Putting Foxconn’s Wage Rises in Context
[Via -Forbes]
Bad news for all those thinking that boycotts, petitions and monologues are what have led Apple‘s supplier, Foxconn, to raise wages these recent weeks. I’m afraid that it isn’t, it really isn’t, well meaning people shouting about ethical production methods that has led to this pay rise. It’s the deeper underlying economics of manufacturing in China that has.
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The pool of displaced agricultural workers is apparently drying up. The increasing scarcity of labor means that salaries go up.
That is until robotics reduces the cost of labor closer to zero. That is what the increasing productivity has done here. When fewer people accomplish more due to technology, the price of labor drops.
Foxconn has already said it wants to increase the number of robots in just a few years. The end result – robots doing the work for ‘free’ and labor having few if any jobs at all – the ones that do exist compete with ‘free’.
How healthy is a society going to be with huge numbers of people out of work or not making a living wage? Who will buy the goods made by robots?
We have to realize that getting a living wage in the era of robots means that we get paid for spending less time working, not more. Over the last 30 years, as productivity has continued to increase, the median income has actually dropped.
George Jetson had it right. The increased productivity due to robots was spread throughout society. He worked a couple of hours a day pushing a button then went home to a middle class lifestyle.
We created the 40 hour work week and ‘time and a half’ to drive up the cost of labor. We must get paid for working less. Unless we do something now, salaries will continue to drop towards zero.
Driving all salaries to the same level as robots will be a disaster of huge proportions. The Luddites formed because of technological improvements in the textile industry. They were suppressed by hanging.
I wonder what will happen when 30% or more of the population is out of work permanently due to robotics? We have the wealth to properly deal with this situation. But will we?
I’ll know if we are when we start to see efforts to increase the cost of labor.
February 20, 2012 at 10:00 am
Please explain to me where the wealth will come from?
February 20, 2012 at 10:35 am
From the same place it always has. But because of technology, fewer people are needed to produce the same economic benefits.
Technology has increasingly enhanced the money-making abilities of one person. One person now produces as much as 2 did in 1975. In other 30 years, 1 person will produce the same a 4 did in 1975.
So, what to do about those 3 people no longer needed?
One is to pay that one worker the same as before, lay off the other 3 and keep the 75% in wages companies used to pay as profit. Or it could keep all four but pay them 1/4 as much and still keep the profits. That is pretty much a simplified version of what we do now.
Another way is to keep paying all 4 workers the same but have them work fewer hours. This is the George Jetson approach. Unfortunately, profits would stay the same as before.
I think the latter approach would be better for society than the approach where 75% of the population is out of work.