Brad Wardell's views about technology, politics, religion, world affairs, and all sorts of politically incorrect topics.

imageAs pressure mounts to raise the wages of fast food workers, advocates may want to take note that such wage increases eventually pass a threshold where it makes financial sense to simply invest in automation. As Grocery Store cashiers learned, these jobs are not a given. We are all competing not just with each other but with robots. 

One of the primary reasons that the gap between the rich and poor has increased so much in the past 20 years has been the rise in IT.  Once we purchase a computer, robot, etc. its capabilities – its output and productivity are owned by the buyer which increases the wealth generated by that person.

As people demand McDonalds pay workers $15 an hour and the government insists that they also provide health care, restaurant owners are increasingly evaluating whether to simply replace their work force with machines.  

Naturally, in 2017 when today’s “living wage advocate” is ordering their Big Mac from a friendly touch screen and having it delivered momentarily by a robot they’ll make no connection between how their beliefs resulted in more people living in poverty. Instead, they’ll blame McDonalds. They’ll blame greedy restaurant owners. But they won’t consider that perhaps it wasn’t such a good idea to price people out of their workforce.

More reading:

http://singularityhub.com/2013/01/22/robot-serves-up-340-hamburgers-per-hour/

http://www.thestar.com/business/2012/11/29/automatic_burger_machine_could_revolutionize_fast_food.html


Comments (Page 4)
on Aug 17, 2013

It's largely public corporations that view workers as costs.   All shareholders tend to care about in the aggregate are short-term profits and lowering risk.

 

It's quite plausible they would sit on a trillion dollars and crash the economy, if they felt they would gain from it.

 

This is why you need  the ability for government interference, if necessary in large public corporations, to make sure companies don't deliberately act against the interests of society for a short-term profit (see the banking crisis, Enron, etc)  Interference shouldn't be done often , but enough to keep things in check.

 

That is quite different from private companies (like Stardock), which can factor in other factors.   Sure, some private owners are evil horrible beings, but most aren't- it tends to follow the general population.  You're much more likely to get moral behavior from private enterprise than you are a company which is reliant on dividends and corporate boards.

 

on Aug 17, 2013

Alstein
It's largely public corporations that view workers as costs. All shareholders tend to care about in the aggregate are short-term profits and lowering risk.

Pensions are one of the largest groups of shareholders. Shareholders are mostly just normal people off the street. They buy stocks to fund their retirement and expect the people they give that money to use it correctly and not waste it, not hand it out to random people on the street. This means seeking a profit. It's mind bogglingly ridiculous to expect public companies to not seek profits above all else because this is what the public demands from them. Yes I mean everyday people off the street. Our financial system couldn't work unless companies first and only real goal is to make a profit. Why would you invest in a company that didn't? There is no conspiracy or greed public companies and corporations are just doing what they are designed to do. Make a profit for their shareholders, and yes this sometimes means paying huge bucks for top CEOs because they are scarce and it's a competitive market.

Alstein
This is why you need the ability for government interference, if necessary in large public corporations, to make sure companies don't deliberately act against the interests of society for a short-term profit (see the banking crisis, Enron, etc) Interference shouldn't be done often , but enough to keep things in check.

Companies that destroy themselves seeking short term profits tend not to last long. No one forces you to invest in scams. You are responsible for your own money, all the government can do is set standards to help make companies more transparent so you can make informed decisions, and punish criminal behavior. 

on Aug 18, 2013

I don't lump Stardock in with companies who call workers Costs. I love Stardock and I bet it's a great place to work. Brad is probably a great boss.

Alstein
It's quite plausible they would sit on a trillion dollars and crash the economy, if they felt they would gain from it.

And they will.

When you factor in that the other big things that are going on are: Student Loans fiasco and we may yet see another housing crash then yes we are in big trouble.

on Aug 18, 2013

Workers are costs.  That's not some nefarious greed showing through.  It's basic accounting.  Good workers cost money, but bring benefits to the corporation.  Companies understand that.

I always laugh at the idea that companies trying to make money is somehow a bad thing.  That's what corporations are.  For profit, money making enterprises.  That's their reason for being.  

