You Must Admit That A $15 Minimum Wage Is A Job Killer
The Luddites weren’t wrong. Automation destroys jobs.
Take a deep breath.
This is a very emotional issue. Very quickly, as happened on a Facebook discussion I had yesterday, someone will say,
Minimum wage by definition should cover minimum living expenses. Rent, basic groceries, cheap transportation.
Fine. Let’s stipulate that.
Many of us have heard the slur,
You’re just a Luddite.
Some of us have used it in accusing someone else of being opposed to new technology, the implication being that they just don't get it. I know I have. Here’s the deal, though.
The Luddites weren’t wrong.
They did get it. Automation did destroy their jobs.
Luddites were 19th century English textile workers who saw clearly that the textile machinery being introduced by the Industrial Revolution was destroying their high-skill, high-income craft jobs. Automated equipment allowed lower-skilled, lower-income workers to produce more goods less expensively than the craftsmen. This destroyed many people’s jobs making them angry. The Luddites were so frustrated by changes in their world they couldn’t control that they violently destroyed textile machinery in protest. Unfortunately, violent resistance to change is too familiar in 21st century America.
What country do these people live in?
Usually, about this time in this discussion, someone will pull out an analysis like this one that Minimum Wage Increases Do Not Destroy Jobs. In Economics 101 the people who write these reports should have learned that increasing the price of a good or service reduces the quantity demanded. Maybe they missed class that day freshman year.
They can make up for that deficit by looking around the world they live in today and seeing automation gobbling up low wage jobs. More ATMs mean fewer bank tellers. Self-service gas and checkout lines mean fewer retail workers. There is more automation they don’t see, from the systems that allow them to order online to the robots that produce those goods on factory floors and move them around warehouses.
Yesterday, I commented on this from an entrepreneur's perspective. Right now you recognize the Amazon Prime delivery driver frequently in your neighborhood. Soon they’ll just send the Amazon robot to your door… that is until the FAA allows them to fly over the delivery drone. Like Luddites, delivery drivers rightly see this as a threat to their jobs. Entrepreneurs see opportunity in creating the advanced electrified propulsion, situational intelligence, AI-enabled autonomy, and the team-routing algorithms that make this possible.
Five years ago, Amazon Go Stores began opening that you walk into with an app open, the store recognizes who you are, you take what you want off the shelves, walk out, and you’re charged for the goods that you purchased. Other grocery store chains have seen the future. Kroger soon will pilot a similar store.
OK, at this point in the conversation, having established that automation destroys jobs, someone then suggests,
This has nothing to do with the minimum wage. This is technology advancing our world. This would happen regardless of wages.
Here’s the problem. Pinhead accountants are brutal when it comes to maximizing the return on investment. I know. I am one.
When wages are low, it is harder to justify the upfront investment in automated machinery. Raising the cost of labor incentivizes companies to buy all the automation technology the entrepreneurs are developing much sooner than they would have. Entrepreneurs love this. Workers, not so much.
You’ll be a Luddite too
You may be reading this thinking it’s interesting but doesn’t apply to you. You’re already making more than $15/hour. Take little comfort in that. So far, automation has been devastating mostly to low wage workers. Soon artificial intelligence will gobble up professional jobs too, taking over any task that is routine, from reading medical images to closing mortgage loans.
Considering his destiny in Star Wars, Luke told Yoda,
I’m not afraid.
Yoda responded,
You will be… you will be.
Soon, you may be a Luddite too.
