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

[ChicosBailBonds]

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?

I'm sorry, but that isn't necessarily the case depending on the study one uses.  I suspect if I link a study from Heritage or CATO or something of that nature, I would be slammed for it.   

I think this article on raising the minimum wage is interesting.  Note, he is not suggesting to NOT raise it, but he is properly pointing out that there are ramifications....all too often those are ignored or given short shrift. 

http://www.forbes.com/sites/timworstall/2013/12/03/so-lets-look-at-what-happens-when-they-raise-the-minimum-wage-in-bangladesh/

For the law of unintended consequences of raising the minimum wage, I'd steer your here.....yes, it's from way back in ancient times of 2006, but interesting.  http://www.economics.uci.edu/files/economics/docs/workingpapers/2006-07/Neumark-08.pdf

[ChicosBailBonds]

It's funny how you ask a bunch of economists this question, and what wonderfully different answers you get.


http://blogs.wsj.com/economics/2014/01/30/should-the-minimum-wage-be-raised-economists-weigh-in/

[Pakuni]

It's funny how you ask a bunch of economists this question, and what wonderfully different answers you get.


http://blogs.wsj.com/economics/2014/01/30/should-the-minimum-wage-be-raised-economists-weigh-in/

Economics = soft science.

[Pakuni]

I'm sorry, but that isn't necessarily the case depending on the study one uses.  I suspect if I link a study from Heritage or CATO or something of that nature, I would be slammed for it.  

Well, in all fairness, you're the one who chose to cite the CBO report. Turns out, it considers raising the minimum age a net gain for the U.S.

I think this article on raising the minimum wage is interesting.  Note, he is not suggesting to NOT raise it, but he is properly pointing out that there are ramifications....all too often those are ignored or given short shrift.  

http://www.forbes.com/sites/timworstall/2013/12/03/so-lets-look-at-what-happens-when-they-raise-the-minimum-wage-in-bangladesh

Interesting, but I take issue with his attempt to liken the situation in Bangladesh to that in the U.S. because the "laws of economics" are the same everywhere. For starters, there are not "laws of economics" as there are laws of physics or laws of chemistry. Secondly, it's like saying the laws of physics are the same everywhere, so lstriking a match on the earth is the same as striking a match on the moon. Environment is important.

[brandx]

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. 

I agree... but you always look at the have-nots as the culprits. You forgot gov't, religion, Banks, Wall Street, welfare to Oil Companies or Wal-Mart, etc., etc., etc.  Maybe $5 TRILLION to fight unnecessary wars with one side asking for a half dozen more wars. If you want to add up where the money is being spent, focus on the Haves. They get theirs and then demonize those that have nothing.

Rather than choose the small amount of fraud by the poor, focus on where the real corruption and fraud is.

[ChicosBailBonds]

Economics = soft science.

Yes, which is why when someone says there is NO impact, I tend to take more than a bit of a critical eye.  There may be no impact, there may be quite an impact, but when someone says definitively there is no impact....run away.  No one knows for sure, way too many dynamic market forces at work.

[ChicosBailBonds]

I agree... but you always look at the have-nots as the culprits. You forgot gov't, religion, Banks, Wall Street, welfare to Oil Companies or Wal-Mart, etc., etc., etc.  Maybe $5 TRILLION to fight unnecessary wars with one side asking for a half dozen more wars. If you want to add up where the money is being spent, focus on the Haves. They get theirs and then demonize those that have nothing.

Rather than choose the small amount of fraud by the poor, focus on where the real corruption and fraud is.

The "small amount" isn't small at all.  More importantly, why is it allowed?  Why are more stringent steps taken?  Hell, there is a way to grow employment...enforcement. 

I'm not going to get into the wars stuff or the crazy inflated number of $5 trillion.  If we want to get into that, let's talk about unfunded liabilities which range anywhere from $35 trillion to $125 trillion depending on how it is calculated...pretty crazy that there is a $90 trillion swag in there.  My guess is your "real corruption" definition is a lot different than others.  Some might argue those wars that are fought do a lot of good for this country in protecting interests, preventing mass casualties, etc....some might argue that is "small potatoes" just as you have argued the amount of fraud going on is small. 

All in the eye of the beholder. 

[Tugg Speedman]

Have you read about the digital manufacturing coop initiative in Chicago?  Seems like a step in the right direction.

