In our hashtag world, the debate rages on about increasing the federal minimum wage. Proponents of raising the minimum wage in incremental increases from $7.25 to $10.10 claim we will get closer to providing a "living wage" resulting in more spending power.
Opponents claim that prices of goods and services will skyrocket, resulting in less job opportunities. With joblessness the number one American priority, workers will be replaced by automation yielding net negative results for job opportunity.
Surveys and polls reveal that by tugging at our heart strings, most of us support more earnings for minimum wage workers. It's the right thing to do, they say. But there are also considerably different results when realistic impacts are introduced into the equation. Likely price increases and less employment opportunities for minimum wage workers lead the concerns.
According to a Reason-Rupe poll, December 2013; 72 percent support an increase in the minimum wage to $10.10 but the opinion was quite different with expanded consequences.
"What about if raising the minimum wage caused some employers to lay off workers or hire fewer workers? Would you favor or oppose raising the minimum wage?" Support for raising the minimum wage dropped to 39 percent with 58 percent opposed.
While many say this is the right thing to do regardless of impact, how can we NOT consider the studies that analyze the economic impact of a hike in minimum wage? Some statistics are essential to the argument and are essentially credible. In that spirit, common sense thinking is necessary in order to consider the economic effects to Americans and business.
There are facts that we cannot escape: companies regularly and always evaluate their profit margins, adjust their prices accordingly, and look to methods to maximize cost efficiency. That practice will never cease; any student of business will tell you that.
A blanket increase in minimum wages also pushes salaries of supervisors, admin assistants, bean counters, et al. Another cost of raising minimums, and that's the fact, Jack!
Businesses are considering the replacement of rudimentary jobs by automated systems. Actually, that train has already left the automation station. We regularly experience systems that have replaced workers with robotic technology: ATMs, self-checkout lanes at grocery stores. Pharmacies utilize robotic systems to fill prescriptions, the auto and steel industries have utilized robots on assembly and production lines for decades. Farmers are using automated machinery, herding livestock, weeding roombas, replacing the need for manual labor/minimum wage workers.
Similar to the career gap during the technology boom, jobs will be created to fill the robotics and automation demands with heightened requirements for skill sets. According to my friend and colleague Art Meadows, automation and robotics expert and educator, there is considerable need for development and training of young people and those in need of career change.
There is a clear shift in jobs requiring different training and competencies and filling this gap WILL result in a reduction of minimum wage workers. But with robotics education and training, they will yield considerably higher wages.
Qualifications can be obtained by college certificate programs, usually two years or specialized high school technical training resulting in significant wage improvement possibilities. Problem-solving skills, good hand/eye coordination, and aptitude required.
Robotics operators' wage: $16 to $22 per hour; automation and maintenance: $25 to $36 per hour with opportunity to earn $100,000 or more.
Robots don't need health care, vacation time, or retirement contributions. According to Meadows, "They need occasional maintenance but robots do not take jobs they usually make more jobs because the company is more profitable with the use of robots. This does significantly add more jobs but they are technical jobs, NOT minimum wage positions."
Let's face it; this argument is largely about the danger of job losses in rudimentary jobs in the food service industry, service industries, and typical youth jobs. (retail, cashiers, waitstaff)
50.6 percent of American workers ages 16 to 24 are federal minimum wage workers.
One indisputable fact that gnaws at proponents of a blanket minimum wage increase is that fewer basic jobs would be available. (supported by the Department of Labor studies). The argument that more money would be available for spending on the American economy would be a short-lived potential boost. Then the evaluators and budget analysts get to work. Higher wages = less employment and/or increases in prices. Results? Less expansion, more attrition, and more automation.- Bingo or not.
The answer? Create a benchmark for periodic evaluation of the minimum wage. Schedule periodic reviews based on cost of living consideration but primarily linked to job market change, recruitment, and retention. The overall economic impact cannot be ignored. And for goodness' sake, encourage minimum wage workers to seek technical training and education for the next wave of automation and their career success.
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