Realist, not conformist analysis of the latest financial, business and political news

Minimum Wage Lesson – Wages Are Rising, Walmart Is Hiring More Robots

As everyone keeps telling us rising the minimum wage just doesn’t cost anyone their job, no siree. Labour is unique among the things that human beings buy, no one ever will buy less of it just because it’s becoming more expensive. Unlike, say, ice cream, where we all know that we’ll sell fewer at $15 than we will at 15 cents.

But, you know, the Fight for $15 is cool politics and that trumps reality, right?

Well, not so fast. Because as we can all note wages are rising at present. We’re in a tight labour market, the unemployment rate is back down to where it was before Carter, near before Nixon even. Wages are indeed rising and the likes of Target, Walmart and so on are having to raise entry level wages in order to get the labour they can make a profit from. What’s happening along with this? Walmart is hiring more robots too:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Walmart wants store workers to help out customers instead of mopping up floors and unloading boxes in backrooms. So it’s increasingly turning to robots to fill those tasks.[/perfectpullquote]

That’s one way of putting it. Another would be that in the absence of robots then Walmart would be using people to do these jobs, not robots.

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]This year, Walmart (WMT) plans an aggressive expansion of technology that will automate a range of low-level tasks within its fleet of U.S. stores, freeing up its associates to do more specialized work.[/perfectpullquote]

Sure, and again in the absence of robots how many associates would there be?

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]In a statement released on its blog on Tuesday, the retail giant said that it was unleashing a number of technological innovations, including autonomous floor cleaners, shelf-scanners, conveyor belts, and “pickup towers” on stores across the United States.[/perfectpullquote]

Well, yes. When speaking to the staff they’re not about to say “We’re firing you all, Ha Ha!” now are they?

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]1,500 new autonomous floor cleaners, aka “Auto-C”: After an associate preps the area, this machine can be programmed to travel throughout the open parts of the store, leaving behind a clean, polished floor. Auto-C provides a cleaner shopping experience for our customers, and it frees up our associates to serve them better.[/perfectpullquote]

That’s using less human labour to keep the floors clean than would be utilised in the absence of the robots.

The basic truth here being that at any particular level of technology there’s a price at which we will replace people with machines. Obviously, technology changes over time. But so do prices, making the switch over point different. Raise the price of labour and some technological substitutions that weren’t economically viable become so and thus human jobs are lost as a result of the higher wage. This is true whether we’re talking about a generally tight labour market or the imposition of a higher minimum wage.

Except, of course, there is a difference. If wages are rising because there’s a shortage of labour then those displaced by the machines have other jobs they can go do. Those displaced by an artificial – a legislative that is – rise in the minimum wage won’t have those other opportunities waiting. Some significant portion of those displaced by a higher minimum wage will be displaced into unemployment that is. Which really isn’t a great way to improve the lives of the low paid really, is it?

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