On February 19, 2014, the Editorial Board of The New York Times write:
Republicans sputtered with outrage when the Congressional Budget Office said that immigration reform would lower the deficit, strengthen Social Security and speed up economic growth. They called for the office to be abolished when it dared to point out that tax cuts raise the deficit or when it highlighted the benefits of health care reform. But now that the budget office has predicted (and exaggerated) the possibility that an increase in the minimum wage might result in a loss of jobs, Republicans think it’s gospel.
“This report confirms what we’ve long known,” said a spokesman for the House speaker, John Boehner. “While helping some, mandating higher wages has real costs, including fewer people working.”
What Republicans fail to mention is that Tuesday’s report from the budget office, a federal nonpartisan agency, was almost entirely positive about the benefits of raising the minimum wage to $10.10 by 2016, as President Obama and Congressional Democrats have proposed.
More than 16 million low-wage workers, now making as little as $7.25 an hour, would directly benefit from the increase, the report said. Another eight million workers making slightly more than the minimum would probably also get raises, because of the upward “ripple effect” of an increase. That would add $31 billion to the paychecks of families ranging from poverty level to the middle class, significantly increasing their spending power and raising the nation’s economic output and overall income.
In fact, the report said, 900,000 people would be lifted from poverty with a wage increase. The income of those below the poverty line would increase by a total of $5 billion, or 3 percent, at no cost to the federal budget.
The vast majority of those getting raises would not be teenagers with part-time jobs. Nearly 90 percent of them are adults 20 and older, and 53 percent of them work full time. Women represent 56 percent of them.
But the report said there could be a cost to the wage increase, and most of the headlines have focused on the possible loss of 500,000 jobs, or about 0.3 percent of total employment. That bears further scrutiny, because, unlike the benefits, the employment estimates have been disputed by a wide variety of nonpartisan economic studies.
What the report actually says is that there is a two-thirds chance that a $10.10 wage would produce job losses in a range from just above zero to one million. The number 500,000 was simply picked as a midpoint. (There is a one-third chance the wage increase would lead to more than a million job losses or actually increase employment.) A range that big is essentially the budget office’s way of saying it doesn’t really know what would happen to employment if the wage goes up, because, as the report says, there is vast uncertainty about how much wages will go up on their own over the next three years, and uncertainty about how employers would react to a higher minimum.
The budget office didn’t do its own research on those variables. It surveyed the economic literature on the subject, and chose a figure more conservative than the most recent and rigorous studies have found. That means the job-loss figure needs to regarded skeptically, as a careful reading of the report shows, while the benefits are undisputed.
Those benefits to millions of low-wage workers overwhelmingly outweigh the questionable possibility of job losses. Lawmakers who focus only on the potential downside of an enormously beneficial policy change are the same ones who never wanted to do it in the first place.
The common thread of articles that address unemployment and underemployment are solutions that would build an American society of dependent citizens on tax extraction and national debt to provide social insurance. While social insurance is certainly an emergency measure that requires implementation, it should not be seen as a panacea. The real task is to change the culture, from one of wanting or lacking personal responsibility and dependency on the “State,” into one where our human nature can be sustained and advanced through a private property ownership mentality, pursuing individual virtue. We need to transform the present credo, as advocated by progressive political leaders and others from one of servitude and dependency to one of personal responsibility and sustainability by means of broadening wealth creating, income-producing private property ownership by EVERY citizen of the productive capital (non-human) means of production. Private property ownership is the cornerstone of American liberty. Without it our free enterprise system, our free markets, and our republican form of self-government cannot endure. Nor can we prosper without the equal opportunity to acquire capital ownership financed by its own earnings. We need to pursue policies that will strengthen the economic position of the individual, the family, and the local community with decreasing reliance on government welfare support financed by tax extraction and national debt.
Whether or not raising the minimum wage is harmful and will cause less employment should be discussed within the larger scope of economic inequality. The proposed measures are at best a sedative to ease the pain of deteriorating livelihoods, but not the solution that is necessary to significantly address income disparities between the wealthy ownership class and the propertyless, non- and under-capitalized American majority.
While a $1 initially and another $1 in 2016 will be welcomed by low-income minimum-wage earners, this is certainly not the solution to the serious widening income gap between the “haves’ and the “havenots.”
