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OFF-TOPIC Amazon announce min. hourly wage raise to $15

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Kak

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Yep. Now that they’ve done it, how much do you want to bet that they start lobbying for it to be mandatory to hurt the competition? They already ride out selling a lot of items below cost, they’ve pushed the razor thin margins on to the smaller proprietors, and now they want to go a step further to crush competition.

The other thread talking about Amazon being a monopoly, I’d say this is one of those counter intuitive, crony capitalist, moves that will shake out better for them despite doubling their cost of their workforce. It is looking more like a monopoly today, than when that thread started. Is a monopoly necessarily bad? No. But the government, ignorantly playing that game, is wildly bad business policy. It’s all desssed up in a pretty bow. “Higher minimum wage, workers rights, YAY!”

Honestly, in this business environment, it’s what I would do.

I’m interested in what @Vigilante thinks about this.
 
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Yep. Now that they’ve done it, how much do you want to bet that they start lobbying for it to be mandatory to hurt the competition? They already ride out selling a lot of items below cost, they’ve pushed the razor thin margins on to the smaller proprietors, and now they want to go a step further to crush competition.

The other thread talking about Amazon being a monopoly, I’d say this is one of those counter intuitive, crony capitalist, moves that will shake out better for them despite doubling their cost of their workforce. It is looking more like a monopoly today, than when that thread started. Is a monopoly necessarily bad? No. But using the government to crush competition is bad for business and the consumer. It’s all desssed up in a pretty bow. “Higher minimum wage, workers rights, YAY!”

I’m interested in what @Vigilante thinks about this.
If I’m not mistaken Amazon says in the article here and in the WSJ that they have already begun the lobbying process. All in an attempt to look like a champion of the people.

I think it’s brilliant, now, with or without congressional action, Target and Walmart look like the bad guys while Amazon is “pro-employee” the biggest question I see now is when they inevitably follow suit do all three simply pass the cost on to the consumer, at which point the cry will be that $15/hour is not enough and now they want $20.
 

Jaden Jones

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The costs will just get past on to everyone else anyways. Look at examples like Seattle, where minimum wage went up, the big guys stayed around while the little guys got pushed out and the cost of living eventually goes up to compensate. Amazons prices will as well.
 

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I think it’s brilliant, now, with or without congressional action, Target and Walmart look like the bad guys while Amazon is “pro-employee” the biggest question I see now is when they inevitably follow suit do all three simply pass the cost on to the consumer, at which point the cry will be that $15/hour is not enough and now they want $20.
This is not a new concept, by any means. Walmart has been lobbying for raising minimum wage for years for exactly this reason. I believe they pay $11/hour. So it's not as great as Amazon, but that's still a far cry from making Walmart look like the bad guy. No, this makes the mom and pop shops look like the bad guy. Why support local businesses when they don't even support their employees?
 

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Yep. Now that they’ve done it, how much do you want to bet that they start lobbying for it to be mandatory to hurt the competition? They already ride out selling a lot of items below cost, they’ve pushed the razor thin margins on to the smaller proprietors, and now they want to go a step further to crush competition.

The other thread talking about Amazon being a monopoly, I’d say this is one of those counter intuitive, crony capitalist, moves that will shake out better for them despite doubling their cost of their workforce. It is looking more like a monopoly today, than when that thread started. Is a monopoly necessarily bad? No. But the government, ignorantly playing that game, is wildly bad business policy. It’s all desssed up in a pretty bow. “Higher minimum wage, workers rights, YAY!”

Honestly, in this business environment, it’s what I would do.

I’m interested in what @Vigilante thinks about this.
And then once they've raised the minimum wage for all their competition, amazon replaces all their own minimum wage labour force with robots lol.
 

Kak

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And then once they've raised the minimum wage for all their competition, amazon replaces all their own minimum wage labour force with robots lol.
Dead on, then raise their “wages” to $25 and start the loop over.
 
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The Abundant Man

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Wouldn't this eventually cause inflation?

If you raise minimum raise then product cost would go up?
 

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If I’m not mistaken Amazon says in the article here and in the WSJ that they have already begun the lobbying process. All in an attempt to look like a champion of the people.

I think it’s brilliant, now, with or without congressional action, Target and Walmart look like the bad guys while Amazon is “pro-employee” the biggest question I see now is when they inevitably follow suit do all three simply pass the cost on to the consumer, at which point the cry will be that $15/hour is not enough and now they want $20.
Wal-Mart and Target will pass the cost onto the consumer.

Amazon won't. "Your margin is my opportunity."

