The Rise of the Machines — Labor costs in this country are at an all-time high.
That’s actually kind of a no-brainer. Prices go up; it’s what they do. We really are concerned when the rate of rising prices gets out of hand. That’s called… wait for it… inflation.
But according to the most recent National Compensation Survey, a quarterly survey full of metrics on the cost of labor with related productivity measurements, labor in this country costs, on average, almost 41 bucks an hour.
$82k per year per employee on average, based on a 40-hour workweek with two weeks of unpaid vacation. This figure includes measurements from the mailroom to the board room. What is also included are high-schoolers working at fast-food restaurants making $20 an hour.
A story broke about three months ago about Chippy the Chip Machine. Chipotle is working towards a future in which high-schoolers are no longer taking tens of thousands of dollars per man-year out of franchisees’ bottom lines. Indeed, we have already seen a push towards increased automation, not just in the food industry.
But think about your grocery store experience. Aside from the instacarters out there, when you go to the grocery store or a myriad of other big-box locales, you can expect only a limited number of manned cash registers. It turns out that it’s more efficient and less expensive to host multiple self-checkout lines.
Does that mean prices went down after the roll-out of these unmanned miracles? Don’t bet on it: it’s unlikely you’ll see a $5.49 burrito bowl again once Chippy figures out how to make carne asada and heat tortillas.
The immediate future of the economy is not, however, completely autonomous. Even if we had the technology to roll out novel, complex systems to automate the mundane, there is still an integration period during which the old tech needs to be phased out.
I liken this period to the time when folks rode horses next to Model Ts on dirt roads. Sure, the Model T had more horsepower and longer legs, but you probably would have preferred to be on a horse after a good summer rain shower.
It’s the same with EVs. There are lots of early adopters (looking at you, Elon simps). But there will always be those of us who enjoy the smell of an engine running a little bit rich burning premium gasoline, even if it costs us $12 a gallon to drive only about one mile per dollar.
People and their ideas are the future. It’s not just about technology. Economic developments are rooted in ideas that, in the words of Peter Thiel, are capable of being pushed from zero to one.
Successful investors clearly identify and stake their futures in these kinds of ideas and the people that back them.
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