And the reason that so many of them are holding serious reserves right now has nothing to do with greed.  It is because running a company requires the ability to forecast projects' success or failure over a period of months or years.  Companies will happily spend money when it is going to generate a positive return.  The problem is that right now there is so much uncertainty in the economy that companies can't forecast into the future.  What you see as "Greed" is actually just good management.  You don't spend $1M on a project if you can't predict reasonably well its success (or your wasting your shareholders' money).

And, yet again, getting to the root cause of that uncertainty reveals the real problem.  The US has a government that essentially believes it can do whatever it wants whenever it wants.  Take Obamacare as an example.  It was passed, everyone essentially hated it, but companies adjusted and planned for it.  Then, suddenly this year, when the President and Democrat leaders realized that Obamacare's enforcement was going to have serious economic consequences before the next midterm election on both individuals (through significantly rising premiums) and companies (through higher coverage costs and greater than expected costs to comply) they started delaying implementation deadlines despite the fact that they have no legal basis to do so.  The government acts on whims and outside the rules of their power (rules set by the laws they already wrote).  This makes companies hesitant, because they know that they can't count on the rules under which they operate to remain the same over a period of months or years.  These rules should be static, since they went through the legislative process, but the executive branch has taken to drastically expanding executive power in some areas, though removing the certainty that big new changes wouldn't be sudden (because they have to go through Congress).  The rule of law is becoming the rule of political whim.  So they hold their reserves to protect themselves and to not make bad investments in new projects.  

You're problem is essentially that companies are being (mostly) well run in an economy that is not being well managed by a government run by children with ADHD.  It's not greed, at all.  

on Aug 18, 2013

I recently read an article which stated that if Wal-Mart paid all their hourlies $12.00/hour and passed the entire difference to the consumer, the price of their merchandise would only go up about 1%.

Same was reported for McDonalds giving their employees $10.00/hour.  If the additional payroll costs were passed directly to the consumer, the price of their meals would only rise pennies.  The $15/hr figure comes from a story regarding how much MickeyD employees are paid in Australia. (Link: http://www.smartplanet.com/blog/bulletin/australia-where-mcdonalds-workers-earn-15-an-hour/25806 )

 

Link to Wal-Mart story: http://www.huffingtonpost.com/2013/07/18/walmart-worker-wages_n_3611531.html

 

 

on Aug 18, 2013

werewolf
And the reason that so many of them are holding serious reserves right now has nothing to do with greed. It is because running a company requires the ability to forecast projects' success or failure over a period of months or years. Companies will happily spend money when it is going to generate a positive return. The problem is that right now there is so much uncertainty in the economy that companies can't forecast into the future. What you see as "Greed" is actually just good management. You don't spend $1M on a project if you can't predict reasonably well its success (or your wasting your shareholders' money).

Indeed how could holding reserves be greed? They don't pay themselves that money it is theirs to begin with, they have just decided to sit on it because they don't feel safe without having some cash stashed away. It costs them to do this as they could be investing that money. They don't want to do it and it doesn't benefit them.

on Aug 18, 2013

Lets not play it off like we didn't know all along that greed is generally the driving force of success. To be successful generally one has to have a degree of greed in them. That touch of "I want more" lends to drive folks to go the extra mile trying to get ahead.. Without it IMO many successful companies wouldn't be here today, employing hundreds of thousands of people...  But when rampant greed sees one treating their work force more like a liability than an asset, is when folks start getting unhinged.

The company I work for which was built on Unionized work force, has recently declared that they no longer need us, laid us off and brought in an all new "less expensive" non-union work force, claiming that times are hard and they need to reinvent the company to streamline profit. (many of us had been there for over 20 years).. they didn't lay off 4 office buildings worth of Management, Just those who actually do the work, ( is a construction company, Without it's labor force, management wouldn't have paper to push..) 

I personally have been thanked by the VP of the company, the Executive safety officer and most upper management in the various divisions all over the U.S. I have come in contact with over the years, for my outstanding work ethics, my diligence and attention to detail, my care and dedication to the company, keeping my equipment in mint condition, and my over all professionalism on the job. Ive got dozens of safety awards, kudos, and gleaming recommendations coming from them. But  even with all that praise and back-patting, I was still deemed too expensive to keep around. Sad part is my pay check is a mere fraction of what most of theirs are...