Remember, only 250,000 Amazon employees will have a wage increase. Wal-Mart has like 1 million people.

Yet again, Bezos outsmarts the competition. He probably turned The Washington Post into The Bezos Blog with this, and anti-trust, in mind.
 

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Wouldn't this eventually cause inflation?

If you raise minimum raise then product cost would go up?
That’s the basic economics argument against higher minimum wage, universal incomes etc.

What’s interesting is they didn’t do some feel good .25 or .50 over their competition, they did 25-30% more. Logic says they will raise prices or charge more for FBA etc. OR as @Kak alluded to above, will they cut their margins and secondly, cut them long enough to put most everybody else out of business? At which point they can raise prices. At which point they then run the risk of then being considered a monopoly.
 

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Kak

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Wouldn't this eventually cause inflation?

If you raise minimum raise then product cost would go up?
Yes. On a macro level because of supply and demand, not directly because “they pass the price on the consumer” though some of that happens. On a micro level, this is more likely to cause companies to shed employees.

More money in people’s pockets equals more money spent monthly. When the supply “of money” is increased so is demand for what is purchased with it. Supply for those items is lessened relative to the demand, thus increasing prices everywhere, not just at Amazon or Walmart.

As a capitalist, I loathe any form of minimum wage laws. Labor should be an open and free market like everything else should be. But it isn’t... So... As a businessman, I applaud the tact, foresight and ability to navigate our actual business environment shown here.
 

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Vigilante

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Yep. Now that they’ve done it, how much do you want to bet that they start lobbying for it to be mandatory to hurt the competition? They already ride out selling a lot of items below cost, they’ve pushed the razor thin margins on to the smaller proprietors, and now they want to go a step further to crush competition.

The other thread talking about Amazon being a monopoly, I’d say this is one of those counter intuitive, crony capitalist, moves that will shake out better for them despite doubling their cost of their workforce. It is looking more like a monopoly today, than when that thread started. Is a monopoly necessarily bad? No. But the government, ignorantly playing that game, is wildly bad business policy. It’s all desssed up in a pretty bow. “Higher minimum wage, workers rights, YAY!”

Honestly, in this business environment, it’s what I would do.

I’m interested in what @Vigilante thinks about this.
The city of Seattle tried to require Amazon to do this, and Amazon threatened to leave as a result.

How Amazon Killed Seattle's Head Tax - The Atlantic

Amazon continues to invest in automation, with a focus on EBITDA improvement. One of the largest variable costs is that of the employee. More machines equals less employees. If I were a gambler, I'd put money on Amazon cracking the whip on the automation of functions previously occupied by employees.

It's the same as fast food and other unskilled labor. The higher the labor costs, the more automation develops to take your order, flip your burger, and eliminate one of the larger variable costs. ‘It just makes sense’ to replace workers with machines, Jack in the Box CEO says

The net effect of Amazon's higher wages will be higher unemployment. Congratulations workers... you just went from $12 an hour to $0 an hour.

What I haven't figured out yet is how this plays into the feud between Bezos and Trump. But maybe this is even bigger than that. It's likely less about that, but more about casting off heat about being a monopoly. Now you become a champion for the people. Instead of being an enemy and a capitalist, now you are a social justice warrior, and all it really costs you was a few million dollars... a rounding error for Amazon.

The US Department of Labor said in their statement they think it will entice more people to work for Amazon. That presumes Amazon is hiring. Elisabeth Warren, a potential 2020 presidential candidate, has publicly called for Amazon to be broken up. The EU is already holding an antitrust investigation against Amazon.

If you believe what a former president of the United States said about industry... industry is essentially by the people and for the people. Bezos didn't build Amazon, some would muse. The people did, and were supported by the roads, the infrastructure, and even the backdrop of the internet Amazon doesn't own.

Amazon just played a card aimed at stemming the rising bile from the have nots. They just went from an enemy to a socialist darling, and probably bought themselves a few more years of unfettered growth in the process.

Who does this hurt the most?

......

WALMART.

Non-unionized, underpaid walmart workers. Walmart will now be put in a corner.

Amazon has 500,000 employees.

Walmart has 2.1m, of which 1,400,000 are in the US. Walmart has high fixed retail expenses, and you just potentially delivered the most significant blow to them from a SG&A standpoint in the history of Walmart. Amazon has warehouses. Walmart has 5,000 FIXED COST stores in the United States, and you literally just delivered a significant blow to how they operate their stores. Their labor cost is their single biggest expense and their largest variable expense, and overnight you just changed that by 20%.

