September 30, 2015

TAX WHAT YOU DON'T WANT:

Rising minimum wages make automation more cost-effective (Jack Karsten and Darrell M. West | September 30, 2015, Brookings)

The federal minimum wage, currently set at $7.25 per hour, is not tied to inflation, so Congress must periodically raise it to maintain its value. At the state level, only 10 states have minimum wages that increase annually with the cost of living; a further five states and the District of Columbia will introduce annual increases in the future. These annual increases forgo the need for large adjustments to the minimum wage at irregular intervals. In addition to benefiting workers, it would allow employers to slowly adjust to wage increases. If the price of labor rises too quickly, businesses have a bigger incentive to replace human labor with automation technology.

Automation involves the substitution of machines for human labor. Historically, automation has reduced or eliminated some job categories while simultaneously creating new ones. During the Industrial Revolution, new farming machines reduced the need for agricultural labor just as factory jobs were opening up in cities. Likewise, the spread of personal computers, the Internet, and smartphones have greatly expanded the number of jobs available in the service sector. As computer functionality improves and computer prices fall, the labor market is bound to undergo further changes.

The food service industry in particular is at the center of both the fight for a higher minimum wage and the introduction of automation technologies. For example, employee scheduling software can match staffing levels with high and low customer demand. Tablet computers placed at tables allow customers to order meals and pay for them without the intervention of a waiter. In the same way, self-service kiosks can replace cashiers at fast food restaurants, and smartphone apps enable customers to order and pay before arriving. Computers are changing food service just as they have for many other industries.

Posted by at September 30, 2015 7:17 PM
  

blog comments powered by Disqus
« THE KURDS AND THE SHI'A HAVE WON THE WoT: | Main | OUR REPUBLICAN PRESIDENT: »