Forbes

Carl’s Jr. CEO Concern-Trolls Workers Whose Jobs He Wants to Automate

Lost in Space

Danger, Will Robinson: I’m coming for your job!

Writing in an op-ed on Forbes.com, Carl’s Jr. and Hardee’s CEO Andy Puzder warns about “The Harsh Reality of Regulating Overtime Pay.”

Turning highly sought-after entry level management careers into hourly jobs where employees punch a clock and are compensated for time spent rather than time well spent is hardly an improvement on the path from the working class to the middle class.

“Highly sought-after entry level management careers,” my ass. During my coverage of the fast food strikes in 2013, I heard from a number of fast food workers who turned down “assistant manager” promotions because the extra 50 cents an hour wasn’t worth the extra 20 hours a week of unpaid overtime work. But either way, Puzder’s alleged concern for employee welfare is nothing short of ironic coming from a guy who fondly muses about the idea of replacing all of his workers with robots:

“They’re always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case,” says Puzder of swapping employees for machines.

What a charmer.

The harsh reality is that CEOs like Puzder couldn’t give a shit about the welfare of their employees (let alone the welfare of their franchisees’ employees). “Millennials like not seeing people,” Puzder explained to Business Insider in describing his robotized utopia. So if he could have automated all his workers out of their jobs, he’d already have done so.

But he can’t. So he hasn’t. Likewise, you can be sure that if Puzder could run his restaurants with fewer employees working fewer hours he already would be. So don’t expect to see any overtime-rule-induced mass layoffs at Carl’s Jr. or Hardee’s anytime soon.

Of course, it’s not just Puzder wiping away crocodile tears on behalf of the 12.5 million Americans who will soon be forced to endure higher pay for fewer hours at the cold unfeeling hands of government bureaucrats. Paul’s got a rundown of various conservative objections to the new higher overtime threshold, and frankly, they all strike me as rather weird. Most bizarre is the repeated assertion that salaried workers would somehow prefer to go unpaid for their overtime hours rather than suffer the humiliation of having to “punch in” like a lowly hourly prole. “Forcing More Workers to Punch a Clock Isn’t Progress,” cries Koch-funded Carrie Lucas at the National Review.

Oy. Speaking of things I’d like to punch.

Puzder proudly describes himself as a member of the Job Creators Network—a network with close ties to notorious D.C. public relations firm Berman and Company, and from the looks of their landing page, apparently consists of rich old white men concern-trolling on behalf of the young off-white workers they pay poverty wages. (Um, maybe they should’ve focused-grouped their website’s white-man-on-top motif?)

Job Creator's Network

2015 Webby Awards winner for “Most Condescending Landing Page”

But Puzder and his Job Creators Network buddies aren’t really interested in creating jobs at all. Quite the opposite. Like all self-interested businesspeople, they’re focused on minimizing their labor costs as much as possible. And if that means a brave new world of employee-free restaurants, Puzder is eager to embrace the future without an ounce of regret: “I want to try it,” he told Business Insider.

So enough already with this paternalistic bullshit about defending “entry-level” workers from the dangers of higher wages and more benefits. It just isn’t believable. And it never has been.

People Are Not Bananas (Except for Tim Worstall)

Banana

As a proud “Fellow at the Adam Smith Institute in London,” you’d think the one thing Forbes blogger Tim Worstall might have a firm grasp of is, well, Adam Smith. But you wouldn’t know it from Tim’s nuance-free depiction of the labor market:

This is very basic economic stuff: If we have a surplus of something then that means that the price is above the market clearing price. This is true of bananas and it’s also true of labor. The answer to getting all the bananas sold is to lower the price. The answer to getting all the people who want to offer labor employed is to lower the price of that labor.

Oy. If by “very basic” Tim means “simplistic to the point of absurdity,” then sure.

The most obvious problem with Tim’s labor/bananas analogy is that people are not bananas. For example, if the demand for bananas far outstrips supply, people can always choose to eat apples or oranges or any number of other fruits. Because markets! But regardless of the state of the labor market, people still need to eat. And as Smith explains in The Wealth of Nations, this fundamental human condition — eat or die — is just one of the factors that inherently distorts the labor market decisively to the advantage of employers:

What are the common wages of labour, depends everywhere upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour.

It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. … In all such disputes the masters can hold out much longer. A landlord, a farmer, a master manufacturer, a merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.