From a Walmart standpoint this is a nightmare. Walmart's average full time wage is $13 and part time is $10. Walmart is screwed.
 

garyfritz

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As a capitalist, I loathe any form of minimum wage laws. Labor should be an open and free market like everything else should be. But it isn’t...
I understand your point. But IMHO some large companies are abusing their power in this situation. E.g. Walmart pays starvation wages because they CAN -- because there are so many low-end workers desperate for a job, ANY job. Supply and demand. But they pay so little that their workers can't support themselves, and the workers end up on the public dole for food stamps, etc. Some people call this a "Walmart Tax" because the Walmart workers' drain on the system roughly equals Walmart's profits. Our taxes pay the welfare, enabling Walmart to pay lower wages, so it's effectively an income redistribution from everyone to Walmart. And IMHO that's wrong. Just like a company shouldn't be allowed to dump toxic wastes, forcing everyone else to clean it up, they shouldn't be allowed to dump their financial issues onto the public either.
 

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Amazon continues to invest in automation, with a focus on EBITDA improvement. One of the largest variable costs is that of the employee. More machines equals less employees.
It's the same as fast food and other unskilled labor.
Yes, and it will only accelerate. We as a society need to recognize and plan for the fact that, sooner than you might expect, automation will take over a large percentage of formerly-human jobs. The lower-end, less-challenging jobs (fast food jobs, janitors, etc) are the low-hanging fruit for automation. Unfortunately, the sad reality is that a large portion of society is really only able to hold down those less-challenging jobs. They may be perfectly lovely people but they're not rocket scientists and they can't retrain to IT jobs. Fairly soon there will not BE any jobs that those people can handle. A large percentage of the population will become UN-employable. That's a recipe for (even more) political unrest. And of course our government is utterly clueless and is not thinking about this at all.

I'm not sure where the entrepreneurial opportunities will be in that environment. I assume we will have to extend the welfare system to a "guaranteed income" solution, otherwise we'll have 10's of millions of people starving on the streets. Once those people have a living wage, then there will be demand for entertainment to keep them from going crazy and burning the place down, but that's a long way down the road.
 

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I'm not sure where the entrepreneurial opportunities will be in that environment. I assume we will have to extend the welfare system to a "guaranteed income" solution, otherwise, we'll have 10's of millions of people starving on the streets. Once those people have a living wage, then there will be a demand for entertainment to keep them from going crazy and burning the place down, but that's a long way down the road.
If there is a "guaranteed income" why would someone work then? Who would work if he would be sure that every month he doesn't have to worry about anything? It will be like having a ton of employees in your society, sitting around and behaving like Unscripted (correct me if I am wrong) in the worst way (loans, reckless lives etc.)
Work would be carried out only by the ones' who want to be helpful to the society. But until when is this system feasible (if it is at all)? Sooner or later one (and more) of those who sit their a$$*s in order to produce wealth and contribute to the wellbeing of this "society" will revolt and say; "Basta!" I am working and you are not, yet you eat, drink and have fun no matter what." And this will be an even bigger problem.

Evolution in its' self is survival of the fittest after all. In ancient times it was the mascular, Conan-type guys and as we move towards the "4th revolution" I see a "Nerds strike back" scenario.

As always, those who can adapt (socially, financially etc.) will those who will manage to survive in the end.
 

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The other thread talking about Amazon being a monopoly, I’d say this is one of those counter intuitive, crony capitalist, moves that will shake out better for them despite doubling their cost of their workforce. It is looking more like a monopoly today, than when that thread started. Is a monopoly necessarily bad? No. But the government, ignorantly playing that game, is wildly bad business policy. It’s all desssed up in a pretty bow. “Higher minimum wage, workers rights, YAY!”
Yes this would be bad. Monopolies created because of government laws are horrible for everyone except the owners of the monopoly. If Amazon was a "natural" monopoly in a free market that would be ok. This is bad.
 

Kak

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Yes this would be bad. Monopolies created because of government laws are horrible for everyone except the owners of the monopoly. If Amazon was a "natural" monopoly in a free market that would be ok. This is bad.
Re-read my post.
 

Kak

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I understand your point. But IMHO some large companies are abusing their power in this situation. E.g. Walmart pays starvation wages because they CAN -- because there are so many low-end workers desperate for a job, ANY job. Supply and demand. But they pay so little that their workers can't support themselves, and the workers end up on the public dole for food stamps, etc. Some people call this a "Walmart Tax" because the Walmart workers' drain on the system roughly equals Walmart's profits. Our taxes pay the welfare, enabling Walmart to pay lower wages, so it's effectively an income redistribution from everyone to Walmart. And IMHO that's wrong. Just like a company shouldn't be allowed to dump toxic wastes, forcing everyone else to clean it up, they shouldn't be allowed to dump their financial issues onto the public either.
The whole, subsizing Walmart argument is a bunch of left wing propaganda. Starvation wages? Really?

