The founder and CEO of Amazon, Jeff Bezos, has been getting a lot of criticism. Mostly because he is the richest man in the world and so people think he should pay his employees more. In facing this criticism Amazon announced last week that they will be raising their company minimum wage for all of their U.S. employees to $15/hr.
However, with Amazon investing a lot of money into automated robotics this may actually negatively impact low wage workers in the long run. It also may wipe out a lot of Amazon’s competitors.
What is a Fair Wage?
Leftist and especially Bernie Sanders have been saying that big retail companies like Amazon and Walmart should be paying their low wage workers a “fair” wage. Sanders last month introduced legislation called the Bezos Act to tax corporations for every dollar that their low-wage workers receive in government health-care benefits or food stamps.
There has been a public outcry from these low-wage workers to raise the minimum wage to $15/hr because they cannot afford the basic living expenses. The frustration is understandable for these workers, but the minimum wage might not be the the solution. In fact, this might actually have the opposite affect and do more harm than good. The rising minimum wage might actually result in more unemployment and more tax dollars going toward combating the loss of these jobs.
After Amazon’s announcement Bernie Sanders praised Jeff Bezos and Amazon for stepping up to the plate and helping these low-wage workers afford their living expenses. Sanders said that the other companies like Walmart and McDonald’s should take note of Amazon’s lead and raise their minimum wages.
More Money for The Lower Class? Or Just a Bait and Switch?
Now this might sound like good news for Amazon employees and low-wage workers in general. It might be good initially to get these wage raises, but if you look at the big picture you will see where this is heading.
Big retailers like Amazon and Walmart have been investing a lot of money in developing robotics for production and self-checkout machines. Amazon has been talking about how they are going to open up a lot of stores. But there won’t be anyone working there! They are switching everything to automated robotics. Does this really sound like good news for the employees?
Amazon is Switching to Robotics
Jeff Bezos is a smart guy. He knows that the smaller retail chains and small businesses can’t afford to pay their employee’s these wages so he is trying to kick start raising the bar. All these smaller businesses are going to go out of business and the retail giants that are switching everything to robotics are going to rein supreme.
Even if there wasn’t pressure from the left to raise wages one could argue that they would have switched to robotics and laid everyone off anyway with technology advancing like it is. Yet these social programs aren’t making matters any better for the workers.
The labor participation rate is declining according to the Bureau of Labor Statistics.
After reaching its historical peak at 67.1 percent in 2000, the labor force participation rate for all workers (age 16 and over) is projected to decline to 61.0 percent in 2026.
It is basic economics. Raising the cost of labor for employers will either result in an increase in prices or more unemployed workers.
Increasing Price of Goods and Services
Over the years the cost of goods and services has gone up. Obviously inflation is the main cause of price increases over the years. Yet another factor that could result in price increases is the cost of production. Simply put, a rise in wages results in a rise in prices.
For someone to understand why the prices of goods and services is so high and wages are so low you must understand two factors. They are the risks and the costs that employers must account for. Regulations, lawsuits, liabilities, overhead costs, building, machinery, ect. All these extra costs the employer has to pay for plus pay all his employees before he gets what is left over.
Lawsuits Add Costs and Increase Risk of Employment
Unexpected events happen, conditions change, and the revenue might go down. Lawsuits are a big expense that a lot of businesses now have to account for. Some lawsuits are understandable and the business should be held responsible if they commit some kind of unfair act.
However, a lot of these lawsuits are just flat out ridiculous. I’m sure everyone has heard of the lady who sued McDonald’s for spilling hot coffee on herself. Another suit that was the Walmart cashier who sued Walmart because they didn’t provide them a chair to sit in during their shift. It was settled just recently after 10 years in court for $65 million. Of course the lawyers are gonna come away with most of the money.
Entrepreneurs get rewarded for taking these risks in the form of profit. People must understand that businesses can make a lot of money, but they can also lose a lot of money. Everybody thinks they should get a share the money they make, but nobody wants to share their losses.
Increased Production Costs, Risk, Liabilities, and Lawsuits….Why Hire Anyone?
Nobody wants the prices of all our goods and services to go up. So what will be the result of these ridiculous lawsuits and the increasing price of labor if we don’t want to see a rise in consumer prices?
Employers just won’t hire as many people. They might not even hire any at all.
Amazon has already talked about opening stores without anybody working in them. They have invested a lot of time and money into robotics and automation. Why? Because hiring actually people is costs too much and a robot can’t sue you.
Why hire someone that is gonna sue you for something as silly as not being provided a chair to sit in? If they knew they had to stand up during the job then why did they take the job in the first place? They could have just worked somewhere else if standing was too hard on them.
All the jobs are being outsourced to other countries like China. It is because the production cost is a lot lower. Not because they are working in terrible “sweat shop” conditions, but because China’s economy is a lot stronger. China’s “sweat shop” conditions is the result of them having to break their backs working to not only produce for themselves, but for all the nations that they lend to like the lazy fat American economy.
You can’t blame the worker’s for thinking that this would be a good thing for them and they should be angry. However the problem is government intervention in the free market system. That is why the unemployment rate keeps rising.
Amazon wants the minimum wage to go up to $15/hr because it would force a lot of their smaller competitors to go bankrupt. It is pretty clear to me that they have seen this coming and decided to plan all this out and use it to their advantage.