Digital coops don't work ... Their purpose is to put people out of work.

http://www.reuters.com/article/2014/03/18/us-usa-obama-manufacturing-idUSBREA2H06L20140318?r=6112G2540690E4Z


(Reuters) - Along the banks of the Mahoning River in the struggling Ohio steel town of Youngstown sits a once-abandoned furniture warehouse that has been converted into a sleek new laboratory.

Inside is a Silicon Valley-style workspace complete with open meeting areas and colorful stools. Several 3-D printers hum in the background, while engineers type computer codes that tell the machines how to create objects by layering materials.

The lab, called America Makes, is the first in a series of so-called "manufacturing innovation hubs" that President Barack Obama has launched with the promise that they could revitalize America's industrial sector and spur jobs growth in downtrodden communities like Youngstown. Seven more hubs are planned by the end of the year, including projects in Chicago, Detroit and Raleigh, North Carolina, that will follow the Youngstown model of bringing together businesses, non-profits and universities to pursue technological breakthroughs.

But after more than a year of operation, the Youngstown hub underscores the challenges facing Obama's goal of ensuring "a steady stream of good jobs into the 21st century," as he put it in remarks at a White House event last month.

One of the biggest challenges is the nature of factory innovation itself, which often reduces, rather than bolsters, the need for workers who aren't very skilled. That means the manufacturing initiative could help create jobs for people with highly specialized skills, such as engineers, but it may do far less to help people struggling to find work after the shuttering of local steel mills.

Three-D printers, the focus of the Youngstown project, are an example of this. Once they are programmed and loaded with raw materials, they work their magic with nary a human hand. If they are ever widely adopted, researchers say a big reason will be that they use less labor than traditional manufacturing.

"A lot of the equipment can be run automatically, so it is less labor demanding," said Don Li, senior manager of process modeling at RTI International Metals, a Pittsburgh-based titanium manufacturer working on an America Makes project.

MULTIPLIER

Former White House economic adviser Gene Sperling, who conceived the administration's manufacturing initiative, said the White House was focused on the "spillover impact" from new manufacturing projects, which also create jobs at suppliers. "When you look at manufacturing and the jobs it provides in the supply chain and in communities, these are middle class, high-skill jobs," he said.

Research by Enrico Moretti, an economist at the University of California, Berkeley, has found that each factory job on average supports 1.6 additional jobs outside manufacturing. A job in a high-tech industry can support even more outside employment because high wages for engineers and programmers can spur more spending at restaurants, stores and other businesses.

When Obama first proposed the manufacturing initiative, he asked Congress for $1 billion for 15 centers but the request has gone nowhere amid Washington's political gridlock so he is funding the projects through existing budgets. Ultimately, he would like to set up 45 centers around the country.

The Department of Defense, which is contributing the federal funding to the Youngstown initiative, believes its demand for high-tech goods will help the broader economy, said Elana Broitman, acting deputy assistant secretary of defense for manufacturing and industrial base policy.

The Youngstown hub is still in its very early stages but so far, at least, there are no obvious signs of a wider impact. About 29,600 people held factory jobs in the Youngstown metro area in January, the latest month for which data are available. That's actually slightly lower than the number of manufacturing jobs there when the administration awarded the hub to Youngstown in August 2012 and when it opened its doors that October. Total employment in the area was flat in 2013, while it grew nationwide.

Of six organizations in Youngstown and Cleveland - the nearest major city in the state - working on America Makes projects, none has made new hires for the work. But the non-profit managing the initiative, the National Center for Defense Manufacturing and Machining, has added 10 employees to run the lab and oversee the application process, said executive director Ralph Resnick.

Asked whether the administration had set goals for job creation at the manufacturing hubs, White House spokesman Robert Whithorne declined to say, noting that the hubs "are just getting started." He said there was a lot of interest among manufacturers in joining the hubs, showing the potential to create jobs.

DECADES OF JOB LOSSES

To understand the harsh reality of factory job losses in Youngstown and other once-thriving communities along America's Rust Belt, one needs only to follow the Mahoning River upstream from America Makes to see how that theme has played out.

About 15 miles north in Lordstown, Ohio, a General Motors assembly plant has cut its workforce to 4,500 from 13,000 over the last 30 years. Further north in Warren, the sound of wrecking balls demolishing the area's last major steel mill echoes across the water.