You are absolutely right they pay the wages they pay because they can. So? Every single person in that store applied for that job, interviewed for it, wanted it, and accepted the terms. Too bad.

There is a market for jobs that do NOT pay all the bills a household could incur. Let me repeat that... there is a MARKET to WILLINGLY ACCEPT jobs that wouldn’t pay all the household bills. Why? Because there are also high school kids “subsidized” by their parents. There are people who want to work in retirement. There are people that want to help out their higher earning spouse financially. LOTS of scenarios that support the MARKET for these jobs.

Gary, what you are saying is that these people don’t matter. Toss them in to higher competition marketplace battling over higher wage jobs, because well, they “deserve” more money. No they don’t. They deserve to be compensated for the amount they agreed upon. They deserve the right to EARN a better job.
 
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Kak

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Yes, and it will only accelerate. We as a society need to recognize and plan for the fact that, sooner than you might expect, automation will take over a large percentage of formerly-human jobs. The lower-end, less-challenging jobs (fast food jobs, janitors, etc) are the low-hanging fruit for automation. Unfortunately, the sad reality is that a large portion of society is really only able to hold down those less-challenging jobs. They may be perfectly lovely people but they're not rocket scientists and they can't retrain to IT jobs. Fairly soon there will not BE any jobs that those people can handle. A large percentage of the population will become UN-employable. That's a recipe for (even more) political unrest. And of course our government is utterly clueless and is not thinking about this at all.

I'm not sure where the entrepreneurial opportunities will be in that environment. I assume we will have to extend the welfare system to a "guaranteed income" solution, otherwise we'll have 10's of millions of people starving on the streets. Once those people have a living wage, then there will be demand for entertainment to keep them from going crazy and burning the place down, but that's a long way down the road.
Creative destruction equals the advancement of civilization. Your theory of mass unemployment due to creative destruction has been disproven for centuries. There will be opportunities, as long as the labor market remains open and people still want to consume. Isn’t that cool?
EA80F820-A256-4E5B-A05E-86545293558E.jpeg
 
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garyfritz

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If there is a "guaranteed income" why would someone work then? Who would work if he would be sure that every month he doesn't have to worry about anything?
You're assuming there is an OPTION to work. Read my post again. Automation will take most/all of the low-end jobs -- it WILL happen at some point, unless banned by the government. (It's already happening to some jobs. How many telephone operators are there, or travel agents? How many fast-food workers have been replaced by kiosks? How many assembly-line workers work at the Tesla Gigafactory? Uber has already live-tested self-driving cars with paying customers.) Then you have to recognize that a significant segment of people can only DO low-end jobs. Some of them cannot retrain for non-automatable jobs. Eventually there will be NO JOBS left for those people. NONE. They will be UNABLE to work even if they desperately want to. They will be priced out of the labor market by cheaper and more reliable automation. There will be NO WAY for them to earn a living. NO WAY to pay for food or housing.

How do you think it would play out if society says "Tough beans, you're unnecessary now, just go starve quietly and don't bother the productive members of society" ? Answer: very, very badly. Major riots and anarchy.

"Guaranteed income" (in this endgame scenario at least) is not largesse or liberal-snowflake happy-think. It's a desperation defensive move to prevent large-scale revolt. It's not a pleasant alternative but it's cheaper than the other choice.
 

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There is a market for jobs that do NOT pay all the bills a household could incur. Let me repeat that... there is a MARKET to WILLINGLY ACCEPT jobs that wouldn’t pay all the household bills. Why? Because there are also high school kids “subsidized” by their parents. There are people who want to work in retirement.
I see and agree with your point. But IMHO this is an early symptom of the syndrome I described above. Many of the jobs at Walmart fit into those low-end jobs I described. There is already more competition for those jobs than supply. A lot of breadwinners take those jobs because they haven't found any better alternative. They're already starting to get squeezed out of the job market but they can't afford to do anything else. There's a lot of civil unrest fomenting around this issue already, and it will only get worse.
 

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Automation will take most/all of the low-end jobs -- it WILL happen at some point, unless banned by the government.
No it won’t.
 

