Similarities and differences between two articles.
Write a draft of an essay comparing/contrasting the two articles you located and summarized. Essays should be typed and double-spaced; 12-point, Times New Roman font; using APA format, including a cover page and references page.
Similarities and differences between two articles
Constructive destruction, a 21st-century terminology that denotes [G1] economic shocks that arise from changes in economic variables, has been a subject of significant discussions among researchers in the recent past. As the name suggests, constructive destruction arises from changes that are both beneficial and harmful at the same time, leaving economists and policymakers in a dilemma. This paper compares and contrasts two articles: ‘Higher Minimum Wage May Have Losers’’( Noam Scheiber, January[G2] 10, 2017) and ‘‘Amazon to Add 100,000 Jobs as Bricks-and-Mortar Retail Crumbles’’ (Nelson D. Schwartz and Nick Wingfield, January 12, 2017), both appearing on the New York Times.[G3]
In both articles, the authors present economic tradeoffs occasioned by what they call ‘creative destruction’. Firstly, Scheiber notes that researchers in the field of the minimum wage[G4] have concluded that there is a tradeoff between increasing minimum wage and contending with a reduction in employment levels.[G5] [G6] In findings presented at an annual general meeting of the American Economic Association, researchers found that while increasing the minimum wage led to a rise in the standards of living, there were significant losses of jobs as many businesses closed down. These findings [G7] [G8] are corroborative of the findings of Nelson (2007), who noted that increased use of technology led to the crumbling of traditional retail chains, leading to job losses. While Amazon plans to employ at least 100,000 employees including highly paid engineers, other retail chains such as Macy’s reported that they would be eliminating close to 10,000 jobs, having closed at least 250 of its stores. Owings Mills Mall is said to be crumbling in the face of non-occupancy, as retailers move to online merchandising.[G9] [G10] [G11]
These two examples amplify the relevance of adoption of technology, while at the same time underscoring the resultant job losses that would be occasioned by such technology. Amazon intends to employ the use of more robots and driverless cars, drones to help in deliveries, which would ultimately lead to job losses. On the other hand, while Scheiber (2017) argues that the increase in minimum wage would lead to employers rooting for more productive workers to reduce the costs of employment, the net result is that most of the employees that are regarded as less productive would be rendered jobless, with a net effect of reduced income and increased inequality.
Both authors argue that creative destruction often leads to the extinction of businesses that are not prepared for such changes in their environments, but rewards those that are prepared to take the necessary risks. Scheiber, for instance, argues that in a 2013 study, the researchers identified a case where after [G12] New Jersey increased their minimum wage, many businesses closed down on the weight of the new wage bill, while other sprung up to fill the gap left by the collapsed establishments. Schwartz & Wingfield (January 12, 2017) similarly argues that while the use of online merchandising seems to reward Amazon, other traditional retailers are wallowing in losses and even closing down operations.
While both authors seem to highly converge on the consequences of creative destruction in modern business environments there are however a few points of departure. Both authors present their arguments using different analogies, with Scheiber using the minimum wage while Nelson Uses technology to show how businesses that are caught on the wrong side of the divide [G13] lose their share of the market. [G14]
The consequence of creative destruction in technology, as is the case Macy’s and Owings Mills Mall seems to be direr as compared to minimum wage increment. While there is limited statistics on the effects of increased minimum wage bill on unemployment and standards of living, the world is teeming with evidence of how businesses have been affected by advancements in technology. Using the case of Amazon as an example, the impact of technology on unemployment and productivity is more pronounced.[G15] [G16]
Scheiber argues that there appears to be an optimum or equilibrium level, where minimum wage can be fixed, without necessarily resulting in unemployment or [G17] business closures. On the use of technology, Schwartz & Wingfield (January 12, 2017 ) do not find any equilibrium on the application of technology in business. Businesses that fail to innovate to meet customers changing needs easily go out of business as competition catches up with them.[G18]
Creative destruction is not all a bad thing. As both authors note, the whole economy actually gains from it. If the government works towards retraining workers so that they can be more productive, they would be more attractive to employers even with higher wages. Additionally, putting more resources in retraining and redeploying the workers that are displaced as a result of creative destruction would be a great way of ensuring that such benefits are safeguarded.
Scheiber, N ((Newyork Times, January[G19] 10, 2017) ‘Higher Minimum Wage May Have Losers’’Retrieved from https://www.nytimes.com/2017/01/10/business/economy/national-minimum-wage-.html?ref=economy&_r=0[G20] [G21]
Schwartz, N.D & Wingfield, N (January 12, 2017) ‘‘Amazon to Add 100,000 Jobs as Bricks-and-Mortar Retail Crumbles’’ Retrieved from https://www.nytimes.com/2017/01/12/business/economy/amazon-jobs-retail.html?ref=economy[G22]