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Higher Minimum Wages Increase Automation of Routine Tasks



(p. A11) Over the past few years, San Francisco in particular, and California in general, has increased the cost to hire and train employees at risk of being automated. The minimum wage will rise to $15 an hour in San Francisco in 2018. The rest of California will get there four years later. On top of San Francisco's hourly wage mandate are requirements for health care, paid leave and employee scheduling.

These added costs give employers with already slim profit margins a strong incentive to automate or embrace self-service. In an interview with Forbes, the founder of a delivery robot company linked his product's value proposition to a rising minimum wage: "At something like $10 per delivery, the majority of citizens will not use [human delivery]. It's too expensive."

The empirical evidence supports the anecdotes: An August [2017] study published by the National Bureau of Economic Research linked a rising minimum wage to an increase in unemployment for workers in jobs that require a large number of routine tasks. The authors reported that it wasn't just service-industry jobs at risk. A rising minimum wage also had a negative effect on job opportunities for older, less-skilled employees in manufacturing.



For the full commentary, see:

Michael Saltsman. "CROSS COUNTRY; San Francisco's Problem Isn't Robots; It's the $15 Wage Floor; The city fears automation will replace workers--but its own policies make low-value jobs illegal." The Wall Street Journal (Saturday, Nov. 25, 2017): A11.

(Note: bracketed year added.)

(Note: the online version of the commentary has the date Nov. 24, 2017.)


The later published version of the National Bureau of Economic Research study mentioned above, is:

Lordan, Grace, and David Neumark. "People Versus Machines: The Impact of Minimum Wages on Automatable Jobs." Labour Economics 52 (June 2018): 40-53.






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