Kak

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I see and agree with your point. But IMHO this is an early symptom of the syndrome I described above. Many of the jobs at Walmart fit into those low-end jobs I described. There is already more competition for those jobs than supply. A lot of breadwinners take those jobs because they haven't found any better alternative. They're already starting to get squeezed out of the job market but they can't afford to do anything else. There's a lot of civil unrest fomenting around this issue already, and it will only get worse.
I don’t know where you are seeing this... We have LOW unemployment right now. Low underemployment.

A truly open and free labor market would leave not one willing worker unemployed. So I would continue to say that we could employ the rest of the 5 percent of whoever wants a job if we got rid of minimum wage.

But that isn’t going to happen, people who can’t think deeply enough into the issues are going to continue to tout government as the solution... worsening the problem.
 

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No it won’t.
Why? How will bus drivers and truck drivers and (name your manual labor) escape the fate that **already** hit telephone operators, travel agents, elevator operators, etc?

The changes are happening. They're not likely to stop. Technology keeps marching on and it will change society as it always has.
 

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Why? How will bus drivers and truck drivers and (name your manual labor) escape the fate that **already** hit telephone operators, travel agents, elevator operators, etc?

The changes are happening. They're not likely to stop. Technology keeps marching on and it will change society as it always has.
The US unemployment rate is 3.9 percent currently.

Are you saying they are all telephone operators and travel agents? They fit in somewhere else. Pure and simple.
 

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They fit in somewhere else. Pure and simple.
Yes, for now they do. There are still other low-tech jobs available for them.

But I'm not talking about now. In 5 years, there will be fewer jobs like that. In 10 years, fewer still. In 20 years...

If you don't believe my premise, fine. But I think you should take a hard look at how low-skill jobs have ALREADY been disappearing, and how the trend has accelerated, before you dismiss it.
 

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Yes, for now they do. There are still other low-tech jobs available for them.

But I'm not talking about now. In 5 years, there will be fewer jobs like that. In 10 years, fewer still. In 20 years...

If you don't believe my premise, fine. But I think you should take a hard look at how low-skill jobs have ALREADY been disappearing, and how the trend has accelerated, before you dismiss it.
Yes the trend you have discussed, will continue. Certain jobs will go away and they will find other jobs. Gary, you’re just going to have to trust me on that one. It’s been disproven, you’re wrong. It has already happened over and over and over.

Everyone will find their place as long as the labor market stays some form of open.

Creative destruction only improves the average standard of living.

From investopedia:
“What is 'Creative Destruction'?
Creative destruction, a term coined by Joseph Schumpeter in "Capitalism, Socialism and Democracy" in 1942, describes the "process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one." This occurs when innovation deconstructs long-standing arrangements and frees resources to be deployed elsewhere.”

Key... “Deployed elsewhere”
98A28DB9-958B-44C4-A4BF-0D51C0657439.jpeg
 
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Technology has always been the fastest growing industry within the lifetime of the human species. When our cave-dwelling ancestors first discovered ways of prolonging their likelihood to survive and get food, etc. it was due to some form of technology. Due to wars and natural disasters and economic crashes, etc. technological advances rise and fall, but ever since the very beginning it keeps growing. Technology is both the past and the future, always has been, always will be.
 

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Technology has always been the fastest growing industry within the lifetime of the human species. When our cave-dwelling ancestors first discovered ways of prolonging their likelihood to survive and get food, etc. it was due to some form of technology. Due to wars and natural disasters and economic crashes, etc. technological advances rise and fall, but ever since the very beginning it keeps growing. Technology is both the past and the future, always has been, always will be.
Reminds me of this. The ape-man discovers a tool and a weapon so he becomes the alpha male. Throws it up in the air and it turns into a spaceship from the future.

View: https://www.youtube.com/watch?v=ypEaGQb6dJk
 

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Yes the trend you have discussed, will continue. Certain jobs will go away and they will find other jobs. Gary, you’re just going to have to trust me on that one. It’s been disproven, you’re wrong. It has already happened over and over and over.
You're still missing my point.

Yes, I totally agree it has worked this way IN THE PAST, and it will continue to work that way in the near future. But I assert the rise of AI changes the equation in a fundamental way. "This time it's different."

In the past, new technologies meant the streetlamp lighters and ice delivery men and elevator operators lost their jobs, so they went to other jobs. New technologies replaced the low-skill workers in those SPECIFIC jobs, but other low-skill jobs were still available for them to move into.

