Sunday, November 21, 2004

The Technological Double-Squeeze on American Wage Labor

Visiting my local Super Wal-Mart recently, I was treated to an unusual, but not unexpected, sight. A long line of shopping carts was being pushed into the store not by the usual two-man team, but by a single worker with a remote-controlled pushing device that propelled the carts from behind while he guided them from up front. I have worked in positions that entailed cart-pushing myself, and had wondered how the process might be automated. But I didn’t expect to see it so soon, because I knew what I was earning pushing carts. Any robotic replacement would have to be really cheap. Or so I thought.

In retrospect, it should’ve been obvious that there were other cost pressures at play besides my twice-monthly pittance. I had already used self-checkout stations at grocery stores, where one cashier mans (or often doesn’t man) a station of four terminals. Since these aren’t as fast as manned registers I figured that each cluster of four was maybe eliminating one job. It should’ve occurred to me then that a pusher robot for shopping carts would probably cost considerably less than a couple of self-checkout stations. But how on earth do these stores recover the costs of these clever machines when the people they replace get paid so little?

It didn’t take me long to realize I had not been taking into account the hidden expenses added by even the cheapest human employees to an American employer, particularly one not operating under the table. There is the employer portion of the payroll tax, the cost of goods stolen or damaged by employees, worker’s compensation claims and lost wage benefits for injuries on the job, legal fees and settlements when employees sue their employers, hiring and training costs, retention efforts, paycheck distribution, and all of the associated bureaucratic overhead resulting from the above.

But even as technology shrinks some of those expenses, it swells others. The first and probably largest category is medical. As we are so often reminded in this country, the costs of health care are soaring, thanks in large part to an extremely healthy market for corporations that develop costly new diagnostic tools and drugs. The benefits of any one procedure or pill are often very limited, but the spoiled patient will usually get them all. And since practically all American medical care is given by professionals who either have a profit motivation for pulling out all the stops, or who are completely isolated from the costs of technology, we are all spoiled patients (except for the growing number of uninsured, who don’t count in a discussion of workers compensation expenses). I’m not sure that we would even want a saner third alternative that helps reign in costs, because the American attitude towards healthcare is that everyone should get the best care possible no matter what. It’s noble and good, but, it drives up the cost worker’s compensation insurance as much as ten percent a year for many employers.

The second major way in which technology is making even cheap employees more expensive is litigation. Thanks to modern media and the internet, everyone knows about the million dollar settlement claims made by corporations and the diverse ways in which their employers might be screwing them over. And, with just a few short clicks, you can find entire legal firms dedicated to pressuring employers into making settlement claims for your mutual enrichment.

So we find ourselves in a situation where retaining human employees is increasingly costly even though the paychecks of the bottom-feeders remain low. Let’s face it: From the standpoint of an American retailer, human employees are lazy, flighty, shifty, clumsy, and litigious. Combined with the inexorable tendency of high technology to become cheaper over time, we have a technological double-squeeze leading American shoppers to bag their own purchases after checking themselves out at a store where they probably had to compete for the attention of a handful of service personnel running around in response to chimes and lights scattered around the building.

It’s not that we don’t like personal service along with our modern comforts--just ask any Westerner who’s had the pleasure of visiting developed areas in China lately. No, we live in a self-service society because we don’t like paying the surprisingly high cost of American low-wage workers in the form of more expensive goods at checkout time.

(Note: I’m not passing judgment on anyone here, I’m just trying to explain one of the many economic realities shaping our future that we must learn to cope with. More on this topic later.)


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