Bill Gates: People Don't Realize How Many Jobs Will Soon Be Replaced By Software

[Coleman]

Why do we think people are permanently stuck at the minimum wage?

Do you know how inflation works?

[ChicosBailBonds]

Chicos, you make me laugh. Thank you.

Doing what I can.  This guy should have his balls cut off and fed to him rather than getting food stamps.

[Coleman]

Doing what I can.  This guy should have his balls cut off and fed to him rather than getting food stamps.

I don't disagree with you.

Although I suspect you, and other conservatives, are angry because he is robbing you and me, Joe taxpayer.

I'm more angry he is robbing those who need food stamps and providing fodder for those trying to dismantle the program.

[Tugg Speedman]

Do you know how inflation works?

Why should it be indexed to inflation?  You're assuming that people that make minimum wage are stuck at that level forever so they should get a cost of living raise.  Again, only a small percentage of those making the minimum wage are stuck at that level forever.

If you a smart kid, you can be an assistant manager at a McDonald in less than a year, making way more than minimum wage.  If you have a problem getting to work on time or passing a drug test, you will make minimum wage forever.  In this case, why should the Government force business to pay them more?

FYI - McDonalds has been experimenting with Indian call centers taking orders in McDonalds so they can eliminate more jobs in the restaurant.  So, go ahead and raise the minimum wage to the level of inflation.  When McDonalds automates them out of a job, how have you helped them?

Don't think it will happen?  I remember the 1970s when everyone said gas stations were out of their mind for going self-serve.  They did this because a series of the minimum wage in the 70s made gas station attendants too expensive.  

If you make minimum wage jobs too expensive, they will be eliminated.

[ChicosBailBonds]

I don't disagree with you.

Although I suspect you, and other conservatives, are angry because he is robbing you and me, Joe taxpayer.

I'm more angry he is robbing those who need food stamps and providing fodder for those trying to dismantle the program.

Actually, I'm angrier about the latter, not the former....the amount of corruption and fraud by people is sickening, and that goes to workman's comp, food stamps, disability, etc. 

[Pakuni]

I said $50, not $50K.

Raising the minimum wage, regardless of the amount, raises costs and those are passed on to people.  Jobs are lost because expenses go up.  Since when is a job at McDonalds DESIGNED TO SUPPORT A FAMILY?  It shouldn't be, that's the whole point.  We have so bastardized things that this is what it has become.  Keep allowing low skilled labor into the market place only adds to the problem, but hey...they vote for us so let's do it.

We reap what we sow.

Nice talking points, but not really true.
A study of nine cities that raised their minimum wages - in some instances by as much as 26 percent - showed it led to miniimal job loss. Instead, businesses absorbed the costs through lower turnover and smaller price increases.
Read all about it here:
http://seattletimes.com/html/localnews/2023116005_wageimpactsxml.html

[Tugg Speedman]

Nice talking points, but not really true.
A study of nine cities that raised their minimum wages - in some instances by as much as 26 percent - showed it led to miniimal job loss. Instead, businesses absorbed the costs through lower turnover and smaller price increases.
Read all about it here:
http://seattletimes.com/html/localnews/2023116005_wageimpactsxml.html

The vast majority of economics studies say hikes will cost jobs.  Thy get ignored like this CBO study last month that said the current hike being considered would eliminate 500,000 jobs by 2016.

http://www.usatoday.com/story/news/politics/2014/02/18/cbo-minimum-wage-jobs/5582779/

Then every once in a while an uber-left academic says it will not and those get major headlines.

Now think about it rationally.  If you raise the price of something, you get (or sell) less of it.  What makes minimum wage jobs exempt for the basic laws of economics.  If you're going to argue inelasticity , I'm going to argue that the new era of technology is making minimum wage jobs very elastic.  This means, in years past you were stuck paying them more as you need people in these jobs.  Today you have options to automate them away.  See my McDonalds using call centers. 

But if you can explain why they do not follow the basic laws of economics, Chicos will pay you zillions.  He would love to know how to make DTV fees exempt from basic law of economics.  He would love to raise fees 30% (like the proposed minimum wage hike) with only a minimum loss of subscribers!