Lloyd Carmichael, 57, was one of 1,100 workers who lost his job in June 2012 after RG Steel declared bankruptcy. He is now learning to be a carpenter but expects to be earning about half of his previous salary.

"When you look in this area for industrial jobs, there's nothing," Carmichael said.

After rising for decades, U.S. factory jobs peaked in 1979, and then declined due to technological advances and foreign competition. The decline accelerated after Washington lifted trade barriers to China following its entry into the World Trade Organization in 2001.

Obama and other Democrats have long sought to ensure that their economic message resonates with blue-collar workers like Carmichael. But Republicans have seized on the economy's sluggish recovery from the Great Recession to try to court workers in states like Ohio that are closely divided between Democrats and Republicans.

Wrestling with how to spur faster economic growth in the summer of 2011, Obama asked White House aide Sperling for a list of policy ideas. Sperling looked abroad for models of success.

Manufacturing's share of total U.S. jobs stood at just below 10 percent, half its level thirty years earlier. Americans seemed to be losing ground to other countries. In Germany, a rich nation that specialized in making high-precision goods, about 20 percent of workers still clocked in at factories.

Sperling drew inspiration from Germany's Fraunhofer Institutes, which bring together universities, companies and government to turn scientific knowledge into practical applications. Obama liked this idea.

For the Youngstown project, the administration organized a competition to win $30 million in federal money. The money is then allocated to research projects led by partners in the consortium, who must match the federal funds and explain how their project might benefit government agencies.

Current projects range from a cooling system for satellites to repairing aging metal casts, without which legacy equipment like B-52 bombers could be retired. Researchers are also toying with printing a light-weight prototype of a drone.

Ashley Martof, an intern at America Makes, is studying 3-D printing as an industrial engineering major at Youngstown State University. Her friends and family tell her she is wasting her time because manufacturing jobs have dwindled.

"I tell them there will not be as much need for the working class, but there will be more engineers," Martof said.

The availability of such jobs probably won't do anything to help people like Dennis Church, 60, who is retraining for a maintenance job after 31 years at RG Steel.

"Those are tech jobs," Church said. "My personality is more hands on."

[Pakuni]

Yes, which is why when someone says there is NO impact, I tend to take more than a bit of a critical eye.  There may be no impact, there may be quite an impact, but when someone says definitively there is no impact....run away.  No one knows for sure, way too many dynamic market forces at work.

Well, the story I provided was regarding a study of actual results, not projected results (as was the case of the CBO report you cited).

[ChicosBailBonds]

Well, the story I provided was regarding a study of actual results, not projected results (as was the case of the CBO report you cited).

The study focused on food service workers, I believe.


Here are a few others

UC Irvine study  http://www.socsci.uci.edu/~dneumark/min_wage_review.pdf

"A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries," the UC Irvine study stated.


Here's one analyzing 28 states to determine if it has any impact on poverty...the authors of this study say no.

http://www.people.vcu.edu/~lrazzolini/GR2010.pdf


Texas A&M study from last year, focuses on some other factors including job growth, etc.  http://econweb.tamu.edu/jmeer/Meer_West_Minimum_Wage.pdf

[mu03eng]

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.

And this is ultimately why I believe the $2 billion net to be a red herring, it assumes reduced federal spending associated with reduced safety net spending programs.  I agree the spending would be less on the programs and this is a good thing, but unless there is an associated reduction in tax burden for those absorbing the wage increase(employers and potentially consumers of the goods) or a reduction in overall federal spending then it is a net negative and the assumptions are wrong. 

A tax reduction is not proposed so then the next best thing would be to ensure the amount reduced in program spending  be applied to deficit reduction, so basically if we aren't spending it here, we aren't spending it anywhere.  However, no such thing has been proposed indicating that the usual budget games will be played where we spend less here but reallocate that money to another place so the net reduction in spending the CBO assumes never actually happens.

And it still doesn't address for me, why are people that need a living wage trying to use minimum wage as a living wage?  That is not it's intent so what can we do to move people off of the minimum and near minimum wage to avoid the issue all together?

[Coleman]

And it still doesn't address for me, why are people that need a living wage trying to use minimum wage as a living wage?  That is not it's intent so what can we do to move people off of the minimum and near minimum wage to avoid the issue all together?

What's the point of working if it doesn't provide enough for basic food, clothing and shelter?

