A new study finds a hike in the minimum wage means many low-skilled workers would be replaced by robots.
Economists Grace Lordan and David Neumark reviewed 35 years of Census Bureau data, dating back to 1980. Their research found that increasing minimum wage would result in companies automating more positions held by low-skilled workers. For example, businesses would add more self-checkouts in stores rather than having staffed cashiers or replace assembly-line workers with robotic arms.
The study titled, “People Versus Machines: The Impact of Minimum Wages on Automatable Jobs,” explains that low-skilled workers, those who have a high school diploma or less, may want to reconsider their “Fight for 15.” The researchers found that an increase in minimum wage, even by a dollar, would decrease the number of low-skilled workers in automatable jobs by .43 percent. When broken down by industry, the report found that the manufacturing sector would hit workers the hardest, with a predicted .99 percent decrease in low skilled employees.
The research suggests that employers would invest in computers and robots to keep their cost low and maintain efficiency, rather than paying their employees higher rates. An increase in hourly rates would affect low-skilled workers 40 years and older and workers younger than 25. Specifically, females and blacks would be the most impacted, the study predicted.
Should companies decide to automate, businesses will have to inevitably hire people to maintain and troubleshoot the new technology the study said. However, the new jobs created to manage the robots would require applicants with a higher education and skill level than entry-level workers.
Since 2009, the federal minimum wage has remained at $7.25 per hour. Twenty-nine states and the District of Columbia have hourly rates higher than the federal minimum wage with Washington D.C. having the highest wages at $11.50 per hour. The “Fight for $15” is a movement that started in 2012 when 200 fast food workers protested their wages by not showing up to work, demanding to be paid a minimum of $15 per hour. If the minimum wage were to be doubled to $15, this study shows a glimpse of the effects it would have on both businesses and workers.