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Why Unskilled Workers Do Not Need the Minimum Wage (2009) – Article by G. Stolyarov II

Why Unskilled Workers Do Not Need the Minimum Wage (2009) – Article by G. Stolyarov II

The New Renaissance Hat
G. Stolyarov II
Originally Published August 16, 2009
as Part of Issue CCIII of The Rational Argumentator
Republished July 24, 2014
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Note from the Author: This essay was originally published as part of Issue CCIII of The Rational Argumentator on August 16, 2009, using the Yahoo! Voices publishing platform. Because of the imminent closure of Yahoo! Voices, the essay is now being made directly available on The Rational Argumentator.
~ G. Stolyarov II, July 24, 2014
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I was recently asked whether one justification for the minimum wage might be a lack of genuine bargaining power among unskilled workers, as compared to high-skilled workers. The argument implicit in the question was that a specific unskilled worker can give his employer no reason to retain him in particular, and so the employer can afford to push down the unskilled worker’s wage to a ridiculously low amount. At the same time, the unskilled worker cannot find any opportunities to work elsewhere. I do not think that such suppositions are realistic, however.

Let us compare unskilled workers with workers who have specialized skill sets. High-skilled workers do indeed have more bargaining power within their specific places of employment, as they are more difficult to replace and more valuable to their employers. However, they also have fewer competitors to whom they could go if their current employment situation does not turn out to their liking. This is because a narrower range of employers would demand a worker with a certain specific skill set than would demand a generic unskilled worker. An unskilled worker can earn his maximum current possible income working in, say, a factory, a fast-food restaurant, or a custodial job for a variety of employers. A skilled accountant, on the other hand, can only earn his maximum current possible income working as an accountant, if that is his most valuable skill according to the market.

Both the skilled and the unskilled worker will tend to earn the marginal product of their labor – i.e., the amount of value that their labor contributes to the product they create – in a truly free market. The skilled worker will earn this because of his high bargaining power. The unskilled worker will earn this because he has so many alternatives with regard to employers. If the current employer does not pay the unskilled worker his marginal product of labor, numerous other employers will try to bid away the work of that person by offering slightly higher wages. Say, for instance, unskilled worker X has a marginal product of labor of $5 per hour, but he is only paid $1 at his present job with Employer A. Employer B sees a lucrative opportunity if he could hire X at $2 per hour and keep $3 of X’s hourly product for himself. So X is hired by B at $2 per hour. Now Employer C sees a lucrative opportunity if he could hire X at $3 per hour and keep $2 of X’s hourly product for himself. So X is hired by C at $3 per hour. This will tend to keep happening until X is hired by an employer who pays him his marginal product and therefore creates a situation where X cannot be bid away by a competitor offering higher wages.

This is a dynamic process, and it takes time to attain. In the meantime X’s skills might be improving as a result of on-the-job training and experience – so his marginal product might increase still further, and “equilibrium” might never be fully attained. Nonetheless, the market process functions to relentlessly approach equilibrium by means of the perceptiveness of entrepreneurs, motivated by profit and desiring to out-compete their rivals by means of greater perceptiveness and by offering better terms to employees and customers.

I do not think there is ever truly a situation where a worker has “no choice” about where to work. Moreover, I do not think there is ever a situation where a healthy human being is forever condemned to earn a low wage. A low initial wage is an excellent opportunity for many workers to gain the knowledge and experience necessary to earn higher wages in the future. There is no better job training than training on the job – as every job I have ever had demonstrated to me. By prohibiting people from working for pay below a certain level, the minimum wage laws deprive many workers of the opportunity to gain such invaluable experience.

Click here to read more articles in Issue CCIII of The Rational Argumentator.

The Modularization of Activity – Article by G. Stolyarov II

The Modularization of Activity – Article by G. Stolyarov II

The New Renaissance Hat
G. Stolyarov II
February 7, 2013
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On February 2, 2013, I ran my first ultramarathon: 50 kilometers (31.07 miles) in 5 hours, 10 minutes, 50 seconds – all within the comforts of my home on my elliptical trainer. I experienced no pain, no pounding, no strain on the joints, no car traffic, and no vicissitudes of weather. More importantly, I had constant access to water and nourishment if I wished it. The elliptical trainer’s shelf held my tablet computer, and I could pass the time reading articles, watching videos of philosophical discussions, and listening to Mozart.

This kind of experience is truly new. Even when I ran my first elliptical-trainer marathon in 2008 (see my article about that experience and its advantages here), I could not have replicated it. I had to content myself with reading a hard-copy book back then, prior to the age of e-readers and tablets. Cumulatively, I have read thousands of hard-copy pages while running, but the strain required for such reading is certainly far greater. Occasionally, one must hold the book still. The tablet screen is far more stable and versatile, offering vast possibilities for entertainment. With an Internet connection, immense repositories of information are at one’s fingertips, all without interrupting one’s workout!

