What Chinese robots can tell us about the automation debate
So here's a funny pairing of stories.
Last Tuesday, former McDonald's CEO Ed Rensi told Fox Business that increasing the national minimum wage to $15 an hour would lead to "job loss across this country like you're not going to believe." The reason is robots: "If you look at the robotic devices that are coming into the restaurant industry — it's cheaper to buy a $35,000 robotic arm than it is to hire an employee who's inefficient making $15 an hour bagging French fries."
The second story came last Wednesday out of China, where automation is apparently underway across the manufacturing industry. Foxconn — the supplier of Apple products that's infamous for low pay and brutal working conditions — has apparently used robots to cut the workforce at just one factory from 110,000 down to 50,000. "More companies are likely to follow suit," one government official told the BBC.
So why is this a funny pairing? Well, consider the implicit logic of Rensi's argument. If you hike the minimum wage, you increase labor costs for employers. And if the costs of labor rise, then the costs of automation become more attractive, pushing employers to replace workers with robots. Ergo, we have to keep paying employees poorly for their own good, because if we don't the robots will take all their jobs.
In fact, the specter of McDonald's replacing cashiers with kiosks and cooks with robots has been a recurring theme among critics of minimum wage hikes. But that raises the obvious question, exactly how poorly do workers have to be paid before they're safe from the robot menace?
Because it appears even Chinese Foxconn workers — who are so ill-treated that nets had to be set up outside the factories to prevent suicides — are not paid poorly enough.
This reductio ad absurdum logic is not just about the minimum wage. It's about the way automation is talked about in politics generally, and in the debate over economic policy. Americans have been told to freak out that robots are coming for their jobs: They've been told that, beyond the fast food industry, grocery and retail chain warehouses could be automated, and retail outlets could be taken over by kiosks, vending machines, and online ordering. Think pieces envision a future dystopia in which Matrix-like armies of robots and Star Trek-esque replicators have reduced humans to couch potatoes, sitting on their butts collecting universal basic income checks.
But the story of progress is basically the story of people coming up with new ways to replace human labor with automation. We invented stovetops so we wouldn't have to build cooking fires; washing machines so we wouldn't have to do the laundry by hand; tractors so we wouldn't have to plow the fields; and on and on.
Employment in agriculture, both in absolute terms and as a portion of the workforce, utterly collapsed from 1948 to 2011. Over the same time period U.S. agricultural output more than doubled. It's the same story for U.S. manufacturing.
Producing more of value with less human labor is the very essence of productivity growth. It's the foundation behind rising standards of living. It is the process by which human misery and toil is reduced in the world. So while the question of stagnating wages and low pay for American workers is a complex one, any argument that rests on the assumption that automation is bad — that it should be slowed down or held back — really ought to be met with skepticism.
On top of that, there's basically no evidence to support these worries. The big concern among economists these days is that rates of productivity growth have slowed to a crawl in the U.S. and abroad. This is the polar opposite problem of the robot-led jobs Armageddon. More broadly, technological advancement proceeded at a breakneck pace over the course of the 20th century, yet there's no sign the overall level of employment in society is falling.
It's certainly possible that at some point that will change, and human beings will just run out of new ideas for doing useful things in exchange for money. But then an asteroid wiping out humanity is possible too. In the meantime, as long as we keep inventing things to pay each other to do that can't be done by current technology, it will remain possible to employ everyone in society. It will simply be a question of making sure there's enough demand in the economy to give everyone a job. As long as we do that, wages will rise for everyone.
If we need to, we can even divvy work up into smaller, better-paying chunks; through things like paid vacation, paid family leave, paid sick time, a shorter legal work week, stronger overtime laws, a lower retirement age and higher minimum wage.
But suggesting workers' only options are "low pay" or "no job" is always and everywhere a con.