say, “Any relation of the Duke of Somerset?” To this the candidate would say, quite possibly, “No, sir.” Then another gentleman would say, “Perhaps you are related, in that case, to the Bishop of Watminster?” If he said “No, sir” again, a third would ask in despair, “To whom then are you related?” In the event of the candidate’s saying, “Well, my father is a fishmonger in Cheapside,” the interview was virtually over. The members of the Board would exchange significant glances, one would press a bell and another tell the footman, “Throw this person out.” One name could be crossed off the list without further discussion. Supposing the next candidate was Henry Molyneux and a nephew of the Earl of Sefton, his chances remained fair up to the moment when George Howard arrived and proved to be a grandson of the Duke of Norfolk. The Board encountered no serious difficulty until they had to compare the claims of the third son of a baronet with the second but illegitimate son of a viscount. Even then they could refer to a Book of Precedence. So their choice was made and often with the best results.

The Admiralty version of this British method (old pattern) was different only in its more restricted scope. The Board of Admirals were unimpressed by titled relatives as such. What they sought to establish was a service connection. The ideal candidate would reply to the second question, “Yes, Admiral Parker is my uncle. My father is Captain Foley, my grandfather Commodore Foley. My mother’s father was Admiral Hardy. Commander Hardy is my uncle. My eldest brother is a Lieutenant in the Royal Marines, my next brother is a cadet at Dartmouth and my younger brother wears a sailor suit.” “Ah!” the senior Admiral would say. “And what made you think of joining the Navy?” The answer to this question, however, would scarcely matter, the clerk present having already noted the candidate as acceptable. Given a choice between two candidates, both equally acceptable by birth, a member of the Board would ask suddenly, “What was the number of the taxi you came in?” The candidate who said “I came by bus” was then thrown out. The candidate who said, truthfully, “I don’t know,” was rejected, and the candidate who said “Number 2351″ (lying) was promptly admitted to the service as a boy with initiative. This method often produced excellent results.

C. Northcote Parkinson, “The Short List, Or Principles Of Selection”, Parkinson’s Law (and other studies in administration), 1957.

June 14, 2014

QotD: The sins of the modern university system

Filed under: Bureaucracy, Quotations, USA — Tags: , , — Nicholas Russon @ 09:22

Few if any other professions — not law, medicine, finance, engineering, etc. — offer guaranteed lifetime employment after a six-year apprenticeship. Tenure was predicated on a simple premise: The protection of faculty free speech and instruction was worth the possible downside of complacency and an absence of serious ongoing faculty audit. Whatever may once have been the case, in our time tenure does not ensure free expression, but instead a banal orthodoxy, in which 90 percent of the faculty in the humanities share the same progressive outlook. Tenure also created a caste system far more rigid than anything found in private enterprise, while a huge permanent faculty class ensured inflexibility in scheduling and budgeting. The associate or full professor enjoyed a lifelong right of selection of his classes without too much worry over whether they were either needed or taught well. Worse, the nontenured faculty member, in the fashion of the Middle Ages, was admitted to the guild only if his tenured peers believed that he was agreeable in politics and attitude. He was usually judged by teaching and publication criteria that did not necessarily apply to his board of overseers, many of whom had achieved tenure 20 years earlier under entirely different criteria.


The abuse of lecturers, part-timers, and graduate students is institutionalized. In a word, the university is the most exploitative institution operating at present in the United States, protected by the notion that it is progressive and that its protocols cannot possibly be understood by the ordinary public. Temporary and adjunct faculty members often have degrees as good as those of their tenured betters. Often their teaching records and publications are comparable, if not superior. They may teach the same classes as permanent faculty do, and yet often receive about half the compensation. Were Wal-Mart or a coal mine to operate under such protocols, it would earn Labor Department sanctions. At some public universities, nearly half of the curriculum is taught by part-time faculty — in effect a subsidy that allows the tenured caste to teach smaller and less-in-demand classes, where less time is needed for preparation and grading. Worse still, universities knowingly turn out too many PhDs in the humanities, which ensures a glut of job applicants, which, again, ensures a continued supply of cheap temps to sustain tenured privilege.

