‘Fair’ Cost of Goods & Services

George Rebane

[This is the addended transcript of my regular KVMR commentary broadcast on 5 April 2017.]

Capitalism in America is on the ropes and about to take two big hits that most likely will put it down for the count.  The first is to tax automation and technology in the workplace intended to reduce wage inequality and protect jobs for the untrained, the mis-skilled, and the uneducated.  The second is gender pay equality.  Implementing these will enable government to determine and enforce what the labor component of goods and services should cost the employer.  We’ll take each of them in turn.

To begin, please don’t confuse government cost controls with government price controls.  Cost controls are more insidious, and difficult to understand and connect to the inevitable changes in the marketplace and to our quality of life.  But the promise to hold back automation to create more and higher wage jobs will work reliably to buy votes for the politician.

In these commentaries we have heralded and covered the growth of systemic unemployment that now sees only 3 out of 5 working age Americans actually working or looking for work, and up to 90 million of them remaining unemployed.  Some of our country’s politicians and business notables, including Bill Gates, are suggesting that robots – read workplace technology – should be taxed while minimum wages are raised.  The missed point here is that those two goals contend with each other.

These people want government to make the use of machines more expensive for businesses.  However, not having thought things through as usual, no one knows how to properly price automated labor and which technologies should be judged to be worker equivalent.  All we know for sure is that bureaucrats will then cement their arbitrary decisions into another mountain of economy stifling regulations for employers to follow.  But what most economists and businesses will agree on is that the accompanying minimum wage laws should really be called robot employment laws, because that will be the clear result.  Finally, when you attempt to equalize the cost of machine and human labor through such confounding government interventions, you will have created thousands more government jobs and one more full employment opportunity for lawyers.

Now let’s consider gender pay equality.  Yesterday, April 4^th, was Equal Pay Day intended show how much more into the new year women have to work to earn what men earned last year.  In California we are proposing legislation which will empower the state to define the dollar equivalence between, say, work behind a counter and desk, and physical labor in the maintenance yard, warehouse, or factory floor.  Here we don’t deny that gender pay inequality, though greatly diminished, is still around.  But according to the Bureau of Labor Statistics, people more comfortable with numbers will put the actual Equal Pay Day back into the second week of March.

Carrie Lucas of the Independent Women’s Forum, which has analyzed these data, confirms that “the female-male wage gap is shrinking, and most of what remains is not due to sexism. … The Department of Labor ignores, for example, that the average man working full-time spends two hours more each week on the job than does the average full-time working woman. It shouldn’t be a surprise — or considered unfair — that someone who works longer hours also earns more money. They also don’t take into account differences in industry, years of experience, education, and specialty. Men suffer the overwhelming majority of workplace deaths and major injuries. To get people to take on dangerous and physically grueling jobs, businesses have to sweeten the pot with higher pay. Men even have longer commutes on average than women do. They often take on the extra commuting burden in order to take a job that pays more.”

The bottom line, if these two movements succeed, is that government will then become the final arbiter of the cost of doing business.  And given its historical incompetence in commercial matters, these new anti-capitalist initiatives guarantee to stifle investment, reduce job creating start-ups along with entry level jobs, and raise the prices of everything while creating shortages for all of us.

My name is Rebane, and I also expand on this and related themes on Rebane’s Ruminations where the addended transcript of this commentary is posted with relevant links, and where such issues are debated extensively. However my views are not necessarily shared by KVMR. Thank you for listening.

[Addendum] Ms Lucas writes in the National Review about the leftwing National Pay Equity Committee that promotes a dire picture of gender pay inequity.

Accuracy about statistics has never been this movement’s strong suit. According to the Bureau of Labor Statistics, in 2014 the average full-time working woman earned 83 percent of what the average full-time working man earned. That’s up from about 80 percent in 2004. If you assume that the 2016 wage gap is roughly the same as 2015 and follow the Equal Pay Day math, then women would need to work about 44 more days in 2017. (more here)

Locally our happy champion of closing the pay gap is a Ms Kathryn Davis who joyously reports that –

The California State Commission on the Status of Women and Girls has gender equality in the workforce as a top priority. In July 2016, the Commission convened the California Pay Equity Task Force to provide a forum to encourage compliance with the California Fair Pay Act (SB 358 Jackson) and facilitate an informed understanding of the importance of gender equity in the workplace. Effective Jan. 1, 2017, in California, equal pay is required for women and men who do "substantially similar work," regardless of how their jobs are formally described. "This says you can't hide behind job titles. You have to look at what people actually do," said Noreen Farrell, executive director of Equal Rights Advocates, a San Francisco public interest group that pushed for the change. (more here)

So there you have it, another state government bureau in charge of making and adjudicating the kinds of “substantially similar work” is going on in the workplaces of California.  Exactly what we need to take another step backward.

Meanwhile, on robots competing with minimum wage workers we have the CEO of the CKE restaurant chain writing –

Avoiding significant increases in the minimum wage won’t solve all the problems that face today’s job-seeking youth. But one thing is certain: If government policies substantially increase the cost of entry-level labor, there will be more automation, fewer jobs and less opportunity for young people trying to get ahead. (more here)

To this Fed Chair Janet Yellen, talking last week about workforce development in low-income communities, said, “it is crucial for younger workers to establish a solid connection to employment early in their work lives.”  They will have an uphill fight to accomplish that with mandated high wages competing against ever smarter and more capable machines.

Comments

[Don Bessee]

Business insider is reporting that the days of transient trimmigrants are numbered. A company has developed an automated trimmer that uses computer monitored cameras control the trimming. They are going to roll them out in CO this year. It could prove to be good for communities that are forced to subsidize the growers trimmigrants. So much for all those jobs promised by the pot advocates. ;-)

[Account Deleted]

There isn't a problem in the world that the left can't solve with a tax of some sort.
All of this will lead to massive unemployment which will lead to a guaranteed minimum income.
Which will lead to folks who actually still produce something deciding to not accept the face value of money.
By this point the fed govt will institute an all-digital monetary system that will enable massive inflation with out the usual problem of printing boat loads of paper cash. Every month or so, we will wake up to find all of the decimal points have moved a notch over. Shrug. Whatever.
Maybe in the middle of all of this folks might start to realize the govt really hasn't a clue. But, too late.

[Russ]

SASSE ON AUTOMATION - Sen. Ben Sasse (R-Neb.) says lawmakers need to confront the role that automation and trade respectively play in affecting job opportunities. "Look at trade and automation: two competing but slightly overlapping forces in the shrinking of the duration of jobs right now," he said in an interview with New York Times Magazine . "We have to be able to talk honestly about how disrupted this world is going to be, and it is crazy to mislead people and say we're going to bring back all of the big factory jobs by creating a protectionist regime. That isn't true."

Sent from iPhone