It doesn’t make any difference what’s going on in the scientific world or the business world or the industrial world, the nation still believes full employment with a minimum wage and other redistributive social insurance programs will solve our income distribution problems. This is what progressive political figures have always maintained.
Digital computerized operations, automation and other productive technological advances are destroying jobs and devaluing the worth of labor. This tectonic shift in the technologies of production and the greater employment of robotics and super-automation to save labor costs is not well understood and reported by the national media. Advances in software and production technology, abundant and relatively inexpensive energy, fast access to huge amounts of data, and growing global demand will continue to drive competitiveness of American manufacturing, and drive down labor costs, except for people with jobs in research and high-tech skilled work. Such innovation will increasingly impact the fast-food and services industries and as well result in fewer and fewer jobs as a result.
The global economy, as well as the national economy, will continue to bifurcate into a rich/tech track and a poor/non-tech track due to continual technological invention and innovation that will destroy and/or replace old non-tech jobs. For example, Foxconn (China’s largest private employer and the manufacturer/assembler of Apple and other global manufacturers smartphones has plans to install over one million manufacturing robots within three years (http://www.theverge.com/2012/12/11/3753856/foxconn-shenzhen-factory-automation-manufacturing-US-expansion). Already, fast-food chains in Japan, China and Great Britain have begun piloting the use of robots to cook meals. These fast-food robots are capable of preparing full sushi rolls or noodle dishes for Asian food outlets. In many cases, customers complete their orders through a touch screen, which then alerts the robot how to prepare the meal. No humans needed.
Dan Fastenberg, a writer for BusinessInsider.com, stated the obvious: “It stands to reason that American fast-food companies will adopt the robots at some point.” It is also logical to expect that demands for increased wages without corresponding labor productivity gains will intensify such efforts to adopt robotics and sophisticated automation.
The off-shoring of manufacturing will eventually be replaced by human-intelligent super-robotic automation. This too will put competitive pressures on American companies to ramp up technological productivity.
The impact of technological invention and innovation should surprise no one who is conscious and who has even causally observed the constant shift to non-human productive inputs in the manufacturing, distribution, and sales of products, as well as the delivery of services, that has been occurring during their lifetime.
There’s nothing new about machines replacing people, but the rate of replacement is exponential and the result is that productivity gains lead to more wealth for the OWNERS of the non-human factor of production. For others who have always been dependent on jobs as their source of income, there has been a steady decline to poverty-level labor incomes or loss of employment.
Business investment in machine and robotic super-automation hardware and software is more than it’s ever been. What’s not back is the jobs.
The percentage of Americans with jobs is at a 20-year low due to tectonic shifts in the technologies of production. In every industry, we are witnessing fewer interactions with other human beings. Everyone should be aware of robotic kiosks––providing bank teller services via ATMs, sales customer services via e-commerce, and switchboard support services via voice recognition technology. Super-automation is transforming commerce. There are heavily automated warehouses where there are either very few or no people around. Increasingly jobs, especially those that involve relatively structured tasks, are being replaced by human-intelligent robotic computerization and physical entities other than humans.
The pursuit for lower and lower cost production that relies on “slave wage” labor will eventually run out of places to chase. Eventually, “rich” countries, whose productive capital capability is owned privately by its citizens, will be forced to “re-shore” manufacturing capacity, and result in ever-cheaper robotic manufacturing.
“The era we’re in is one in which the scope of tasks that can be automated is increasing rapidly, and in areas where we used to think those were our best skills, things that require thinking,” says David Autor, a labor economist at Massachusetts Institute of Technology.
While I am not opposed to the concept of a “minimum wage,” economic productivity is a bigger part of the story. Those arguing its support basically argue that labor is producing more value today, but working people aren’t seeing any of the gains. Who has walked away with the proceeds from all that productivity? But contrary to general belief, when looked at through the lens of two factors of production––human and non-human––labor is not becoming more productive; the non-human means of production is driving the productivity gains.
A January 2013 report from Oxfam noted, “The richest one percent has increased its income by 60 percent in the last 20 years.” It further argued that the 2012 net income of the world’s top 100 billionaires—a haul of $240 billion—would be four times the amount needed to eliminate extreme poverty internationally.
These arguments fail to point out the income source for the richest one percent is not their labor but their dividend income derived from their ownership of productive capital assets––the non-human factor of production.