Doesn't this incentivize people to collect unemployment or disability (which they do)?

I don't care what the original intent of the minimum wage was, if people can't live off of it, they will suck on the taxpayer's teat. I'd rather have the buden shifted. It's really that simple.

[WellsstreetWanderer]

It's called the Law of Supply and Demand. If someone doesn't have the talent, skills or experience they simply cannot command higher wages. Businesses would lose money, hire fewer people or go bankrupt. Your is a commendable intent but it just doesn't work in practice.

[Benny B]

I don't care what the original intent of the minimum wage was, if people can't live off of it, they will suck on the taxpayer's teat. I'd rather have the buden shifted. It's really that simple.

This is what boggles me... the politicians who are pushing for hikes in the minimum wage are the same politicians who have risen to power by offering the taxpayer's teat to those who stand to benefit from said hikes -- if you actually take these people off the teat, they may find that the milk of independence is so much sweeter.

Politics is supposed to be strictly about maintaining and advancing your power & and influence... not about actually helping people.  Is the overall intelligence of America rapidly declining, or are Americans merely electing exponentially dumber representatives every two years?

[Coleman]

This is what boggles me... the politicians who are pushing for hikes in the minimum wage are the same politicians who have risen to power by offering the taxpayer's teat to those who stand to benefit from said hikes -- if you actually take these people off the teat, they may find that the milk of independence is so much sweeter.

Politics is supposed to be strictly about maintaining and advancing your power & and influence... not about actually helping people.  Is the overall intelligence of America rapidly declining, or are Americans merely electing exponentially dumber representatives every two years?

Its all about incentives. If people are incentivized to work, they will.

This is why I like things like the earned income tax credit. It is a giveaway to low income folks, but it requires them to work to get it. It was a republican measure introduced during the Bush Administration, although if introduced by Obama every single Republican would oppose it.

But even better than this government giveaway would be companies that paid enough for people to live on.

[Coleman]

It's called the Law of Supply and Demand. If someone doesn't have the talent, skills or experience they simply cannot command higher wages. Businesses would lose money, hire fewer people or go bankrupt. Your is a commendable intent but it just doesn't work in practice.

LOL. Corporate profit margins are at a record high. Walmart would not go bankrupt if they paid every worker $10 an hour. They just don't want to.

By the way, people made the same arguments about child labor. We outlawed that and American private enterprise came out ok.

[LAZER]

It's called the Law of Supply and Demand. If someone doesn't have the talent, skills or experience they simply cannot command higher wages. Businesses would lose money, hire fewer people or go bankrupt. Your is a commendable intent but it just doesn't work in practice.

Have there been any significant increases to unemployment as a result of min wage increases in the past?

[Coleman]

Changing the subject, what do people think about guaranteed basic income?

Quite a few conservatives actually support it, and countries such as Switzerland (a European bastion of the free market) have ballot measures considering it.

It basically goes like this:
-Get rid of every entitlement program (Social Security, Medicaid, SNAP, Disability, Unemployment, housing assistance, Obamacare subsidies, etc. etc.)
-Replace it with a guaranteed basic minimum income to all citizens. Enough to live on, but that's about it (maybe just above poverty level)
-People can choose to work or not. The vast majority will continue to do so, as they will be incentivized to make more money than the poverty level. Those that choose not to work will free up jobs for others.
-Eliminates massive bureaucracies, government staffing, fraud, etc.
-Frees up people to take risks, be entreprenurial, start businesses, etc.

[Benny B]

Changing the subject, what do people think about guaranteed basic income?

Quite a few conservatives actually support it, and countries such as Switzerland (a European bastion of the free market) have ballot measures considering it.

It basically goes like this:
-Get rid of every entitlement program (Social Security, Medicaid, SNAP, Disability, Unemployment, housing assistance, Obamacare subsidies, etc. etc.)
-Replace it with a guaranteed basic minimum income to all citizens. Enough to live on, but that's about it (maybe just above poverty level)
-People can choose to work or not. The vast majority will continue to do so, as they will be incentivized to make more money than the poverty level. Those that choose not to work will free up jobs for others.
-Eliminates massive bureaucracies, government staffing, fraud, etc.
-Frees up people to take risks, be entreprenurial, start businesses, etc.

Where does the graft fit into that sort of arrangement?  Until that question is answered, no such bill will ever make it out of committee in this country.