[ChicosBailBonds]

Nice talking points, but not really true.
A study of nine cities that raised their minimum wages - in some instances by as much as 26 percent - showed it led to miniimal job loss. Instead, businesses absorbed the costs through lower turnover and smaller price increases.
Read all about it here:
http://seattletimes.com/html/localnews/2023116005_wageimpactsxml.html

What do you say then about the CBO report that it will cost 500,000 jobs?

[Pakuni]

What do you say then about the CBO report that it will cost 500,000 jobs?

I'd say the report indicates that that's .3 percent of the workforce, that the hike would benefit more than 16.5 million workers oberall, and the net benefit would be $2 billion (and greater for poor families).

16.5 million > .5 million

[ChicosBailBonds]

I'd say the report indicates that that's .3 percent of the workforce, that the hike would benefit more than 16.5 million workers oberall, and the net benefit would be $2 billion (and greater for poor families).

16.5 million > .5 million

So 500,000 job losses is minimal?

How about the other part where it says employers will cut back hours to make them part time to save additional costs...so workers are still "employed", but under employed.

[Tugg Speedman]

I'd say the report indicates that that's .3 percent of the workforce, that the hike would benefit more than 16.5 million workers oberall, and the net benefit would be $2 billion (and greater for poor families).

16.5 million > .5 million

So FU to half a million people that lose their job, the rest make an extra $3/hour.

[ChicosBailBonds]

Do FU to half a million people that lose their job, the rest make an extra $3/hour.

There is also the part about the cost of goods.  If you raise the minimum wage at fast food restaurants, then the owners either have to reduce employment, reduce hours, or increase prices (or a combination of them all).  They almost certainly aren't going to reduce their margins.  So the costs of eating there, just went up.  Ironically, this is where many people that are struggling to make ends meet go to eat because it is affordable.

All this stuff has consequences, but it seems to me the focus is all to often on one part of the equation. 

[Pakuni]

Do FU to half a million people that lose their job, the rest make an extra $3/hour.

Yep.
$2 billion net gain is a good thing. Those 500,000 will be able to find work elsewhere.

[ChicosBailBonds]

Yep.
$2 billion net gain is a good thing. Those 500,000 will be able to find work elsewhere.

Or if not, the gov't will go further into debt to cover them

[mu03eng]

Yep.
$2 billion net gain is a good thing. Those 500,000 will be able to find work elsewhere.

Where does this $2 billion net gain come from?

[Tugg Speedman]

Where does this $2 billion net gain come from?

16 million make an extra $2.50 to $3 hour = equals $2 billion.

500,000 to go a paycheck to unemployed.  Ignore them.

As long as the union get the hike so all those union contract jobs that get "200% to 250% of the minimum wage" get a hike.

[Pakuni]

So 500,000 job losses is minimal?

How about the other part where it says employers will cut back hours to make them part time to save additional costs...so workers are still "employed", but under employed.

Yes. 500,000 workers represents .3 percent of the workforce. That's pretty minimal.
The (minimum of) 16.5 million who it would benefit, on the other hand, represents nearly 10 percent of the workforce.

As for the other dreadful consequences .... that hasn't been the case in places where the minimum wage has been raised.
So, I guess we've got what the CBO thinks might happen - which is still a $2 billion net gain - versus real life.

And, let me re-state, the CBO report says this is a $2 billion net gain for workers and it would benefit 16.5 million. You consider this a bad thing?

[Pakuni]

Where does this $2 billion net gain come from?

Read the report:

http://www.cbo.gov/publication/44995

Here's the synopsis when it comes to the $2 billion net gain:

Estimated Effects on Employment of an Increase in the Federal Minimum Wage, Second Half of 2016

Many more low-wage workers would see an increase in their earnings. Of those workers who will earn up to $10.10 under current law, most—about 16.5 million, according to CBO’s estimates—would have higher earnings during an average week in the second half of 2016 if the $10.10 option was implemented. Some of the people earning slightly more than $10.10 would also have higher earnings under that option, for reasons discussed below. Further, a few higher-wage workers would owe their jobs and increased earnings to the heightened demand for goods and services that would result from the minimum-wage increase.

The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBO’s estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates.