Victor Davis Hanson, “The Outlaw Campus”, VDH’s Private Papers, 2014-01-07

June 13, 2014

QotD: Mathematical formula describing bureaucratic growth

Filed under: Bureaucracy, Humour, Quotations — Tags: , — Nicholas Russon @ 00:01

Dealing with the problem of pure staff accumulation, all our researches so far completed point to an average increase of 5.75 per cent per year. This fact established, it now becomes possible to state Parkinson’s Law in mathematical form: In any public administrative department not actually at war, the staff increase may be expected to follow this formula —

x=(2km + l) / n

k is the number of staff seeking promotion through the appointment of subordinates; l represents the difference between the ages of appointment and retirement; m is the number of man-hours devoted to answering minutes within the department; and n is the number of effective units being administered. x will be the number of new staff required each year. Mathematicians will realize, of course, that to find the percentage increase they must multiply x by 100 and divide by the total of the previous year, thus:

100 (2km + l) / y n %

where y represents the total original staff. This figure will invariably prove to be between 5.17 per cent and 6.56 per cent, irrespective of any variation in the amount of work (if any) to be done.

The discovery of this formula and of the general principles upon which it is based has, of course, no political value. No attempt has been made to inquire whether departments ought to grow in size. Those who hold that this growth is essential to gain full employment are fully entitled to their opinion. Those who doubt the stability of an economy based upon reading each other’s minutes are equally entitled to theirs. It would probably be premature to attempt at this stage any inquiry into the quantitative ratio that should exist between the administrators and the administered. Granted, however, that a maximum ratio exists, it should soon be possible to ascertain by formula how many years will elapse before that ratio, in any given community, will be reached. The forecasting of such a result will again have no political value. Nor can it be sufficiently emphasized that Parkinson’s Law is a purely scientific discovery, inapplicable except in theory to the politics of the day. It is not the business of the botanist to eradicate the weeds. Enough for him if he can tell us just how fast they grow.

C. Northcote Parkinson, “Parkinson’s Law, or the rising pyramid”, Parkinson’s Law (and other studies in administration), 1957.

June 4, 2014

A real-life experiment – does a higher minimum wage cause job losses?

Filed under: Business, Economics, USA — Tags: , , , — Nicholas Russon @ 00:01

Seattle just changed their minimum wage to $15 per hour (that’s the city, but not the surrounding suburbs). Tim Worstall outlines what we may see in this handy real world economic experiment:

The first and most obvious effect of a $15 an hour minimum is that there are going to be job losses. Don’t forget that the message from the academic literature is that “modest” increases in the minimum don’t seem to have “much” effect on employment levels. And we’d all agree that a $100 minimum would have rather large effects. So our puzzle here is to try to decide what is the definition of “modest”. Clearly $100 an hour isn’t. But also we can dismiss something like $1 an hour as being problematic. Since no one at all gets paid a sum that small making the minimum $1, or $1.50, has no effect on anything whatsoever.

The best result we have from the academic literature is that a minimum wage in the 40-45% region of the median wage has little to no effect on unemployment. The reason being similar to that of a $1 one. So few people get paid so little that it just doesn’t affect the wages of anyone very much. The same research tells us that once we get to 45-50% of the median wage then we do start to see significant unemployment effects.

This $15 an hour in Seattle will be around 60% of the local median wage. We would therefore expect to see reasonably large unemployment effects.

We would also expect to see unemployment among high school graduates rise very much more than the rate in general. For this minimum applies only inside the City of Seattle: it doesn’t apply to the surrounding counties or suburbs that aren’t part of that political jurisdiction. Imagine that you were a college graduate having to do some basic work to make ends meet while you were waiting for that career opening. If you’re going to get $7.25 outside Seattle and $15 inside it you’d probably be willing to make the trip each day to earn that extra. Of course, as a high school graduate you would too. But now think of yourself as the employer. You’ve got the choice of a college graduate or a high school graduate, both willing to do the same job at the same price. Who are you going to hire? Logically, the higher grade worker, that college grad.