In the future, low-skill jobs will go away not just because new technology replaces a FEW jobs, but because AI-based automation can potentially replace the low-skill workers in nearly **ALL** low-skill jobs. And they very likely will, because the automation will be cheaper and more effective. Market forces will ensure automation replaces humans wherever it's economically advantageous or demonstrably superior. (E.g. self-driven cars aren't perfect but they're **already** comparable to human drivers and they're improving rapidly. Who will hire a human driver when the truck itself is 10x safer and doesn't need rest breaks?)

If **ALL** low-skill jobs disappear, then where do those low-skill workers go? They can't be retrained to be computer programmers. Some people are only cut out to drive a truck.

In my opinion, the only points of uncertainty in this scenario are how fast it happens, and how MANY low-skill jobs go away. Initially it won't be that many, and things will continue to work the way you say. But over time, more and more low-skill jobs will fall to automation. There will be fewer and fewer low-skill jobs available. Automation will probably (?) never replace 100% of all low-skill jobs, but it won't take 100% to cause massive societal upheaval. We will have a permanent underclass that is UN-employable in almost any *available* job.

And then we have to consider the HIGH-skill jobs. The low-skill jobs tend to be the easiest ones to automate, but white-collar jobs aren't safe either. IBM's Watson can already do a passable job of medical diagnosis and many legal procedures. It's not ready to replace all the doctors and lawyers yet, but...
 
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GoGetter24

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It's come out: they're doing it to absorb workers from other companies. Nice tactical evil. They've gotten rid of the stock and bonus system, which applied to workers already there, to pay for raises for entry-level workers, to stock up ready for holiday season and draw workers away from other companies. And on top of it they got to pretend it was for the common good and out of the goodness of Bezos' heart.

I loathe any form of minimum wage laws. Labor should be an open and free market like everything else should be.
It should, but there should be some forms of social safeguards against what big companies do.

We've seen with companies like Uber how they use power & knowledge asymmetry to straight up consume people. And sure, the government getting involved hurts things. But someone should be involved.

Traditionally this was the role of unions. It seems that in countries like America the corporations have successfully managed to suppress union power, and Amazon workers urinating in bottles, and Uber drivers making less than minimum wage, has been the result. There's nothing anti free market about a union: it can be a creature of contract.

Unions should be much more widespread and there should be much more innovation in the union space beyond just the odd threat of a strike here and there.
 

Brad S

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Yep. Now that they’ve done it, how much do you want to bet that they start lobbying for it to be mandatory to hurt the competition? They already ride out selling a lot of items below cost, they’ve pushed the razor thin margins on to the smaller proprietors, and now they want to go a step further to crush competition.

The other thread talking about Amazon being a monopoly, I’d say this is one of those counter intuitive, crony capitalist, moves that will shake out better for them despite doubling their cost of their workforce. It is looking more like a monopoly today, than when that thread started. Is a monopoly necessarily bad? No. But the government, ignorantly playing that game, is wildly bad business policy. It’s all desssed up in a pretty bow. “Higher minimum wage, workers rights, YAY!”

Honestly, in this business environment, it’s what I would do.

I’m interested in what @Vigilante thinks about this.
The city of Seattle tried to require Amazon to do this, and Amazon threatened to leave as a result.

How Amazon Killed Seattle's Head Tax - The Atlantic

Amazon continues to invest in automation, with a focus on EBITDA improvement. One of the largest variable costs is that of the employee. More machines equals less employees. If I were a gambler, I'd put money on Amazon cracking the whip on the automation of functions previously occupied by employees.

It's the same as fast food and other unskilled labor. The higher the labor costs, the more automation develops to take your order, flip your burger, and eliminate one of the larger variable costs. ‘It just makes sense’ to replace workers with machines, Jack in the Box CEO says

The net effect of Amazon's higher wages will be higher unemployment. Congratulations workers... you just went from $12 an hour to $0 an hour.

What I haven't figured out yet is how this plays into the feud between Bezos and Trump. But maybe this is even bigger than that. It's likely less about that, but more about casting off heat about being a monopoly. Now you become a champion for the people. Instead of being an enemy and a capitalist, now you are a social justice warrior, and all it really costs you was a few million dollars... a rounding error for Amazon.

The US Department of Labor said in their statement they think it will entice more people to work for Amazon. That presumes Amazon is hiring. Elisabeth Warren, a potential 2020 presidential candidate, has publicly called for Amazon to be broken up. The EU is already holding an antitrust investigation against Amazon.

If you believe what a former president of the United States said about industry... industry is essentially by the people and for the people. Bezos didn't build Amazon, some would muse. The people did, and were supported by the roads, the infrastructure, and even the backdrop of the internet Amazon doesn't own.

Amazon just played a card aimed at stemming the rising bile from the have nots. They just went from an enemy to a socialist darling, and probably bought themselves a few more years of unfettered growth in the process.