According to Tim, the most efficient (and broadly beneficial) market is one in which prices are set purely through the unadulterated interplay between supply and demand. But even if true, that’s not the way unregulated labor markets have ever functioned. For as Smith explains, wages are set by contract. They are negotiated. And particularly at the low end of the scale, employers enjoy a distinct negotiating advantage.

And as a result, wages are also influenced by bias — the natural bias of employers to keep their labor costs low. As Smith bluntly put it:

[W]hoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate. To violate this combination is everywhere a most unpopular action, and a sort of reproach to a master among his neighbours and equals. We seldom, indeed, hear of this combination, because it is the usual, and one may say, the natural state of things, which nobody ever hears of.

Perhaps there’s no clearer real-world example of this “natural state of things” than our nation’s perennial shortage of truck drivers. After a brief collapse during the Great Recession, the shortage of truck drivers quickly reemerged, climbing from 38,000 in 2014 to 48,000 in 2015. According to the latest research from American Trucking Associations, the shortage could balloon to 175,000 by 2024. Trucking companies routinely turn away business.

Given the critical role of trucking in our economy (69 percent of all freight tonnage moves by road), Worstallian Economics predicts that industry wages will gradually rise until the supply of truckers matches demand, and the market clears. Yet as Neil Irwin observed in the New York Times, the industry’s bias against raising wages has prevented the market from doing its magic:

[T]he idea that there is a huge shortage of truck drivers flies in the face of a jobless rate of more than 6 percent, not to mention Economics 101. The most basic of economic theories would suggest that when supply isn’t enough to meet demand, it’s because the price — in this case, truckers’ wages — is too low. Raise wages, and an ample supply of workers should follow.

But corporate America has become so parsimonious about paying workers outside the executive suite that meaningful wage increases may seem an unacceptable affront. In this environment, it may be easier to say “There is a shortage of skilled workers” than “We aren’t paying our workers enough,” even if, in economic terms, those come down to the same thing.

By 2014, adjusted for inflation, truckers were earning 6 percent less, on average, than they did a decade before. And yet trucking executives would rather leave business on the table than raise pay to attract more truckers. “It takes a peculiar form of logic to cut pay steadily and then be shocked that fewer people want to do the job,” observes Irwin.

Obviously, wages in the trucking industry aren’t immune to the tugs of supply and demand. But they sure as hell aren’t dictated by them.

And its not just the trucking industry. As the housing market recovers, the construction industry has faced a looming worker shortage of its own, even against the backdrop of persistent unemployment. And here in Washington State, produce is left rotting in the fields for want of enough farmworkers at harvest time. Pay them and they will come, Econ 101 teaches. But in industry after industry, the masters of capital simply refuse.

Minimum wage opponents like Worstall insist that the market determines the value of labor. And yet the wage-suppressing evidence of extra-market forces are all around us. Walk into a Sam’s Club and observe cashiers doing the exact same job for $5 an hour less than cashiers at the Costco down the street. The market didn’t set those prices; employers did. Or, look at the history of manufacturing in America, which didn’t broadly generate middle-class wages until collective bargaining forced it to. Supply and demand didn’t build the Great American Middle Class; unions did.

Or, look around your own workplace. You’ll likely find similar people with similar skill sets performing similar jobs but for different wages. Sometimes dramatically different wages. The invisible hand of the market? No. Some people are simply better at negotiating their own wage than others.

So enough of this bullshit about wage floors distorting the natural efficiencies of the market. You can’t distort something that doesn’t exist.

What Happens in California Stays in California; Why $15 Will Boost Employment Statewide

A promotional image from Sony Picture's 2012, which imagined the total devastation California might suffer from a $15 minimum wage.

A promotional image from Sony Picture’s 2012, which imagined the total devastation California might suffer from a $15 minimum wage.

Experienced bloggers know that if you provide a block quote, few readers will click through the cited link — a rule of thumb that less scrupulous bloggers sometimes exploit to devious effect.

For example, take this recent post from Forbes economic blogger Tim Worstall: “California’s $15 Minimum Wage Deal Will Cause Unemployment–And We Have Proof Of This.” Worstall’s claim (as always!) is that a $15 minimum wage will cost many low-wage workers their jobs. Only this time, he kvells, he’s got a lefty economist to back him up:

And we actually do have proof of this: a report about what a $15 minimum wage will do to employment in Los Angeles City. This is not, by the way, a report by some from market fundamentalist like myself. This is from Michael Reich et al at Berkeley, stout supporters of a rise to $15. And yet even their report states that the net effect will be fewer jobs.