So we would expect minimum wage jobs within Seattle to be colonised by those college grads at the expense of those high school ones. We would therefore expect to see a much larger rise in the unemployment rate of those high school grads as against the general unemployment rate. In fact, we’d expect to see this happening so strongly that we’d take the empirical evidence of that widening unemployment gap to be evidence that it was this minimum wage rise causing it.

June 3, 2014

QotD: Parkinson’s Law

Filed under: Bureaucracy, Business, Humour, Quotations — Tags: , — Nicholas Russon @ 19:32

Work expands so as to fill the time available for its completion. General recognition of this fact is shown in the proverbial phrase “It is the busiest man who has time to spare.” Thus, an elderly lady of leisure can spend the entire day in writing and dispatching a postcard to her niece at Bognor Regis. An hour will be spent in finding the postcard, another in hunting for spectacles, half an hour in a search for the address, an hour and a quarter in composition, and twenty minutes in deciding whether or not to take an umbrella when going to the mailbox in the next street. The total effort that would occupy a busy man for three minutes all told may in this fashion leave another person prostrate after a day of doubt, anxiety, and toil.

C. Northcote Parkinson, “Parkinson’s Law, or the rising pyramid”, Parkinson’s Law (and other studies in administration), 1957.

May 28, 2014

The “servant problem” of post-Victorian England

Filed under: Britain, History, Media — Tags: , , , , , — Nicholas Russon @ 07:36

Before the widespread availability of electricity, no middle class household in England could get by without at least one servant. Even as modern labour-saving appliances (along with proper plumbing) started to take their place in the home, servants were still deemed an essential part of being middle- or upper-class. It may account for some of the fascination with TV shows like Downton Abbey or the earlier Upstairs, Downstairs to modern audiences — they give at least a bit of a glimpse into a very different domestic world. At Bookforum, Daphne Merkin reviews a books that look at the “servant problem”:

Servants is chockablock with incredulous-making details about the exploitative conditions in which household help lived and worked (these included cramped, chilly, and spartan sleeping quarters, endless hours, and the overriding assumption of inferiority), as well as anecdotes of supreme helplessness on the part of the coddled rich, such as the following: “Lord Curzon, whose intellect was regarded as one of the glories of the Empire, was so baffled by the challenge of opening a window in the bedroom of the country house in which he was staying (no servants being available so late at night), that he simply picked up a log from the grate and smashed the glass.” Even after World War II, when homes had begun to be wired for electricity despite the gentry’s insistence on the vulgarity of such improvements and the ideal of the 1950s self-contained (and servantless) housewife was hoving into view, so otherwise gifted a chap as Winston Churchill was unable, according to his valet John Gibson, to dress himself without assistance: “He was social gentry … He sat there like a dummy and you dressed him.” As easy as it is to snicker at such colossal ineptitude on the part of the cultural elite, it is also intriguing to consider how this kind of infantilizing treatment might have facilitated their performance in demanding grown-up roles — like someone playing with rubber ducks in the bath before going out to lead men in a military campaign.

Servants takes the reader from the days of Welbeck Abbey, the home of the eccentric and reclusive Duke of Portland, where upper servants had their own underservants to wait on them, to the gradual erosion of the older forms of domestic service and on up through the new world of do-it-yourself home comforts as devised by technology and a greater show of equality between employer and servant. This world, ushered in with the 1950s, shunned the “badge of servitude” that was conveyed by uniforms, surreal daily routines (whether it meant Ladyships who couldn’t sleep with creases on a pillowcase or Ladyships who insisted on cutting their boiled eggs with a letter opener), and a feudal attitude that took no more cognizance of domestics than it did of the furniture. “It was in the best houses considered quite unnecessary (in fact poor form),” Lethbridge notes, “for servants to knock before entering a room. This was partly because they lived in such everyday familiarity with the family that there was nothing to hide from them and partly because … their presence made no difference whatsoever to whatever was being said or going on.”