Moreover, the increased earnings for some workers would be accompanied by reductions in real (inflation-adjusted) income for the people who became jobless because of the minimum-wage increase, for business owners, and for consumers facing higher prices. CBO examined family income overall and for various income groups, reaching the following conclusions (see the figure below):

    Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $2 billion.
    Real income would increase, on net, by $5 billion for families whose income will be below the poverty threshold under current law, boosting their average family income by about 3 percent and moving about 900,000 people, on net, above the poverty threshold (out of the roughly 45 million people who are projected to be below that threshold under current law).
    Families whose income would have been between one and three times the poverty threshold would receive, on net, $12 billion in additional real income. About $2 billion, on net, would go to families whose income would have been between three and six times the poverty threshold.
    Real income would decrease, on net, by $17 billion for families whose income would otherwise have been six times the poverty threshold or more, lowering their average family income by 0.4 percent.

[MU Fan in Connecticut]

Here's your "added costs" for raising the minimum wage to $10.10 at Walmart.  Looks like it might break your back.

For the full article on Bloomberg:
http://www.bloomberg.com/news/2014-02-20/minimum-wage-debate-prompts-u-s-retailers-to-plot-strategies.html

Excerpt:
“When Henry Ford announced the 5-dollar-day, the response was that it would diminish the auto industry and bankrupt his company,” Harley Shaiken, a labor economist at the University of California, Berkeley, said in an interview. “Instead it jump-started purchasing power, reduced turnover and increased the profitability of Ford Motor Co. There’s a lesson we can still learn from that.”

A boost in the minimum wage to $10.10 would add $200 million -- or less than 1 percent -- to Wal-Mart’s annual labor bill, the University of California Berkeley Center for Labor Research and Education estimates.

If Wal-Mart passed along the estimated $200 million in extra labor cost to consumers, it would equal about a penny per $16 item, said Ken Jacobs, the Labor Center’s chairman. Meanwhile, the rise may boost purchases among the chain’s core shoppers, many of whom could see their earnings climb, he said.

[mu03eng]

Excerpt:
“When Henry Ford announced the 5-dollar-day, the response was that it would diminish the auto industry and bankrupt his company,” Harley Shaiken, a labor economist at the University of California, Berkeley, said in an interview. “Instead it jump-started purchasing power, reduced turnover and increased the profitability of Ford Motor Co. There’s a lesson we can still learn from that.”

Yes it provided a competitive advantage in a market that while not technical for the worker required reduced turnover to be successful.  So Ford was competing against other companies for labor force.  A universal increase of wage for all does nothing to increase productivity, capability, or competitiveness of the existing labor force on or near minimum wage.

[mu03eng]

Read the report:

http://www.cbo.gov/publication/44995

Here's the synopsis when it comes to the $2 billion net gain:

Estimated Effects on Employment of an Increase in the Federal Minimum Wage, Second Half of 2016

Many more low-wage workers would see an increase in their earnings. Of those workers who will earn up to $10.10 under current law, most—about 16.5 million, according to CBO’s estimates—would have higher earnings during an average week in the second half of 2016 if the $10.10 option was implemented. Some of the people earning slightly more than $10.10 would also have higher earnings under that option, for reasons discussed below. Further, a few higher-wage workers would owe their jobs and increased earnings to the heightened demand for goods and services that would result from the minimum-wage increase.

The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBO’s estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates.

Moreover, the increased earnings for some workers would be accompanied by reductions in real (inflation-adjusted) income for the people who became jobless because of the minimum-wage increase, for business owners, and for consumers facing higher prices. CBO examined family income overall and for various income groups, reaching the following conclusions (see the figure below):

    Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $2 billion.
    Real income would increase, on net, by $5 billion for families whose income will be below the poverty threshold under current law, boosting their average family income by about 3 percent and moving about 900,000 people, on net, above the poverty threshold (out of the roughly 45 million people who are projected to be below that threshold under current law).
    Families whose income would have been between one and three times the poverty threshold would receive, on net, $12 billion in additional real income. About $2 billion, on net, would go to families whose income would have been between three and six times the poverty threshold.
    Real income would decrease, on net, by $17 billion for families whose income would otherwise have been six times the poverty threshold or more, lowering their average family income by 0.4 percent.

It's not a net $2 billion in US economic gain it is net gain in revenue for those working poor(not a bad thing certainly).  However that $2 billion is not created out of nothing it is generated from increase cost of goods and/or reduced margin for companies

[Pakuni]

It's not a net $2 billion in US economic gain it is net gain in revenue for those working poor(not a bad thing certainly).  However that $2 billion is not created out of nothing it is generated from increase cost of goods and/or reduced margin for companies

Did you read it?