Go ahead. Click through the link above and read this Worstall quote in its full context. The “proof” mentioned in Worstall’s headline, that $15 “will cause unemployment,” is a cited study by Berkeley economist Michael Reich. That is the main thesis of Worstall’s post. There is absolutely nothing misleading or unscrupulous about my block quote.

Alas, the same can’t be said for Worstall’s out-of-context quoting of Professor Reich:

Los Angeles City: Combining costs and benefits and taking into account multiplier effects,we estimate a cumulative net reduction in GDP of $135 million by 2017 and $315 million by 2019, or 0.1 percent compared to a scenario with no city minimum wage increase.

These effects on the level of economic activity correspond to a cumulative net reduction in employment in Los Angeles City of 1,552 jobs by 2017 and 3,472 jobs by 2019, or 0.1 and 0.2 percent of all employment, respectively.

Yes, according to Reich’s model, it is true that a $15 minimum wage hike — in the City of Los Angeles — would result in less growth and fewer jobs — in the City of Los Angeles — than there might have otherwise been had the city not raised its minimum wage. But if you click through the provided link and read the Reich quote within its full context (as Worstall presumed you wouldn’t), you’d come to a very different conclusion about the State of California as a whole:

  • The costs of the proposed minimum wage law will be concentrated in Los Angeles City, but the full benefits will be realized throughout Los Angeles County, because more than half of the affected workers live, and therefore spend most of their increased earnings, outside the city.
    1. Los Angeles City: Combining costs and benefits and taking into account multiplier effects, we estimate a cumulative net reduction in GDP of $135 million by 2017 and $315 million by 2019, or 0.1 percent compared to a scenario with no city minimum wage increase.
      These effects on the level of economic activity correspond to a cumulative net reduction in employment in Los Angeles City of 1,552 jobs by 2017 and 3,472 jobs by 2019, or 0.1 and 0.2 percent of all employment, respectively. These employment changes are quite small when compared to projected job growth of 2.5 percent a year in the city.
    2. Los Angeles County: Combining costs and benefits and taking into account multiplier effects, we estimate a cumulative net increase in employment of 3,666 jobs by 2017 and 5,262 jobs by 2019 at the county level.

That’s actually a net increase of jobs throughout Los Angeles County that more than offsets the tiny projected loss within the city proper!

What Reich is describing above is a kind of economic “leakage,” in which the costs of higher wages are borne entirely within the city while the benefits are shared countywide. This is especially pronounced due to Los Angeles’ relatively high concentration of low-wage jobs. The smaller and more local the minimum wage jurisdiction, the greater the potential leakage effect might be.

But California as a whole is a virtual economic island with none of its job centers a reasonable commute from state borders; almost every minimum-wager who works in California lives in California. There would be little if any economic leakage from a statewide $15 minimum wage. Indeed, as Reich explains: “Just as minimum wage increases in Los Angeles will benefit surrounding areas, higher minimum wage levels in those areas would also boost economic activity within the city, allowing Los Angeles to realize its full share of the benefits of a minimum wage increase.”

What Worstall has done is cleverly deceptive: he selectively quotes a study on Los Angeles as “proof” that $15 “will cause unemployment” statewide. But Reich’s model actually suggests the opposite: a statewide $15 minimum wage would provide an economic boost to Los Angeles proper and to California as a whole.

Their Job Losses Are Hypothetical; Our Minimum Wage Gains Are Real

Jobless men keep going

I can’t actually bring myself to read all the way through Tim Worstall’s latest word jumble at Forbes, because I already have a slight headache, and Jesus, folks, it’s Friday afternoon, so gimme a break. But I would like to comment briefly on his disclaimer at the top:

Before we go any further, as with other minimum wage rises that have been discussed here, no, I am not claiming that the rise is about to destroy the economy of that fair state, nor that all that will be left is a howling wasteland as the unemployed desperately search for scraps. I also agree entirely that the macroeconomic issues of what happens to the whole national economy are going to have far more to do with the employment and unemployment rates in Oregon than this change to the minimum wage will bring about.

… The claim is this and only this: That a higher minimum wage will lead to fewer jobs than the absence of that higher minimum wage would have led to.

Good on Tim for being up front about what he is claiming; not all trickle-downers are so forthright. But let’s be clear about what the core neoclassical claim is: it’s not that raising the minimum wage will destroy existing jobs, but rather that it will lead to fewer jobs in the future than there otherwise might have been.

In other words, it is a claim that, no matter the empirical evidence, has the inherent advantage of being impossible to ever disprove!