Yeh I believe a touch of greed is a pre-requisite to being successful, but when it comes to back stabbing the people who got you where you are today...that's when shit gets ugly..

on Aug 18, 2013

Greed Shmeed. Call it whatever you want but the fact remains that by sitting on all that cash and not hiring AMERICAN workers these companies are not growing the economy. Some outsource to India and The Philippines. Some have their products made in China.

Since 2001 something like 50,00 factories have closed in the U.S. Millions of jobs lost to Mexico or China yet a lot of those companies are sitting on all those profits. So yes when this sort of greed guts our labor force and throws people into poverty. I think that is wrong. It should be against the law.

Then there are all these excuses about The Affordable Care Act and UNCERTAINTY. Quit Whining. Man up. Deal with it. They don't really care about growing the economy and having a viable middle class. The quick buck is all they care about. The bottom line is on instant profit. Whatever happened to investing in the future of our country and our country was the middle class.

It's all so frustrating to see and any of you who are well to do who work for any of these companies I mean you no harm when I say this: If you ever lose what you have because one of these companies outsourced your job overseas or laid you off because they made bad decisions and now you are paying for it then you'll see what it's like to see your retirement money get pissed away and have to work at just above the poverty level. Worrying every day after working your ass off for over 40 years. Living like that is horrible. I know. I don't go on Facebook anymore because it made me so heart sick to see people actually going places and enjoying life. My line of work is newspaper production. Enough said about that.

HG_Eliminator
I personally have been thanked by the VP of the company, the Executive safety officer and most upper management in the various divisions all over the U.S. I have come in contact with over the years, for my outstanding work ethics, my diligence and attention to detail, my care and dedication to the company, keeping my equipment in mint condition, and my over all professionalism on the job. Ive got dozens of safety awards, kudos, and gleaming recommendations coming from them. But even with all that praise and back-patting, I was still deemed too expensive to keep around. Sad part is my pay check is a mere fraction of what most of theirs are...

That's so nice of them to thank you but at the end of the day you don't have a job. Those people have big balls to do that. Personally I'd like those people to get kicked right in their big balls. Thank you very much.

on Aug 18, 2013

Riddle me this:

What happens in a Consumer driven economy when you continually reduce the number of viable consumers?

If Joe is replaced by automation, then he can no longer afford to purchase a new car. Without that sale then bill the car salesman has to cut back on his fast food habit. Now Jim the fast food franchise owner has less money to spend on his liquor habit. Etc etc etc

 

Its funny because I work for one of those major "evil" corporations, and as sales drop they are continually cutting labor costs while spending crazy money on things like having elton john perform at the stock holders meeting and giving the senior management bonuses/raises, and I just laugh cause long term they are cutting their own throats. (especially considering they are the largest employers in the U.S.)

As sales continue to be lower than expected they continue to blame it on everything else without even thinking about the impact that the reduction in both the numbers of their own labor force and the amount of hours they pay the existing labor force (read extra spending money) has on their own sales. Not to mention the overall economy.

on Aug 18, 2013

What a great discussion here.

With regards to how workers are categorized, they're always regarded as a "cost". That's just accounting. Companies have Revenues and they have Expenses.  There's nothing wrong with being an "expense". It means that people (stock holders) find value in them.  It is certainly a lot better than being a liability.

When a business owner (be it a tiny company or a large company) looks at their monthly budget, they have to look over all their costs. That includes employees, utilities, rent, marketing, accounting, legal, cost of goods sold, etc.  

Most entrepreneurs are driven by making the best quality product. This is important because I've never heard of an entrepreneur who starts a company so that he or she can have employees. In fact, I find the very thought a little disturbing. I hate telling people what to do (I am infamous for how I react when someone tries to tell me what to do). I just want to make cool stuff.  This matters because if I can end up with a better product, I will tend to do whatever I have to do to do that.  If that means I have to "outsource" something I'll do that. If it means I pay people more money so that I can attract top-tier talent, I'll do that.  And in the case of someone running a burger place, it means that if they can lower their production costs and afford higher quality ingredients instead (which makes them more competitive) and have the same profit level, they'll tend to do that.

