April 17, 2024

Grand Depart

Experienced In Technology

Technology and labor costs pose dilemma for California’s economy

3 min read
Technology and labor costs pose dilemma for California’s economy

In summary

California’s labor unions prioritize job preservation and employment enhancement, but at what point do these efforts backfire and eliminate jobs?

When Hollywood writers initially went on strike against film and television studios, it was for traditional reasons such as pay and working conditions.

Ultimately, however, the stickiest issue was how much, if anything, the studios could employ artificial intelligence to produce scripts, thereby reducing input from human beings and the need for their talents.

It was an important skirmish in a larger conflict over whether technology and corporate consolidation make the economy more productive and globally competitive, or create multitudes of unemployable workers.

Resisting technology and other labor-saving corporate moves to preserve jobs has become, as the writers’ strike demonstrated, a major goal for labor unions, both in contract bargaining and the political arena. And California, not surprisingly, is on the front lines.

Last year, for instance, Gov. Gavin Newsom and the Legislature agreed to spend more money on improving efficiency at the state’s ports, hoping to improve their competitive position vis-à-vis other ports. But at the behest of longshore unions, the legislation specifically banned spending on “fully automated cargo handling equipment.”

One of the California Labor Federation’s highest priority bills in the just-concluded 2023 legislative session was Assembly Bill 316, aimed at banning the use of autonomous, driverless trucks until 2030. But Newsom quickly vetoed it, despite his close connections with unions.

“Autonomous vehicle technology is evolving and DMV remains committed to keeping our rules up to date to reflect its continued development in California,” Newsom said in his veto message. 

AB 316 was not an outlier. Several other high priority bills for labor were aimed at blocking technology, consolidation and other labor-saving moves by employers.

Assembly Bill 647 would make it more difficult to cut workers when grocery chains merge, while Assembly Bill 627 would make seniority the major criteria in rehiring workers after layoffs.

Other measures, meanwhile, bolstered employment by providing workers with new benefits or wage increases.

Legislation to create a new state agency to oversee wages and working conditions in the fast food industry, passed last year, was challenged by an industry-sponsored referendum that was qualified for the 2024 ballot. That led to a compromise that set a $20 per hour minimum wage for fast food workers.

There was a similar dustup over legislation that would set a $25 per hour minimum wage for health care workers, leading to another compromise.

Still another measure, Senate Bill 616, expands mandatory sick leave from a minimum of three working days to five days.

The overall thrust of these legislative moves has been to make it more difficult for employers to make labor-saving changes while raising their costs for using human labor.

One can certainly understand, and sympathize with, efforts to preserve jobs and increase compensation. But at what point do they backfire, making the state less competitive and indirectly eliminating jobs?

It’s a complicated question but a simplistic example of the dilemma facing the fast food industry, for example, which has been the subject of much political angst this year.

If fast food outlets must pay their workers more and provide them with more sick leave days, does it encourage them to cut staffs even further and rely more on technology, such as the kiosks that McDonald’s uses for food orders?

When the state banned automation investments as it appropriated more money for port modernization last year, John McLaurin, president of the Pacific Merchant Shipping Association, told Newsom in a letter: “California’s ports have no more room to grow – except up. If we are to meet the needs of California consumers and exporters, support hundreds of thousands of supply chain related jobs and function as a competitive gateway, innovation along the waterfront should be encouraged – not stifled.”

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