August 07, 2016
High Minimum Wage And The Decline Of Stores

The incentive to automate will be enormous for $15 per hour minimum wage.

Of America’s nearly 16 million retail workers, the biggest group — 4.6 million — are salespeople. Their average wage is $10.47 an hour. After that, the country has another 3.4 million cashiers, and their average wage is $9.28 an hour. Only a quarter of salespeople earn more than $14 — and only 10 percent earn more than $19. The figures are worse for cashiers.

But in the race to automate there will be a clear winner: Amazon. Why: Amazon can automate more easily than can physical stores. It is analogous to why long haul trucking can be automated before taxis: Just as highways are simpler places than city streets so warehouses are simpler places that stores. Warehouses, in theory, do not need human beings inside them. They can be laid out to make fetching and boxing of goods easier for robots. Stores can't do that.

Basically, Jeff Bezos gets a competitive advantage from higher minimum wages. He can adapt to them more easily than can Wal-Mart, Target, Costco, Kroger, or Home Depot. Amazon's competitors should treat automation as a desperate need.

Share |      Randall Parker, 2016 August 07 07:51 PM 


Comments
Mark Bahner said at August 10, 2016 9:09 AM:

I think you're right that higher minimum wages favor Amazon over brick-and-mortar stores. Another thing that's *really* going to favor home delivery over brick-and-mortar is autonomous delivery vehicles. Autonomous delivery vehicles will flip retail on its head...changing from people going to stores to goods delivered to homes.

I predict that within two decades of the first mass production fully autonomous vehicles, more than 3/4ths of the brick and mortar stores owned by Walmart, Target, Walgreens, Kroger, etc. etc. will be closed or converted to warehouses that distribute goods to neighborhoods (and where people do not come to shop).

Walmart was wise to buy Jet.com. Walmart needs to acquire all the home-delivery expertise it can, and soon.

Nick G said at August 10, 2016 10:02 AM:

Do you think Amazon is serious about drones for home delivery?

TTT said at August 12, 2016 9:53 PM:

A mandated high minimum wage harms exactly the people most likely to vote for it.

By contrast, the ATOM DUES (Direct Universal Exponential Stipend) gets around these problems, as the minimum wage is zero, but perma-QE (which is inevitable anyway), is distributed evenly to all US citizens :

http://atom.singularity2050.com/

Marcel F. Williams said at August 13, 2016 12:31 PM:

A higher minimum wage may hurt some businesses but it doesn't hurt workers since there are-- plenty-- of low wage jobs around. Higher wage jobs, however, are in short supply.

What America really needs is a 32 hour work week plus up to six weeks of Federally mandated payed vacation. In Europe, its four weeks. In the US its nada. In fact, 25% of America workers get no paid vacation-- at all!

TTT said at August 13, 2016 9:13 PM:

What America really needs is a 32 hour work week plus up to six weeks of Federally mandated payed vacation.

That is a horrible idea. Countries with such policies have 12% unemployment and 40% youth unemployment.

jimbo said at August 14, 2016 3:27 PM:

Went to Olive Garden today. The waitress was super fast and she brought a tablet to our table for us to pay our bills. It took me less than a minute to pay my bill which saved the waitress even more time. Restaurants are using technology to make their employees more productive. Higher minimum wages will force employers to get more out of more productive employees. The lower skilled inexperienced workers will be the biggest victims.

Randall Parker said at August 27, 2016 8:59 PM:

Nick G,

Yes, I think Jeff Bezos is very serious about autonomous drones for home delivery. It offers him a few advantages:
- lower labor costs.
- faster delivery times.
- faster time to market than autonomous vehicles to do the deliveries.

Mark Bahner,

Yes, Walmart absolutely needed jet.com because Walmart so far has been unable to build up a really sophisticated web ui. The search and browsing experience is way better on amazon.com. My guess is Walmart does not pay enough to get top notch developers and doesn't know how to manage them.

TTT,

A mandated high minimum wage hurts the ones who lose their jobs but not the ones who keep their jobs. The low paid people are thinking they won't be among the ones who lose their jobs. They also are oblivious to how easily their labor can be replaced.

TTT said at August 31, 2016 11:56 AM:

Randal,

Yes. The thing is, such a law barely raises anyone's wage, but it does cost jobs. Only someone who was already making $14/hr might see the small rise up to $15/hr, but someone making just $8/hr will merely see their job eliminated. They will not see a near-doubling of their compensation for the same work. What is sordid is that the more a person is likely to be harmed by this, the more they are likely to be a supporter of it. This is where real leadership is needed, to save the least intelligent from themselves...

By contrast, as I wrote above, the ATOM DUES (Direct Universal Exponential Stipend) gets around these problems, as the minimum wage is zero, but perma-QE (which is inevitable anyway), is distributed evenly to all US citizens :

http://atom.singularity2050.com/

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