How convenient.

Of course, the neoclassical models back Tim up. Run the models, and they’ll always project at least some theoretical job losses (in the future!) associated with minimum wage hikes large and small — despite the fact that the actual data from hundreds of local, state, and federal minimum wage hikes over the past 75 years show zero correlation between the minimum wage and jobs.

No, I can’t actually prove that there wouldn’t have been more jobs created (in the future!) had the minimum wage not been raised, because it’s entirely impossible to prove or disprove. It’s an alternate history. But what I can prove (and even Tim apparently agrees with this) is that a minimum wage hike has never destroyed the economy in the past.

Oh, also: that it always results in higher wages!

To be clear: Tim’s job losses are hypothetical. But our wage gains are real.

But even if Tim is right that a modest hike in the minimum wage would almost certainly lead to fewer jobs (in the future!) — and I’m not saying that he is — that still may be a tradeoff that’s well worth making. This isn’t a video game. The purpose of economics isn’t to score the highest GDP or the lowest unemployment rate. The purpose of economics is to broadly improve the lives of actual people. I’m more than willing to admit that there is a limit to how high we can reasonably raise the minimum wage — that there is a point beyond which the risk of theoretical job losses exceeds the benefits of actual wage gains.

If trickle-downers like Tim can likewise admit that there’s a point where the benefits of raising the minimum wage exceed the theoretical costs, perhaps we can have a rational and productive policy debate about how high the minimum wage should actually be.

Does automation kill jobs? Forbes says Yes! And No! (But shhhh, don’t tell minimum wage workers, really, no.)

Forbes blogger Tim Worstall is of two minds on automation.

Forbes blogger Tim Worstall is of two minds on automation.

Forbes blogger Tim Worstall sure does love himself a vigorous debate—so much so that he’s taken to arguing with himself on the job destroying/creating impact of automation.

When it comes to raising wages (minimum or otherwise) the dystopian Worstall repeatedly warns that if you raise the cost of labor, employers are going to respond with automation, leading to painful job losses for the very same low-wage workers the minimum wage is trying to help. Seems straightforward enough. Yet at the same time, the utopian Worstall consistently shrugs off automation-related job losses as all part of the healthy process of creative destruction.

Dystopian Worstall:

Higher wages means that automation becomes, relatively, more profitable. And it is to automation that most jobs go to die, not trade or international competition.

Utopian Worstall:

We’ve coped with this sort of thing before. There’s no reason at all to think that it’s going to be different this time. The increasing computerisation, roboticisation, of the economy is no more than a slight uptick in the normal rate of job destruction.

Dystopian Worstall:

So, their first change is going to be looking at greater automation. This raises the productivity of the labor that they do employ, which is great. But it also means that for any given level of output they will be employing less labor: That’s what automation and higher productivity both mean. So, job losses coming here.

Utopian Worstall:

What happens when the robots get good enough to come and steal all our jobs? There’s various possible responses to this, from screaming in fright and running from the room in Luddite panic all the way through to denying, flat out, that it can possibly ever happen. I’m in that second camp myself.

Dystopian Worstall:

Raise the price of human labour and people will substitute away from it to using more capital and more machinery. Things formerly done by people will be done by machines. That is, raising the minimum wage does cause job losses.

Utopian Worstall:

[T]his is how the macroeconomy works. Technology destroys the jobs that it automates. This then frees up that labour to go off and satisfy some other human need or desire. And as long as we don’t run out of those, then there’s no problem, is there?

Confused? You shouldn’t be. The truth is, Worstall is perfectly consistent when it comes to the economic impact of automation: Labor-saving technology tends to displace individual workers (that’s kinda inherent in the very notion of saving labor), something even the utopian Worstall never fails to concede. But Worstall is also fully aware that at the macroeconomic level, automation tends to drive job creation at a pace that more than offsets the jobs it costs. He just never mentions that part when he warns against raising wages.

So it’s not that Worstall is schizophrenic or inconsistent or incoherent on the issue. (Okay, maybe a tad incoherent.) It’s that he’s disingenuous. He’s threatening low-wage workers with only half the automation story, while saving the job-creating good news for conversations that don’t involve the minimum wage.

Lies, Damn Lies, and the Idiots Claiming Seattle Is Losing Jobs

In his online bio, Forbes contributing blogger Mike Patton claims to provide “simple, straight-forward and unbiased analysis.” Well, he got “simple” right, in the sense that his analysis is simplistic. As for “straight-forward” and “unbiased,” not so much.

