Maybe People Are Grasping Onto Technological Unemployment

As they say, better late than never.

COVID-19 accelerated a number of long-term trends that were in place. Unfortunately, when things were happening at a slower pace, most missed what was occurring. Now that things are picking up speed, a few are starting to notice.

Something that I wrote a fair bit about over the last couple years is the idea of technological unemployment. For a long time, many combated that with the idea that "technology always created more jobs than it destroyed". They felt this time would be no different.

Sadly, it is completely different and the pandemic only makes it worse.

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Technology was never as powerful as it is today. We are seeing things coming into being that were far beyond our imagination just a few decades ago. The pace of change is also without precedent. That means we are embarking upon something never seen before.

Unfortunately, our political establishment is responding with the same broken ideas they put forth for decades. Once again, we are seeing implementation of higher minimum wage laws. This is being done across the United States with the misguided belief that it would end up helping the income inequality.

While many think tanks down their biased studies to prove this is not the case, entrepreneurs, the ones who actually meet the payroll every two weeks, shed a different light on the subject. In the age of automation, it is obvious how this plays out.

Of course, the number of losers in this are many. The ones who benefit are the politicians who can grandstand about how they are standing up for "the little people". The reality is they are doing more harm than they are given credit for.

How do you turn $9 per hour into $0? Raise the minimum wage to $15. This will do it very quickly.

It is a well understood fact in the private sector that when wages increase, something has to give. Either prices have to go up to cover the costs or payroll has to be adjusted. This means that for some to get more, others have to get less.

The "less" are the ones who get the pink slip.

Naturally, these are usually the people who are at the lower end of the spectrum who can least afford to lose their jobs. Nevertheless, politicians with the economic sense of a brick pat themselves on the back and talk about how wonderful it is.

In those areas there minimum wage laws have taken effect, companies like Walmart and Target increased the number of self-checkout lines. This means that the cashiers who remain are getting higher pay but there are a lot less of them. We see the same thing in supermarkets.

Amazon Go is a new model that is likely to be implemented across the country. The company has said they will license out the technology when it is fully operational. What is Amazon Go? It is a store with nobody other than a few people who restock the store. Everything else is automated. The customer walks in, grans what he or she needs, the Amazon app was scanned upon entry thus all items are totaled up, and the card is billed upon leaving the store.

No lines nor checkout required. Oh, no people needed either.

This is starting to get some attention. Politico carried an article that detailed what is taking place. Of course, it focused upon what the government is doing (nothing) to help solve this problem. It mentioned how there is $0 in Biden's $.19 trillion "stimulus" package for retraining of employees.

For anyone who was paying attention, this is no surprise. To start, the government (and businesses) are awful at retaining the workforce. At best, we hit about 10%. That leaves 90% who are basically left to flail.

At the same time, politicians, in their infinite political wisdom, do not want to even touch this subject. They are smart on that end since there is truly no solution. It is a no-win situation politically. Retraining is a myth, tossing money isn't going to solve the problem, and enacting regulation to slow the progress of technology will not work. Hence, the political establishment simply operates as if it is not happening.

The private sector is not much better. They are relishing the idea of getting rid of people. After all, employment is usually the largest expense of any organization. Getting rid of employees solve a multitude of problems. All lead to higher rate of productivity while reducing the chance of lawsuits and other unnecessary expenses.

In a world that is going to radically change in under a decade, it is easy to see why nobody in leadership wants to touch the issue. The plain truth is tens of millions will lose their jobs and will not be getting them back. There are going to be millions who exit the workforce for good. This is simply unavoidable.

Many say we are in the information economy. That might be true but what we are really seeing is the automation economy. More jobs are being automated on a near daily basis. With each new robot put in place, someone is likely losing their job.

Of course, few see it in this light. Instead, the discussion is framed that they lost their job to COVID19 and restructuring by the company. The last company I worked for went from 80 employees before the pandemic to now about 50. Thirty people were basically canned through a "restructuring". Essentially, they were automated out by streamlining operations and information flow.

White collar. Blue collar. It is happening all over the place.

And it is a situation few in the mainstream are talking about.

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