[mu03eng]

LOL. Corporate profit margins are at a record high. Walmart would not go bankrupt if they paid every worker $10 an hour. They just don't want to.

By the way, people made the same arguments about child labor. We outlawed that and American private enterprise came out ok.

It's easy to say that when it's other people's money.  How much margin should Walmart make?  Or Mama's bakery?  Or GE?

You are right they don't want to why is that an incorrect answer?

[Coleman]

It's easy to say that when it's other people's money.  How much margin should Walmart make?  Or Mama's bakery?  Or GE?

You are right they don't want to why is that an incorrect answer?

As much money as they want, after they've paid their employees enough to live on.

I own Walmart stock in my index funds. But I should not be their only stakeholder. Employees are another stakeholder.

Why can't companies dump chemicals into rivers? Why can't they employ children under 15? Why can't they put cheap lead in their products?

There are lots of shortcuts. Its just that paying an unliveable wage is one of the few legal ones left.

[mu03eng]

Changing the subject, what do people think about guaranteed basic income?

Quite a few conservatives actually support it, and countries such as Switzerland (a European bastion of the free market) have ballot measures considering it.

It basically goes like this:
-Get rid of every entitlement program (Social Security, Medicaid, SNAP, Disability, Unemployment, housing assistance, Obamacare subsidies, etc. etc.)
-Replace it with a guaranteed basic minimum income to all citizens. Enough to live on, but that's about it (maybe just above poverty level)
-People can choose to work or not. The vast majority will continue to do so, as they will be incentivized to make more money than the poverty level. Those that choose not to work will free up jobs for others.
-Eliminates massive bureaucracies, government staffing, fraud, etc.
-Frees up people to take risks, be entreprenurial, start businesses, etc.

Interesting concept....what establishes the minimum?  How is that determined?  As an example we have people living below the poverty line with iPhones and big screen tvs.  How do we determine what the minimum income is?

How would you determine income sources?  What prevents me from being on the minimum income but doing cash jobs on the side for extra income?

I have to admit, at first blush I have a real issue with any concept that gives people the option to do nothing.  Not saying that's a good hang up but it would drive me nuts having people literally doing nothing to contribute to society.

[mu03eng]

As much money as they want, after they've paid their employees enough to live on.

I own Walmart stock in my index funds. But I should not be their only stakeholder. Employees are another stakeholder.

They are, does Walmart have trouble finding employees?  The answer is no, so why should Walmart pay more?  Who establishes what is enough to live on?  Don't say the poverty line because it's subjective, Somalia has a whole other poverty line than we do.

[Coleman]

Interesting concept....what establishes the minimum?  How is that determined?  As an example we have people living below the poverty line with iPhones and big screen tvs.  How do we determine what the minimum income is?

How would you determine income sources?  What prevents me from being on the minimum income but doing cash jobs on the side for extra income?

I have to admit, at first blush I have a real issue with any concept that gives people the option to do nothing.  Not saying that's a good hang up but it would drive me nuts having people literally doing nothing to contribute to society.

Everyone gets the income. Whether they are making cash on the side or not. Whether they have a W-2 for $200,000 a year or not. Everyone still gets that chunk of change from the government. There is no means testing, which cuts on the bureaucracy. Everyone is mooching off the government equally. You, me, Chicos, Buzz Williams, Derek Wilson, Bill Gates, Larry Ellison, and the guy currently living under the overpass all get the exact same check each month.

If people want to spend their minimum on iPhones and TVs, that's their prerogative. But there is nothing else coming from the government. No food stamps, no medical subsidies, no housing subsidies, etc. Its their choice to make what they spend their money on.

I'd say the amount should be just over the poverty level.

It replaces social security. It replaces medicaid. It replaces EVERYTHING. No more massive bureaucracies. No more fraud. No more gaming the system. You just get a check for food, clothes and shelter. If you want more than that, you get a job.

[MU Fan in Connecticut]

It's easy to say that when it's other people's money.  How much margin should Walmart make?  Or Mama's bakery?  Or GE?

You are right they don't want to why is that an incorrect answer?

I already posted the effect on Walmart in an earlier post.  Is one penny more per $16 item going to hurt any shoppers?  I don't think anyone would even notice?  But to employees making less than $10.10 th eraise would make a world of difference.


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.