Turning his analytical prowess toward the effects of Seattle’s $15 minimum wage, Patton looked at the city’s unemployment numbers and determined that “the early results are in:”

Almost six months have passed since the first wage hike (April 1, 2015). Although it’s early, thus far the data doesn’t bode well for supporters of this law. … The following graph contains Seattle’s unemployment rate from January 1, 2014 to July 31, 2015. I have marked two important dates and included the unemployment rate at those times. When the law was signed, May 1, 2014, Seattle’s unemployment rate was 3.70%. When the first wage hike occurred, April 1, 2015, unemployment was 3.0%. Since then, unemployment has risen steadily while the national average has trended lower.
Seattles-Min-Wage-Law-Unemployment-Graph

“If I had to guess,” Patton haphazardly guesses, “I’d say the unemployment rate will likely trend higher for several years as businesses seek ways to mitigate the negative financial consequences of this law.”

Wow. I mean, just wow. We’ve seen a lot of shoddy analysis in the service of slandering Seattle’s $15 minimum wage ordinance, but Patton’s work is downright embarrassing.

Patton looks at Seattle’s low unemployment rate in April of both 2014 and 2015, and the subsequent rate jumps after the city first passes and then implements its minimum wage ordinance as “clear” evidence that Seattle’s “unemployment rate has been rising.” And apparently, he conducted this simple, straight-forward, and unbiased analysis by Googling “Seattle unemployment rate” and grabbing a chart from Ycharts.com (Ycharts is the second hit on Google’s results page after a post from even-stupider Forbes blogger Tim Worstall).

But any idiot clicking through that Google link to Ychart’s initial five year chart should instantly see an obvious pattern: Seattle’s unemployment always bottoms out in April, followed by an offsetting rise over the next two or three months:

Screen Shot 2015-09-29 at 7.32.12 AM

What explains this extraordinarily consistent pattern? Ychart is reporting non-seasonally adjusted data (hence the parenthetical “NSA” in the header on Patton’s chart), and this pattern merely represents the natural seasonal rhythm of unemployment, not just in Seattle, but in Washington state and the nation as a whole.

That’s why when we usually talk about the unemployment rate (and just about every other economic statistic) we talk about seasonally adjusted numbers. And when we run the same data set through the US Census Bureau’s X-13ARIMA-SEATS seasonal adjustment software we find that Seattle’s unemployment rate has actually fallen since April:

Screen Shot 2015-09-29 at 7.59.37 AM

Oops.

Patton saw in the data what he expected to see—a substantial minimum wage disemployment effect—leaving him utterly blind to the obvious shortcomings of the non-seasonally adjusted data. His bio says that he is a financial planning advisor, but if this is what Patton means by “simple, straight-forward, and unbiased analysis,” I wouldn’t want him anywhere near my money.

The truth is, all this early analysis is a fool’s errand led by erroneous fools like Mark Perry, Tim Worstall, and Patton. Whatever the month-to-month ticks of the unemployment rate or the number of food service jobs, it will take years to determine the employment effect, if any, of Seattle’s $15 minimum wage. And even then there will be a healthy debate over how to properly analyze the data. In the meanwhile, anyone who asserts, based on a few months of non-seasonally adjusted data, that “it’s clear that the unemployment rate has been rising,” is either an idiot or a liar or both.

Skunkworks Stinker of the Day: Forbes’ Tim Worstall

Tim Worstall, bloggerThe only way Forbes blogger Tim Worstall seems to know how to win an argument is to argue with himself:

[T]he basic argument of a minimum wage, any level of minimum wage, is that there’s some moral right to a certain income from providing one’s labour.

Except, that’s not the basic argument in favor of a minimum wage—at least, not the argument that has been winning the minimum wage debate in Seattle, San Francisco, Los Angeles, New York and throughout the nation. No, our basic argument is that raising the minimum wage is good for the economy: that it increases consumer demand, increases worker productivity, and increases economic growth.

Sure, minimum wage workers may be making a moral argument in demanding a living wage—as they should—but Worstall and his free market cohort are sticking their heads in the sand if they believe that it’s the moral argument that’s been winning the day. There’s always been a moral argument to make in support of a living wage. What’s new is the powerful middle-out economic argument that comes from a more modern understanding of how a capitalist economy really works.

