I think it will lead to more offshoring and automation. As such labor wage volatility (caused by a strong economy) combined with health insurance volatility (market structure) makes the capital investment of automation much more appealing than it did even 10 years ago. 10 years ago we dismissed the idea of automation because a human was more flexible than a robot. Now it’s robots or Mexico. America is unsustainable for manufacturing unless you are making very high end stuff like jet engines.
Automation is just coming, there is no stopping it. Even at $7.25 an hour some of these systems can now run at an efficiency that a human labor system cannot compete with. So what I’m saying is that automation won’t necessarily be a replacement but an improvement and that in itself should create a need for a workforce of humans to maintain and manage the automation. Also, while I don’t think automation is deflationary I do think it has an anti-inflationary aspect to it. Needless to say, I’m bullish on automation.