What happens when the minimum wage is raised by the state, but workers' skills are insufficient for that rate of pay? Unquestionably, jobs will be lost.
Some who are young and have little or no experience will never be able to be employed, because the minimum wage is too high for them. Others, who are older but are not highly productive, will either lose their current jobs or remain unemployed.
Despite all that, it is possible that most low-paid workers will keep their jobs and will thus be better off making more money. Some marginal workers may have to upgrade their skills to meet the higher wage. And insofar as poorly paid employees get a raise, the higher minimum wage could improve the lot of the bottom 20 percent on the whole, even if it impoverishes many in that group by disemploying them.
What remains more of a question is how employers will respond to the higher minimum wage, other than simply firing their least capable people. If all or most of an outfit's workforce is too unproductive to be paid $15 per hour (plus add-ons like health insurance, Social Security, worker's comp and so on), that type of business will close its doors.
Another option for some companies will be to replace workers with robots or other technology. SFGate has a story up today regarding a brand new fast food restaurant which is fully automated, at least in terms of its front of the house operation.
The future is now. Well, it certainly feels that way when you walk through the doors at the flagship location of Eatsa, a new high-tech fast food restaurant that opens today … In terms of the front of house experience, it’s fully automated, with all meal ordering done via in-store iPads. Not a human in sight, though there is a team of about five or six back-of-house kitchen staff (or as I like to imagine, magical elves) who are hidden from view and prepare the food. … When your meal is ready — in just a few short minutes — it appears in small glass compartments, in a manner that’s reminiscent of the classic mid-20th century automats.
Automation in the restaurant industry is new. And I suspect it will grow quickly as technology permits and worker costs go up. It seems to me that it won't be long before most people who now take counter orders and work the cash register will be disemployed. It's just not that tough to replace them with an I-Pad and Apple Pay.
It used to be the case that every gas station in the United States employed several people to fill the tanks of customers. But that is long gone. Almost all gas stations are now self-serve, and more and more need no one to process a payment. Most of the employees at these businesses are simply there to work the cash register and stock shelves in the station's convenience store. But if wages are pushed up too much, those jobs will be removed, too, as technology permits.
Plenty of thoughtful people are now worried about what kind of future we will have when self-driving cars replace everyone who makes a living driving trucks, taxis, buses and so on. The fear is real that robots will be able before long to do every job in a factory faster, better and cheaper than a human being.
Given those threats, it makes little sense to speed up the process of disemployment by making humans too expensive to employ.
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