Who does this hurt the most?

......

WALMART.

Non-unionized, underpaid walmart workers. Walmart will now be put in a corner.

Amazon has 500,000 employees.

Walmart has 2.1m, of which 1,400,000 are in the US. Walmart has high fixed retail expenses, and you just potentially delivered the most significant blow to them from a SG&A standpoint in the history of Walmart. Amazon has warehouses. Walmart has 5,000 FIXED COST stores in the United States, and you literally just delivered a significant blow to how they operate their stores. Their labor cost is their single biggest expense and their largest variable expense, and overnight you just changed that by 20%.

From a Walmart standpoint this is a nightmare. Walmart's average full time wage is $13 and part time is $10. Walmart is screwed.
An economist explains how Amazon could use its lobbying for a $15 minimum wage as a 'weapon' against other retailers

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Kak

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It's come out: they're doing it to absorb workers from other companies. Nice tactical evil. They've gotten rid of the stock and bonus system, which applied to workers already there, to pay for raises for entry-level workers, to stock up ready for holiday season and draw workers away from other companies. And on top of it they got to pretend it was for the common good and out of the goodness of Bezos' heart.


It should, but there should be some forms of social safeguards against what big companies do.

We've seen with companies like Uber how they use power & knowledge asymmetry to straight up consume people. And sure, the government getting involved hurts things. But someone should be involved.

Traditionally this was the role of unions. It seems that in countries like America the corporations have successfully managed to suppress union power, and Amazon workers urinating in bottles, and Uber drivers making less than minimum wage, has been the result. There's nothing anti free market about a union: it can be a creature of contract.

Unions should be much more widespread and there should be much more innovation in the union space beyond just the odd threat of a strike here and there.
I fully intend to address this nonsense tomorrow.
 

Kak

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You're still missing my point.

Yes, I totally agree it has worked this way IN THE PAST, and it will continue to work that way in the near future. But I assert the rise of AI changes the equation in a fundamental way. "This time it's different."

In the past, new technologies meant the streetlamp lighters and ice delivery men and elevator operators lost their jobs, so they went to other jobs. New technologies replaced the low-skill workers in those SPECIFIC jobs, but other low-skill jobs were still available for them to move into.

In the future, low-skill jobs will go away not just because new technology replaces a FEW jobs, but because AI-based automation can potentially replace the low-skill workers in nearly **ALL** low-skill jobs. And they very likely will, because the automation will be cheaper and more effective. Market forces will ensure automation replaces humans wherever it's economically advantageous or demonstrably superior. (E.g. self-driven cars aren't perfect but they're **already** comparable to human drivers and they're improving rapidly. Who will hire a human driver when the truck itself is 10x safer and doesn't need rest breaks?)

If **ALL** low-skill jobs disappear, then where do those low-skill workers go? They can't be retrained to be computer programmers. Some people are only cut out to drive a truck.

In my opinion, the only points of uncertainty in this scenario are how fast it happens, and how MANY low-skill jobs go away. Initially it won't be that many, and things will continue to work the way you say. But over time, more and more low-skill jobs will fall to automation. There will be fewer and fewer low-skill jobs available. Automation will probably (?) never replace 100% of all low-skill jobs, but it won't take 100% to cause massive societal upheaval. We will have a permanent underclass that is UN-employable in almost any *available* job.

And then we have to consider the HIGH-skill jobs. The low-skill jobs tend to be the easiest ones to automate, but white-collar jobs aren't safe either. IBM's Watson can already do a passable job of medical diagnosis and many legal procedures. It's not ready to replace all the doctors and lawyers yet, but...
You do realize people said the same exact thing over and over through history? Every single stage in the development of modern civilization has alarmists like you with baseless claims spewing unverifiable conjecture. "Machines are gonna take our JERBS." No they are not. "This time different." No it's not. Someone has to build and design and program and maintain and deliver and adjust and fix said machines. Wow, new Jerbs!

You keep saying your opinion. Your opinion is this. Your opinion is that. The only thing your opinion on this matter is, is baseless.

I fully understand what you are saying and completely disagree.

As long as people consume and the labor market remains open, there will be opportunities for all willing and able. They might need different skills. They might need different knowledge, but there will be opportunities.