There’s much to think about in both these books — not least the particularly British style of treating domestics, both less casually sadistic and less casually amorous than, say, white Americans’ attitude toward black slaves. Indeed, I suspect that one of the reasons American audiences delight in the travails and triumphs of the gaggle of domestics on Downton Abbey is out of a sense of superiority that the “servant problem” in such acute, institutionalized form isn’t ours. Much as we may envy them all that pampering, we also like to look down our noses at it as going against the democratic and independent Yankee ethos. To this point it’s worth noting that Betty Friedan in The Feminine Mystique referred precisely to “the servant problem” as one of the besetting woes of the upper-middle-class housewives she was looking to liberate, and that our habit of befriending those who clean our kitchens and bathrooms and look after our children can’t disguise the fact that we value their hourly labor less than we value a twenty-minute haircut and that we live largely in ignorance of their thoughts and feelings.

May 22, 2014

Here’s a suddenly topical idea that (if implemented) will increase the gender wage gap

Filed under: Business, Economics, Government — Tags: , , — Nicholas Russon @ 08:11

I don’t know why the topic of menstrual sick leave is suddenly a topic of discussion at many media sites, but it’s a bad idea for womens’ equality as Tim Worstall explains:

Standard theory tells us that if we raise the cost to employers of employing a certain class or group of people then the wages paid to that class or group will fall relative to those groups that have not had the extra costs loaded onto their employment. For the employer is paying to get a job done. If we mandate free lunches, or impose employment taxes (like the employer side of social security), or a certain amount of sick leave, then the cost of providing those will be coming from that gross amount that the employer is willing to pay to get that job done. The more we insist that some of those costs be spent on not wages then the less there is that will be paid in wages.

And if we insist that one group or another has an extra set of costs associated with their employment then we’ll end up seeing the wages of that group fall relative to groups that don’t have those associated costs. The provision of paid menstrual leave will act in exactly this manner. Sure, whatever the allowance is not all women will take it. Say that it’s one day a month out of a standard 22 or 23 day working month. If all women religiously took it we would expect female wages to fall by 1/22 or 1/23 relative to those of men (or of post-menopausal women). Not all women would take it, undoubtedly, so the effect would probably be less than this.


As above, if we formalised this arrangement then we don’t think that all women would take all of those sick days. But we do have evidence that part of the gender pay gap is already caused by this very problem. And formalising the arrangement will lead to more women taking the sick leave than happens currently. That’s just a natural human reaction. All of which means that, if we did institute formal paid menstrual leave then we’d expect to see a widening of the gender pay gap.

As more women entered the formal work force over the last century or so, many governments and regulators have imposed additional costs on businesses by mandating different treatment for women: while they often claimed they were acting out of concern, the typical result was to make women’s work proportionally more expensive than that of men. If women are limited — by law — to a shorter working day, or to have additional breaks, or to be entitled to extra sick days, then the rational response of businesses will be to hire more men and fewer women (even for work that does not require more physical strength). The push for a new category of special treatment for women will have exactly the same effect: making women more expensive as employees than men.

May 3, 2014

QotD: The educational machinery that produces the modern twenty-something

Filed under: Bureaucracy, Business, Quotations — Tags: , , — Nicholas Russon @ 00:01

When conservatives complain that children are not being taught anything in public schools, they’re half right: They’re not being taught anything useful. They’re taught how to conform. That’s really the point of so many of the stupid rules in modern schooling, people learn to obey the irrational.