BTW, the McDonald's study I saw someone post is completely bogus. It's important to remember that McDonalds, the corporation, is a franchiser in the main. So its expenses aren't very reflective of what a restaurant's expenses are. What a study should do is look at the expenses of a particular restaurant (which would be a lot easier you'd think) and go from there.  

 

 

on Aug 19, 2013

Frogboy
If it means I pay people more money so that I can attract top-tier talent, I'll do that.

 

I wish more board members and upper management had this sort of mentality, typically it's whats the cheapest while keeping the quality loss to a minimum.. in some cases quality of the work and end product suffer greatly as they milk the company dry before filing bankruptcy.

Which is what i think is my case, the execs trying to boost their dividends while systematically running the company right in to the ground. By selling off everything not nailed down,reducing the crews to a skeleton and dropping union workers for untrained labor. I figure another few years and they will sell off the remainder of hollowed out shell of a company they bought 10 or so years ago..Thus effectively destroying one of the most well known and oldest construction company's in the US.

on Aug 19, 2013

It often takes time for people's perception of your quality to drop after you drop the quality.

 

This is why cutting labor costs is so tempting- it doesn't drop the quality of what you already produced, just the future quality- and with corporations being focused on the short-term, that's super-tempting. 

 

Unfortunately, there's no real solution to this that wouldn't be equally stupid.  You can't legislate companies to keep workers outside of Ayn Rand fantasy slop. 

 

Personally,  I don't agree with minimum wage laws- because I feel they mask inequality.  I prefer the Friedman living stipend amount listed above, as I think that normalizes the labor-capital market to produce a more free-market outcome.

 

on Aug 19, 2013

HG_Eliminator

I wish more board members and upper management had this sort of mentality, typically it's whats the cheapest while keeping the quality loss to a minimum.. in some cases quality of the work and end product suffer greatly as they milk the company dry before filing bankruptcy.

I think they do have this mentality, at least at most companies.  My day job is for one of the companies sure to be listed anytime you ask someone to name the "10 most evil" or "10 worst" or any such list of companies in America.  It's a company that has gone through serious well publicized reorganization over the last 5 years including laying off thousands of employees and has received no end of bad press because of all of it.  

I'm with the company precisely because their board realized that they needed to improve drastically in some areas of their business and, despite ongoing re-orgs and layoffs, decided they needed to spend more in other areas to get better talent.  (NOTE:  I'm not saying they decided to hire me specifically, I'm not that important, but the specific hiring program that brought me into the company was a result of this 'must spend more to get better' mentality).  Once companies cross into the large corporation realm it's never as simple as "keep people" or "lay them off".  Layoffs and hiring programs are themselves strategic programs just like new products are.  They are considered both on individual merits, that is the benefits of laying off group X or hiring in section Y, as well as on their strategic organizational benefits (just like new products are evaluated on how they fit within the company's portfolio of products).  

HG_Eliminator

By selling off everything not nailed down,reducing the crews to a skeleton and dropping union workers for untrained labor.

I have no idea in your particular case and won't pretend to speak to that, but as a general rule the bad place that union labor finds itself in today is largely its own fault.  When unions shifted from their industrial revolution focus on actual safe working conditions and assuring a living wage to the modern day collective bargaining for ever-improving pay and benefits no matter what it was only a matter of time before unions priced their members out of the market.  The thing that kept unions going despite this behavior was the lack of an alternative (a unionized company had no other choice but to deal with the labor union in question).  

That changed in the last 15 years as states realized they could offer right to work conditions while still requiring the company meet some minimum level of safety and working condition quality (the original concern of unions). It's the reason companies like Boeing are opening new plants in non-union states and the reason why the Big Three autos have tried to move away from union states.  Those non-union plants will be just as safe and manned by as qualified engineers as the union plants, but at a fraction of the cost which is the only way for those companies to compete globally.  Unions, as a general organizational category, failed at the long game by not making allowances for things like economic conditions under which the company operates.  