To maximize profit and thus dividend income––the purposeful function of business––companies strive to keep labor input and other costs at a minimum. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by non-human physical productive capital’s ever increasing role.
This is the reality of business in the global and national setting where lowest cost production is necessary to be competitive.
Yet, the government continues to discharge its responsibility for the health and prosperity of the economy through coerced trickle-down; in other words, through redistribution achieved by the rigging of labor prices, including the minimum wage; by taxation to support redistribution and job “creation;” or subsidization by inflation and by all kinds of welfare, open and concealed. From an employment perspective, employment should start at the time one enters the economic world as a labor worker, to become increasingly a capital owner, whose productive capital contributes to the work load, and at some point to retire as a labor worker and continue to participate in production and to earn income as a capital owner until the day you die.
While the problem is one that no one can no longer ignore, the solution also is one starring them in the face but they just can’t see the simplicity of it.
The solution addresses the fact that productive capital is becoming more productive and increasingly responsible for the production of society’s products and services, not labor, whose relative input is constantly being diminished by the substitution of the non-human factor of production.
The fundamental challenge to be solved is how do we reinvent and redesign our economic institutions to keep pace with job destroying and devaluing technological innovation and invention so not all of the benefits of owning FUTURE productive capacity accrues to today’s wealthy 1 percent ownership class, and ownership is broadened so that EVERY American earns income through stock ownership and full-dividend payouts, so they can afford to purchase the products and services produced by the economy.
The best way to protect American citizens from this spiraling disaster that will continue to undercut American workers, destroy jobs and devalue the worth of labor in the United States is to implement policies to create an OWNERSHIP SOCIETY, whereby EVERY American is extended the right and opportunity to acquire productive capital with the self-financing earnings of productive capital––the physical wealth-creating assets of corporations (e.g., machines, super-automation, robotics, digital computerization operations, etc.). Currently non-property-owning Americans are left to acquire, as best as they can, with their earnings as labor workers. This is fundamentally hard to do and limiting. Thus, the most important economic right Americans need and should demand is the effective right to acquire capital with the earnings of capital. Note, though, millions of Americans own diluted stock value through the “speculative stock market exchanges,” purchased with their earnings as labor workers, their stock holdings are relatively miniscule, as are their dividend payments compared to the top 10 percent of capital owners.
What historically empowered America’s original capitalists was conventional savings-based finance and the pledging or mortgaging of assets, with access to further ownership of new productive capital available only to those who were already well capitalized. As has been the case, credit to purchase capital is made available by financial institutions ONLY to people who already own capital and other forms of equity, such as the equity in their home that can be pledged as loan security––those who meet the universal requirement for collateral. Lenders will only extend credit to people who already have assets. Thus, the rich are made ever richer, while the poor (people without a viable capital estate) remain poor and dependent on their labor to produce income. Thus, the system is restrictive and capital ownership is clinically denied to those who need the dividend earnings it produces.
As Kelso asserted: “The problem with conventional financing techniques is that they address only the productive power of enterprise and the enhancement of the earning power of the rich minority. Sustaining or increasing the earning power of the majority of consumers who are dependent entirely upon the earnings of their labor, or upon welfare, is left to government or governmentally assisted redistribution of income and to chance.”
A National Right To Capital Ownership Bill that restores the American dream should be advocated by the progressive movement, which addresses the reality of Americans facing job opportunity deterioration and devaluation due to tectonic shifts in the technologies of production and global competitive pressures.
There is a solution, which will result in double-digit economic growth and significant job opportunities, and simultaneously broaden private, individual ownership so that EVERY American’s income significantly grows over time, providing the means to support themselves and their families with an affluent lifestyle. The JUST Third Way Master Plan for America’s future is published at http://foreconomicjustice.org/?p=5797.
See two references to the proposed Capital Homestead Act, the centerpiece of legislation of The JUST Third Way at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm.
See two references to the proposed Capital Homestead Act, the center piece of legislation of The JUST Third Way at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm.
For more on how to accomplish necessary structural reform, see “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and “The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.
See “Perpetual Unemployment And Underemployment” at http://www.nationofchange.org/perpetual-unemployment-and-underemployment-1388414374 and at http://www.huffingtonpost.com/gary-reber/perpetual-unemployment-an_b_4516814.html.