Although the ability to radically customize my exercise has been quite recent, I have been contemplating the broader development it represents for years.  In 2008, when walking between two buildings during a frigid Michigan winter, I was struck by the realization that life did not have to be this way in the future. I wanted to reach my destination and its amenities, but being outside in freezing weather was a mere contingent circumstance, unrelated to the specific goals I sought. As a result of this insight, I proposed that, in addition to indefinite life extension, complete liberty, and the cessation of all aggression, a worthwhile endeavor for the future should be the decoupling or de-packaging of activities from one another. Life should improve to such an extent that, when considering any activity, people should only need to accept the constitutive parts of that activity – not extraneous physical circumstances that simply get in the way.

Running is excellent exercise, but it has historically been fraught with unnecessary risks and discomforts. People have even died during “traditional” marathons, due to lack of preparation, lack of nourishment, extremes of weather, and the inability to access emergency aid. The repeated pounding of feet on the pavement damages the joints and bones; this is why so many lifelong runners get knee and hip replacements in their forties and fifties. By contrast, the elliptical trainer is gentle. The feet rest firmly on the pedals; there is no pounding or jarring. One can think more clearly and focus on study, esthetics, or entertainment. There is no worry of being stranded from civilization and its amenities. When running outdoors, every mile run away must be run back, even when one might not be in the proper condition to do so. I still remember, from my college days, what it feels like to have no choice but to run for miles after a fall, to have one’s path obstructed by unexpected deep snow, or to face a sudden, chilling wind. I remember the dangerous behavior of distracted drivers at street crossings and even the occasional loose angry dog.

It is self-defeating to take serious short-term risks in pursuit of long-term health. For the past 4.5 years, I have frequently been able to isolate the “pure exercise” element of running from the unnecessary vicissitudes of the outdoor environment. The benefits in improved productivity have been enormous as well: I attained all seven of my professional insurance designations through studying mostly performed on an elliptical trainer. I am able to keep up with current world events and read more opinion pieces, philosophical treatises, and online discussions than ever before. Writing on the elliptical trainer is still quite laborious, but I can consume content during my workout as well as I could sitting at my desktop.

What enables this modularization – this separation of the desirable from the undesirable and the recombination of the desirable parts into simultaneous, harmonious experiences? Technology is the great de-packager of experiences that have hitherto been inseparable of necessity. At the same time, technology is the great assembler of experiences that could not have previously coexisted. In the eighteenth century, you would have had to be among the wealthiest kings and aristocrats in order to hear a string quartet while reading or writing. You would have needed to retain your own court musicians, or to hire professional performers at great expense.  Now you can avail yourself of this combination at virtually any time, on demand, without any incremental expenditure of money.

Other common modularizations now occur with scant notice by most. Today, thanks to global shipping networks, you can eat two fruits on the same plate, whose growing seasons are months apart. Some of these fruits will only have the parts you like, and none of those pesky little seeds – thanks to genetic engineering.  Whereas previously you would have had to purchase prepackaged  vinyl records, cassette tapes, or CDs, now you can obtain individual songs, lectures, speeches, podcasts, or audiobooks and combine them in any way you like. Whereas old-style television networks expected you to adjust your schedule to them, and to sit through annoying advertisements every ten minutes, you can now access inexhaustible content online and watch it at your own schedule.

But this great process of empowering individuals by breaking down old pre-packaged bundles is just beginning. Consider the improvements we could witness in the foreseeable future:

1. The rise of autonomous, self-driving vehicles could not only get rid of the chore of driving, but could also save tens of thousands of lives annually, as the overwhelming majority of automobile accidents and fatalities are due to human error. In the meantime, occupants of autonomous vehicles could entertain themselves in ways previously inconceivable. Texting while driving will no longer pose a risk, because the vehicle will not depend on you.

2. The mass production of in-vitro meat could enable humans to consume meat without requiring the deaths of millions of animals. This will not only increase the ethical comfort and esthetic satisfaction of meat-eating, but will also reduce the messiness of food preparation. It will also reduce the unpleasant odors emanating from large-scale livestock farms.

3. The rise in videoconferencing and telecommuting will simultaneously raise productivity, lower business costs, and improve employee morale. Employees will be able to more flexibly balance their jobs and personal lives. Neither work emergencies nor personal emergencies would need to escalate, unaddressed, just because attending to such emergencies immediately is impractical. More remote collaboration will become possible, without the need to amass huge travel bills or endure sub-optimal and sometimes outright undignified conditions at airports or on roads.

4. Personalized medicine – aided by vast and cheap data about the body and the use of portable devices as the first line of screening and diagnosis – would save considerable money on medical costs and encourage a focus on prevention. It would also enable people to avoid much of the bureaucracy associated with contemporary medical systems, and would free doctors to receive visits related to genuinely the serious conditions that require their expertise. Patients who discover specific health problems could apply directly to specialists, instead of using general practitioners as filters. Burdens on general practitioners would thereby be reduced, enabling them to provide a higher quality of care to the patients that remain.