It says clearly that, even when accounting for increased costs of goods, job losses and increased costs to business, etc., there is still a $2 billion net gain for Americans as a whole ... not just poor Americans.

Let me cut and paste again:

Moreover, the increased earnings for some workers would be accompanied by reductions in real (inflation-adjusted) income for the people who became jobless because of the minimum-wage increase, for business owners, and for consumers facing higher prices. CBO examined family income overall and for various income groups, reaching the following conclusions (see the figure below):

Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $2 billion.

The only group who would lose are those earning six times or more above the poverty level, i.e. a family of four earning at least $191,820. Those poor souls would see their annual income drop .4 percent, or $767. It's a horrible price to bear, to be sure, but I suspect the country will get by, especially when we're talking about a measure that would lift nearly 1 million fellow Americans out of poverty.

[Benny B]

Did you read it?

It says clearly that, even when accounting for increased costs of goods, job losses and increased costs to business, etc., there is still a $2 billion net gain for Americans as a whole ... not just poor Americans.

Let me cut and paste again:

Moreover, the increased earnings for some workers would be accompanied by reductions in real (inflation-adjusted) income for the people who became jobless because of the minimum-wage increase, for business owners, and for consumers facing higher prices. CBO examined family income overall and for various income groups, reaching the following conclusions (see the figure below):

Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $2 billion.

The only group who would lose are those earning six times or more above the poverty level, i.e. a family of four earning at least $191,820. those poor souls would see their annual income drop .4 percent, or $767. It's a horrible price to bear, to be sure, but I suspect the country will get by, especially when we're talking about a measure that would lift nearly 1 million fellow Americans out of poverty.

Life is so much more easily explained in bullet points and 6.5 second soundbites.  Why do you have to go ruining society by telling us there's an entire report.

[mu03eng]

Did you read it?

It says clearly that, even when accounting for increased costs of goods, job losses and increased costs to business, etc., there is still a $2 billion net gain for Americans as a whole ... not just poor Americans.

Let me cut and paste again:

Moreover, the increased earnings for some workers would be accompanied by reductions in real (inflation-adjusted) income for the people who became jobless because of the minimum-wage increase, for business owners, and for consumers facing higher prices. CBO examined family income overall and for various income groups, reaching the following conclusions (see the figure below):

Once the increases and decreases in income for all workers are taken into account, overall real income would rise by $2 billion.

The only group who would lose are those earning six times or more above the poverty level, i.e. a family of four earning at least $191,820. Those poor souls would see their annual income drop .4 percent, or $767. It's a horrible price to bear, to be sure, but I suspect the country will get by, especially when we're talking about a measure that would lift nearly 1 million fellow Americans out of poverty.

You are right, I mis-read the report.  My question(this is not intended to be snarky), if $3 increase nets a $2 billion increase for all, what if we went to $13.10 would that net us out close to $4 billion?  I've been posting too much in the MH370 thread so I don't have time to read it but does part of this calculation also include reduced pay out from the government in assistance for those who would rise above the poverty line?

[Pakuni]

You are right, I mis-read the report.  My question(this is not intended to be snarky), if $3 increase nets a $2 billion increase for all, what if we went to $13.10 would that net us out close to $4 billion? 

I don't think they ran those numbers. They ran numbers concerning the two possible minimum wages being considered - $9 an hour and $10.10 an hour. The numbers I cite are based on the proposed $10.10 wage. I suspect there's got to be some point of diminishing returns, i.e. where the need to raise costs or lay off workers to meet the minimum wage outweighs the benefit that comes with giving workers additional purchasing power and removing people from poverty. But that's just speculation on my part.

I've been posting too much in the MH370 thread so I don't have time to read it but does part of this calculation also include reduced pay out from the government in assistance for those who would rise above the poverty line?

Here's what I found in regards to that:

The rest of the deficit reduction would result from less
federal spending (aside from the effects on refundable
earned income and child tax credits) for the workers
receiving an increase in earnings. Spending on cash and
near-cash transfer programs (such as SNAP and Supplemental
Security Income) would decline for those workers,
because the amount of those benefits generally falls as
income rises.19 In addition, spending for premium assistance
tax credits and cost-sharing subsidies for health
insurance purchased through exchanges would decline for
people who will be receiving such support under current
law, because the amount of that support also generally
falls as income rises.