Here Come Minimum Wage Increases; Here Come the Robots

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

At Gov. Jerry Brown’s press conference supporting a deal on the minimum wage, an overarching point was merely touched upon: Will the minimum wage help or hurt workers that are subject to the proposed law? Business response to the law likely would be increased prices, reduced jobs opportunities and opening the door to working robots.

At the press conference, Brown argued that business would be “cutting its own throat” if business opposed the minimum wage deal and helped shut it down in the legislature. It would then face a more draconian initiative already qualified for the November ballot, he said.

The governor and his allies declared that polling showed widespread support for the initiative. Brown admitted that the specter of the initiative was the force that brought him and others to the negotiating table.

I have been privy to private polls that suggest a different story; that the initiative is no slam-dunk and that the business community might take its chances on a ballot fight, or alternatively, as I wrote yesterday, consider a referendum on successful legislation.

The governor says that businesses will have time to adjust to the wage increase before the $15 mark takes hold in full—2023 for businesses with 25 employees or less, a year earlier for other businesses. However, many small business owners worry how they can cope.

One restaurateur told a reporter, “First you have to raise prices, otherwise you’ll be out of business.”

Mandated minimum wage increases would likely set off a domino effect to raise wages for other workers above the minimum wage level. The increase in wages and prices could easily have an inflationary impact. Those hurt the most by inflation and price increases are people on the lower end of the economic scale.

Besides these usual economic arguments levied in the minimum wage debate comes a relatively new one spurred by the advance in technology.

The governor was asked if the minimum wage would lead to a more mechanized work force. In other words, are robots coming to take people’s jobs?

The governor said that would happen. He said higher wages lead to automation. He is right, of course, and some mechanization of the work force will advance without a minimum wage increase, however, the increased minimum wage laws likely will hasten that day.

Ironically, on the same day of the press conference, the Los Angeles Times ran an opinion piece by Bryan Dean Wright which raises serious concerns about robots taking over jobs.

He cited a White House economists forecast that, “Most occupations that pay less than $20 an hour are likely to be, in the words of the report, “automated into obsolescence.””

Whiles supporters of the California minimum wage deal at the press conference hailed the proposal as something that would spread across the country, California’s action will spur the darker side of such a proposal and hurt the people it intends to help.

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