5. Improved infrastructure should mitigate the effects that the vicissitudes of weather and vehicle traffic have on our everyday movements. Air conditioning and heating in automobiles, trains, and airplanes have already helped greatly in this regard. Additional investments should be made into covered passageways connecting proximate buildings in cities, as well as subterranean and above-ground pedestrian street crossings. Dashing across a traffic-filled intersection should be made obsolete, and our future selves should eventually come to be astonished at the barbarism of societies where people took such outrageous risks just to get from one place to another.  In less populated areas, the least that could be done is for sidewalks for pedestrians and bicyclists to be made ubiquitous, so as to avoid the mingling of cars with less protected modes of transport.

6. Nanofibers and innovative fabrics could render much clothing immune to the typical inconveniences and hazards of everyday wear. Wrinkling, staining, and tearing would become mere historical memories. Packing for a trip would become much easier, and compromises between esthetics and practicality would disappear. Individual expression would be empowered in clothing as in so many other areas.  Some clothing might be engineered to keep the temperature near the body at comfortable levels, or to absorb solar energy to power small electronic devices.

7. Education could be greatly improved by decoupling it from classrooms, stiff metal chair-desks, dormitories, bullies, enforced conformity, and one-size-fits-all instruction aimed at the lowest common denominator. The Internet has already begun to break down the “traditional” model of schooling, a dysfunctional morass that our culture inherited from the theological universities of the Middle Ages, with some tweaks made during the mid-nineteenth century in order to train obedient soldiers and factory workers for the then-emerging nation-states. The complete breakdown of the classroom model cannot come too soon. Even more urgent is the breakdown of the paradigm of overpriced hard-copy textbooks, which thrive on rent-seeking arrangements with formal educational institutions. Traditional schooling should be replaced by a flexible model of certifications that could be attained through a variety of means: online study, apprenticeship, tutoring, and completion of projects with real-world impact. A further major breakthrough might be the replacement of protracted degree programs with more targeted “competency” training in particular skills – which could be combined in any way a person deems fit. Instead of attaining a degree in mathematics, a person could instead choose to earn any combination of competencies in various techniques of integration, differential equations, abstract algebra, combinatorics, topology, or a number of other sub-fields. These competencies – perhaps hundreds of them in mathematics alone – could be mixed with any number of competencies from other broadly defined fields. A single person could become a certified expert in integration by parts, Baroque composition, the economic law of comparative advantage, and the history of France during the Napoleonic Wars, among several hundreds of relatively compact other areas of focus. Reputable online databases could keep track of individuals’ competencies and render them available for viewing by anyone with whom the individual shares them – from employers to casual acquaintances. This would be a much more realistic way of signaling one’s genuine skills and knowledge. Today, a four-year degree in X does not tell prospective employers, business partners, or other associates much, except perhaps that a person is sufficiently competent at reading, writing, and following directions as to not be expelled from a college or university.

The modularization of activity promises to liberate immense amounts of time and energy by enabling people to focus directly on what is important to them. The hardships that are typically seen as part of the “package” of certain experiences today are not, in any manner, necessary, ennobling, or “worth it”. A good thing does not become any better just because one has had to sacrifice other good things for it. Modularization will enhance individual choice and facilitate ever greater customization of life. Some will allege that this will reduce the diversity of experience; they will claim that individuals lose out on the breadth of exposure that comes with being involuntarily thrust into unexpected situations. But this was never an optimal way to pursue diverse experiences. A better way is to remove from one’s life the time-consuming byproducts of useful activities, and to fill the resulting extra time with a deliberate pursuit of new endeavors and experiences. If you do not have to drive in busy traffic, you can spend the extra time reading a book that you would not have read otherwise. If you do not have to deal with a random group of people your age in a traditional school, you can instead go out and meet individuals with whom you could undertake meaningful interactions and mutual endeavors.

Because modularization allows individuals to form their own packages of activities, it will enable us to arrive at an era of truly effective multi-tasking – not the frenzied and stressful rush to do multiple incompatible tasks at the same time, as often occurs today. Technology allows for diversity among individuals’ minds and enables each person to combine and recombine activities so as to make the most out of all of their abilities at any given time. For instance, I think of activities as occupying particular “tracks” in my own mind. I can only competently handle one verbal “track” (written or spoken) at one time. I can combine a verbal “track” with a motion-based “track” and an auditory non-verbal “track” – by reading, exercising, and listening to music simultaneously. I can also do so by writing (which is both verbal and motion-based) and listening to music simultaneously. If I am listening to an audio recording of a book, essay, or podcast, then my visual faculty is free to look at art, or to create it. I can do the former while exercising.  On the other hand, I do not enjoy leaving off any particular verbal or motion-based task prior to its completion, in order to engage in another task of the same “track”. Thus, I generally structure my activities so that such tasks occur in a linear succession and without interspersion. Auditory experiences are easier for me to halt and resume, so I can more readily shift from one to another, depending on where I am on my other “tracks”. It may be that some of my readers have extremely different combinations with which they are most comfortable. The very purpose of modularization is to allow each individual to make choices accordingly, while being subject to increasingly fewer material or cultural limitations that constrain people to accept any particular “packages” of activities.

Modularization is liberation – of time, energy, comfort, and productive effort. It is yet another way in which technology empowers us and enhances our lives in an unprecedented fashion.