A good example is the local teachers unions for the districts around where I live.  Through the last five years, while everyone who works in NYC was going through wage freezes and layoffs and fear of layoffs and ever increasing local property taxes to make up the gaps of exploding public sector expenses, teacher's unions were threatening to strike every year if they didn't get their 6% annual raise, COLA, and increased yearly vacation (as examples among other things).  Because of this, there is a strong public backlash throughout the region against the local teachers' unions, who until recently enjoyed status as an untouchable group.  Entirely their own fault. 

My larger point is that, like almost everything in life, this discussion isn't black and white.  It's not "company X wants to lay everyone off because they are evil" and "company Y pays great because they are the good guys". People here commend SD as a great place to work, but SD received no end of grief after WOM when they laid people off as a result of its bad launch.  Companies operate to stay in business and to protect their shareholders money.  This is the purpose as an organization.  They do this by making good decisions and pushing out good products (or services). Labor is merely a component of that.  It's the failure of our government to provide a stable, predictable environment for companies to operate that has led to the hoarding of cash and the anemic growth.  Under the current economic conditions companies are doing what responsible companies should be doing.  If you want to rage against those at fault, rage against those who create the terrible economic conditions.  

 

 

on Aug 19, 2013

http://www.policymic.com/articles/59981/obamacare-strikes-and-forever-21-cuts-employees-hours

 

Related- Forever 21 eliminating full-time work due to increased labor costs (Obamacare)

 

If I could make one change to Obamacare, I would make it where most private employers are banned from offering healthcare to their employees, unless they can prove that their employment would impact the employees ability to receive healthcare in the private market.  (things like sports/entertainment/hazardous jobs would fall in this category)

 

 

on Aug 19, 2013

Kantok
but as a general rule the bad place that union labor finds itself in today is largely its own fault. When unions shifted from their industrial revolution focus on actual safe working conditions and assuring a living wage to the modern day collective bargaining for ever-improving pay and benefits no matter what it was only a matter of time before unions priced their members out of the market. The thing that kept unions going despite this behavior was the lack of an alternative (a unionized company had no other choice but to deal with the labor union in question).

That changed in the last 15 years as states realized they could offer right to work conditions while still requiring the company meet some minimum level of safety and working condition quality (the original concern of unions). It's the reason companies like Boeing are opening new plants in non-union states and the reason why the Big Three autos have tried to move away from union states. Those non-union plants will be just as safe and manned by as qualified engineers as the union plants, but at a fraction of the cost which is the only way for those companies to compete globally. Unions, as a general organizational category, failed at the long game by not making allowances for things like economic conditions under which the company operates.

 

But really is it the unions fault or Americas desire for cheaper stuff?

Unions were not deemed greedy for the most part till we started mass importing everything under the sun. Then the demand for the "more costly" home made items dropped like a lead balloon..The Union's were called "greedy" for wanting to keep the American worker at his current level of income while the American manufacturers wanted to drop them down to 3'rd world country wages, so they could "compete with the over flow of cheap imports".

When the import models hit the market years ago, one could purchase 2 of many of the import models offered for the price of a single fullsize American car, Yugo was one of them. Almost over night decimating the American car industry. But It's the greedy unions and the union members to blame?.. No.. It's the American obsession with "bargain prices" no matter what the effect it has on the economy.

It has become our national Past time to blame everyone else but ourselves..

The save a buck now and be unemployed later mentality of the American society has been our Achilles heel for quite a few decades now, and will be till we collapse under our own weight.

 

Really Some jobs like truck driving I'd feel safer with a Union member, than some untrained yahoo with a CDL. Teamsters offers full training on most of the various types of trailers out there. As well as defensive driver courses..It's scary to think of an untrained driver out there hauling 80 tons of death behind him...

 

Before anyone say's "But the government regulates the drivers testing and and regulations".. Really?? think about it.. how many driver's did you see this morning on the way to work that made you ask yourself "how the hell did that moron get a license?" Govenment testing at it's finest..

True professionalism is not relying on barely meeting the minimum requirements of "government testing and regulation", but taking the initiative to go beyond that and educate yourself in all aspects of your chosen profession.

 

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