This translates into the corporate world in two ways. Those leaving the educational system are outwardly rebellious and undisciplined, even slovenly. Inwardly they’re perfect conformists. They haven’t the slightest notion of principles or integrity, it’s been beaten out of them by the public schools. They are desperate to fit in and conform in a way that is common among teenagers, but used to fade away as people entered their twenties and thirties. As a cranky old executive once observed to me, the young people aren’t so much soft as weak. Passionate about trivia and indifferent toward the fundamentals of life and work.

Richard Anderson, “In Praise of Grumpy Men”, The Gods of the Copybook Headings, 2014-05-01

April 30, 2014

Disturbing US unemployment figures

Filed under: Economics, Government, USA — Tags: , — Nicholas Russon @ 06:58

Michael Snyder says the official unemployment rate actually conceals more than it reveals:

According to shocking new numbers that were just released by the Bureau of Labor Statistics [PDF], 20 percent of American families do not have a single person that is working. So when someone tries to tell you that the unemployment rate in the United States is about 7 percent, you should just laugh. One-fifth of the families in the entire country do not have a single member with a job. That is absolutely astonishing. How can a family survive if nobody is making any money? Well, the answer to that question is actually quite easy. There is a reason why government dependence has reached epidemic levels in the United States. Without enough jobs, tens of millions of additional Americans have been forced to reach out to the government for help. At this point, if you can believe it, the number of Americans getting money or benefits from the federal government each month exceeds the number of full-time workers in the private sector by more than 60 million.


A number that I find much more useful is the employment-population ratio. According to the employment-population ratio, the percentage of working age Americans that actually have a job has been below 59 percent for more than four years in a row…

US Employment-Population Ratio 2002-2014

That means that more than 41 percent of all working age Americans do not have a job.

When people can’t take care of themselves, it becomes necessary for the government to take care of them. And what we have seen in recent years is government dependence soar to unprecedented levels. In fact, welfare spending and entitlement payments now make up 69 percent of the entire federal budget.

April 24, 2014

You can’t say the IRS isn’t caring and generous

Filed under: Bureaucracy, Government, USA — Tags: , — Nicholas Russon @ 08:27

Tim Cavanaugh explains that your jaundiced view of the Internal Revenue Service is clearly contradicted by the IRS’s approach to helping people with tax troubles:

Sometimes it seems like you only hear the bad news about the Internal Revenue Service: the targeting of the president’s enemies; the padding of union bosses’ hours.

But sometimes the federal tax collector is there to lend a hand.

During 26 of the darkest months of the post-recession, 1,100 persons in the United States had “substantiated Federal tax compliance problems.”

Yet during that same time period, from October 2010 through December 2012, the IRS showed mercy, even charity. It gave those 1,100 people more than $1 million in cash awards, as well as other considerations of value.

The other considerations included 69 workplace promotions and 10,000 hours worth of what California public employees call “air time.”

That is to say: All of those 1,100 were IRS employees.

March 30, 2014

In which Tim Worstall admits that Karl Marx was right

Filed under: Business, Economics, Law — Tags: , , , , — Nicholas Russon @ 10:37

Well, right in this particular analysis, anyway:

Which is where we can bring Karl Marx into the discussion. Wrong as he was on many points he was at times a perceptive analyst. And he noted that what determined the wages of the workers wasn’t some calculation of a “fair wage”, nor some true value of their production (although he had much to say on both points), but in a market economy the wages that were paid were a reflection of what other people were willing to pay for access to that labour.

If, for example, there were a large number of unemployed (that “reserve army of the unemployed”) then a capitalist didn’t have to raise the wages of his workers however far productivity grew. If anyone tried to capture a bit more of the value being created, say through a strike or other activity, then the capitalist could simply fire them and bring in some of those unemployed. No profits needed to be shared with the workers. However, when we get to a situation of full employment then the dynamic changes. It’s not possible to simply hire and fire to keep wages low. For the other capitalists are competing for access to that labour that makes those profits. The higher profits go the higher all capitalists will be willing to bid up wages to continue making some profit at all.

