2012 November 22 Thursday
Wal-Mart Unionization: Another Way To Cut Immigration

A labor union is trying to get Wal-Mart employees to go on strike. Wal-Mart pays close to minimum wage. Since Wal-Mart wage costs are so low management has less incentive to automate than they would if labor costs were, say, twice as high. Imagine Wal-Mart had to pay much higher wages, say $17 per hour. Management would spend more on automation to reduce labor usage. The resulting reduction in labor would include a reduction in demand for immigrant labor and therefore would reduce the incentive for people to enter the United States illegally.

With sufficiently advanced robots it would make sense for a Wal-Mart store to close for a few hours a day to allow robots to go out, restock the shelves, repair displays, and clean the floors. Also, employees who direct customers to goods could do this remotely from interactive video stations located throughout a store. Shoppers could even state questions and have a computer try to answer questions before a human was brought in for the cases where the customer didn't get a satisfactory answer from the computer.

Wal-Mart's increased spending on automation would accelerate the development of technologies that the whole retail sector would embrace. Distribution and retail store automation technology will eventually totally eliminate the added cost of unionization and then go even further and lower costs below where they would be absent the unionization.

Higher labor costs from unionization would lead to higher retail store product prices in the short term. Good news: Higher prices for goods at Wal-Mart would provide incentive to buy more online at lower prices. That would enable more automation. Stores have customers and Wal-Mart employees walking around and they both are obstacles to automation. In an order fulfillment warehouse much more automation is possible. Kiva Systems robots automate most of the work for retrieving inventory in warehouses.

The robots do an excellent job of moving goods to the humans who pack shipments. Of course, it is just a matter of time till the final step gets done by robots too.

History Channel show on the Kiva robots.

Time to allow unionization of low paid jobs that are most ripe for automation.

Update: "Bogwraith" points out in the comments that unions can sometimes block the introduction of new technology. Certainly a higher minimum wage would be preferable to unionization for this reason. But industries across the spectrum have made great strides in automating in spite of the presence of unions. That's true in the auto industry, underground coal mining, and steel among others. Wal-Mart would have great incentive to automate in order to compete with Dollar General, Target, and many other non-union competitors. Still, a higher minimum wage is preferable because it would have economy-wide impact on employer attitudes toward automation.

Share |      By Randall Parker at 2012 November 22 10:27 PM 

Bogwraith said at November 23, 2012 12:12 PM:

A better solution is to just keep immigrants out and stop giving legal incentives to ship manufacturing to China (excepting well-regulated legal immigration).

That alone would force innovation.

Unionization would be like amputating the leg to fix problems with the foot.

Unions tend to hamstring innovation in order to preserve jobs.

The factory job I worked at in college had completely uneducated floor sweepers earning $14 sweeping the factory floor with hand brooms .

The company had tried to purchase mechanical sweepers that could accomplish the same task with less manpower, but they were prevented doing so in order to preserve inefficient jobs.

The factory and all its equipment was disassembled and shipped to China.

Randall Parker said at November 23, 2012 3:12 PM:


Featherbedding doesn't always happen. Look at coal mining. Way more automated due to high union miner wages.

Though it would be preferable to just raise the minimum wage to, say, $14 per hour. That'd avoid union obstructionism as well as provide a much more far-reaching incentive for automation.

Abelard Lindsey said at November 23, 2012 6:05 PM:

Unfortunately, I'm forced to agree with Bogwraith. Our ports are a perfect example of featherbedding. American auto manufacturers are not as automated as their Japanese counterparts, partly due to union obstruction.

Increasing the minimum wage is a better way to promote automation than unionization.

The single best driver of automation (and of technological innovation in general) is a declining birthrate. Japan's lack of young people is the biggest driver of automation in Japan.

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