The world changes. We adapt. Period.

images (1).jpeg
 
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TheCj

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In the future, low-skill jobs will go away not just because new technology replaces a FEW jobs, but because AI-based automation can potentially replace the low-skill workers in nearly **ALL** low-skill jobs.
I read somewhere that the bigger disturbance will be in higher paid jobs such as lawyers and doctors etc... Since an ai lawyer would be able to access archives of cases instantly and make a lawyer redundant. Same with ai based doctors that would all share the information they gather from globally treating billions of people. Being able to assess and diagnose us more reliably and effectively.

Then there is another line of thought talking about how ai aided humans will remain ahead of strictly machine based ai.

When I read these things though I wonder will it effect us in our lifetimes?
 

MythOfSisyphus

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And then once they've raised the minimum wage for all their competition, amazon replaces all their own minimum wage labour force with robots lol.
I was thinking the same thing. They're investing pretty heavily in automation for their warehouses and delivery so it's probably a smart strategy.
 
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garyfritz

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You do realize people said the same exact thing over and over through history.
I realize that. The difference this time is that the machines will not be limited hunks of iron like tractors or fork lifts -- they will be vastly capable systems. Sooner than you might think, they will have more capability and flexibility than many humans. That's fundamentally and qualitatively different to an automatic elevator or an ordering kiosk.

Someone has to build and design and program and maintain and deliver and adjust and fix said machines. Wow, new Jerbs!
100% agree -- for the ones who are capable of doing those high-skill jobs. No problem for them. Same as always, as you say.

But not everybody is capable of taking those higher-skill jobs. And as the AI technology advances, the remaining jobs require higher and higher skills.

Enough arguing. You have your opinion, I have mine.
 

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Yep. Now that they’ve done it, how much do you want to bet that they start lobbying for it to be mandatory to hurt the competition? They already ride out selling a lot of items below cost, they’ve pushed the razor thin margins on to the smaller proprietors, and now they want to go a step further to crush competition.

The other thread talking about Amazon being a monopoly, I’d say this is one of those counter intuitive, crony capitalist, moves that will shake out better for them despite doubling their cost of their workforce. It is looking more like a monopoly today, than when that thread started. Is a monopoly necessarily bad? No. But the government, ignorantly playing that game, is wildly bad business policy. It’s all desssed up in a pretty bow. “Higher minimum wage, workers rights, YAY!”

Honestly, in this business environment, it’s what I would do.

I’m interested in what @Vigilante thinks about this.
I’ve heard this theory... that they’re mainly doing this to make their competition look bad.

I was just thinking that.. It makes everyone else look bad while making them look heroic

If they do start lobbying yo... that might be evil


More money in people’s pockets equals more money spent monthly. When the supply “of money” is increased so is demand for what is purchased with it. Supply for those items is lessened relative to the demand, thus increasing prices everywhere, not just at Amazon or Walmart.
Yea but then what about the billionaires and those with savings.. doesnt that water down the value of their savings?

But it isn’t... So... As a businessman, I applaud the tact, foresight and ability to navigate our actual business environment shown here.
Yea but dude... I think it’s a bit dickish. If they’re doing what I think they’re doing. They’re essentially sabotaging everyone else. I’m a believer in “just build the best widget” rather than burning down everyone else widget factories...

I mean yea this is f’n ruthless and I’m impressed.. but kind of in a Genghis Khan kind of way lol

Let see what happens.

I understand your point. But IMHO some large companies are abusing their power in this situation. E.g. Walmart pays starvation wages because they CAN -- because there are so many low-end workers desperate for a job, ANY job. Supply and demand. But they pay so little that their workers can't support themselves, and the workers end up on the public dole for food stamps, etc. Some people call this a "Walmart Tax" because the Walmart workers' drain on the system roughly equals Walmart's profits. Our taxes pay the welfare, enabling Walmart to pay lower wages, so it's effectively an income redistribution from everyone to Walmart. And IMHO that's wrong. Just like a company shouldn't be allowed to dump toxic wastes, forcing everyone else to clean it up, they shouldn't be allowed to dump their financial issues onto the public either.
Quick question... okay which is a better world:

A world where those people are employed for $11/hr
or A world where they’re making $0/hr

See it’s nice to think ‘oh they need to just pay them $15/hr.. well guess who pays that? YOU. Your toilet paper now goes up from $2 to $3 to cover their new salary. Now Joe Q is paying 35% extra for all his items at Walmart. What does he do? He goes to his employer and says “Look at how high my cost of living is!” I need a raise. Joe is a barber. As a result of his raise, his shop has to charge $20 per haircut as opposed to $15.... now guess what happens... a Walmart employee walks in to get a haircut. He goes “$20 for a haircut are you serious” and goes and asks his boss for a raise. You see what happens here? Wage increases without value increases are chasing your tail.
 

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