As for Worstall’s professed concern for working people, absolutely, he has my support for exempting the employee share of FICA on the first $15,000 or so of income—as long as their Social Security account gets credited for the exempt amount, and the revenue is replaced from somewhere else (say, by lifting the income cap). But this proposed reform and the minimum wage have nothing to do with each other.

It’s the Productivity, Stupid (or Why Rising Wages Drive Economic Growth)

WalmartI agree 100 percent with Forbes blogger Tim Worstall. No, not with his blind faith in the divine wisdom of the free market, or with his pioneering use of intra-word semicolons. I simply agree with Worstall’s belated acknowledgement that higher wages lead to higher productivity:

Costco pays very much higher wages than Walmart. It also employs about half the amount of labor per volume of sales. Costco is therefore simply in a different model along that same spectrum of trading off hourly productivity against hourly wages. And note the obvious point here: Costco pays much better but also uses many fewer labor hours. And as Walmart moves along that same spectrum of possible labor models it is facing exactly the same calculation. Raise the wages in order to get more productive staff and the very point and purpose of what you’re doing is to reduce the number of labor hours you must purchase.

Of course, this is part of what we’ve always argued when we’ve insisted that a higher minimum wage won’t inevitably lead to some combination of higher prices, lower profits, worse service, and/or shuttered businesses. There are real benefits that accrue to employers in moving toward a higher wage business model, two of which include lower rates of turnover and higher rates of productivity.

Higher productivity—even according to traditional economics, that’s a good thing, right? Indeed, throughout the course of US history (if in fits and starts), the steadily rising productivity of the American worker has helped to lift living standards for us all.

And yet, from his headline—”Of Course Walmart Cut Hours After Raising Pay–What Did You Expect?”—Worstall seems to imply that rising productivity is actually bad for Walmart workers? Weird.

The implied threat is that if workers are more productive, Walmart will need less of them, meaning a higher wage will at least indirectly cost some Walmart workers their jobs. It’s a more nuanced argument than the old “if the cost of labor rises businesses will purchase less of it” meme that minimum wage opponents usually put forth, but it still oversimplifies what is actually happening on the ground at companies like Costco and Walmart.

You see, Costco’s higher-wage model doesn’t just deliver substantially higher sales per employee than Walmart, it also delivers substantially higher sales per store and sales per square foot. But more importantly for the purpose of this discussion, year after year, Costco’s same-store sales growth is consistently higher than Walmart’s—7 percent versus 3.5 percent in the most recent quarter. And even though Costco requires fewer employees per unit of sales, the faster Costco grows sales, the faster it adds workers. And the same dynamic should hold true for Walmart, at least once it fully realizes the productivity enhancements that naturally come from employing a more experienced, loyal, and competitively compensated workforce.

Thus when Worstall concludes that “the very point and purpose” of what Walmart is doing is “to reduce the number of labor hours you must purchase,” he’s actually missing the point entirely. Yes, a more productive workforce means Walmart will need fewer labor hours per unit of sales. But sales are not static. In fact, rather than lowering labor costs, the very point and purpose of what Walmart is doing is to increase same-store sales.

Worstall describes the wage/productivity calculation as a “trad[e] off” between wages and jobs, but this isn’t a zero-sum game at either the micro- or macroeconomic level. After all, there’s a reason why Republicans are running on economic growth: because economic growth is how we generate jobs. “That will be my goal as president,” Jeb!™ absurdly promised back in June, “4 percent growth, and the 19 million new jobs that come with it.” Okay, whatever. Still, GDP growth is mostly a function of change in the size of the workforce plus change in productivity. The more we increase productivity, the more the economy grows. And the bigger the economy, the more jobs.

So if (as Worstall correctly argues) higher wages drives higher productivity, and higher productivity drives economic growth, and economic growth drives the creation of new jobs—then logically, higher wages must drive the creation of new jobs. Worstall can’t have it both ways. Rising productivity can’t simultaneously increase and decrease net employment. And since over the history of market capitalism rising productivity has generally led to more jobs, higher wages, and higher living standards, I’m guessing it’s the former.

Interestingly, the whole implied threat in Worstall’s wages argument is identical to the threat at the heart of the “robots are coming for your jobs” meme: rising productivity is somehow bad for workers. (That is the whole point of automation, after all—to increase productivity.) But in the long term, at the macroeconomic level, this dystopian vision of productivity as a job-killer simply cannot come true… at least not in any economic, social, or political system remotely similar to the one we live in today.

In our current economy, productivity drives growth, and growth creates jobs. That’s how it works at Costco. That’s how it works at Walmart. And that’s how it works in the economy at large.