The obverse of this is if the employers collude in order to artificially suppress the wages of the workers which is why that case involving Apple, Google and so on is going to trial. That’s monopoly capitalism that is and we really don’t like it at all.

But in this case with Yahoo trying to challenge Google’s YouTube, it will be the workers who benefit. For the two companies are vying with each other for access to the content being made and thus the profits that can be made. Of whatever revenue can be made a larger portion will go to the producers of the content and a smaller one to the owners of the platforms. Which is excellent, this is exactly what we want to happen.

State occupational licensing is out of control

Filed under: Bureaucracy, Business, Politics, USA — Tags: , , , — Nicholas Russon @ 08:58

Ramesh Ponnuru discusses some examples of ridiculous state occupational license requirements:

Melanie Armstrong wanted to be an African hair braider, practicing a skill passed down from generation to generation. In Tupelo, Mississippi, where she lived, government licensing rules meant she had to take 300 hours of course work to start her salon: 300 hours, she notes, “none of which covered hair braiding.”

In testimony before a U.S. House subcommittee on Wednesday, Armstrong explained that her “ultimate goal” was to teach others how to braid. Getting the needed licenses to do that would have taken 3,200 hours. None of them taught students how to braid hair, either. That’s more hours than it would have taken her to get licenses to become a firefighter, emergency medical technician, hunting instructor, ambulance driver or real estate appraiser. It’s longer than it would have taken her to get licenses for all those things combined.

The subcommittee — led by New Yorkers Richard Hanna, a Republican, and Grace Meng, a Democrat — was considering the excesses of state occupational licensing. More and more jobs fall under these regulations. In the 1950s, according to one study, only about one in 20 jobs required a license. By 2006, about 29 percent did.

While Armstrong helped get her state to scale back the requirements for hair braiders, the trend is toward more stringent regulation. Patti Morrow, who runs an organization fighting licensing for interior designers, says, “These bills come back year after year like zombies.”

March 26, 2014

Minimum-wage jobs becoming more likely to be replaced by robots

Filed under: Economics, Technology — Tags: , , — Nicholas Russon @ 07:44

Everyone seems to want to raise the minimum wage right now (well, everyone in the media certainly), but it might backfire spectacularly on the very people it’s supposed to help:

It’s become commonplace for computers to replace American workers — think about those on an assembly line and in toll booths — but two University of Oxford professors have come to a surprising conclusion: Waitresses, fast-food workers and others earning at or near the minimum wage should also be on alert.

President Obama’s proposal to increase the federal minimum wage from $7.25 to $10.10 per hour could make it worthwhile for employers to adopt emerging technologies to do the work of their low-wage workers. But can a robot really do a janitor’s job? Can software fully replace a fast-food worker? Economists have long considered these low-skilled, non-routine jobs as less vulnerable to technological replacement, but until now, quantitative estimates of a job’s vulnerability have been missing from the debate.

Based on a 2013 paper by Carl Benedikt Frey and Michael A. Osborne of Oxford [PDF], occupations in the U.S. that pay at or near the minimum wage — that’s about one of every six workers in the U.S. — are much more susceptible to “computerization,” or as defined by the authors, “job automation by means of computer-controlled equipment.” The researchers considered a time frame of 20 years, and they measured whether such jobs could be computerized, not whether these jobs will be computerized. The latter involves assumptions about economic feasibility and social acceptance that go beyond mere technology.

The minimum-wage occupations that Frey and Osborne think are most vulnerable include, not surprisingly, telemarketers, sales clerks and cashiers. But also included are occupations that employ a large share of the low-wage workforce, such as waiters and waitresses, food-preparation workers and cooks. If the computerization of these low-wage jobs becomes feasible, and if employers find it economical to invest in such labor-saving technology, there will be huge implications for the U.S. labor force.

H/T to Colby Cosh, who said “McDonald’s is going to turn into vending machines. Can’t say this enough. McDonald’s…vending machines.”

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