Skip to Content
Uncategorized

Increasing Minimum Wage Puts More Jobs at Risk of Automation

August 14, 2017

When the minimum wage goes up, the robots come for people's jobs. That's the upshot of a paper published today on the National Bureau of Economic Research's website (abstract, full PDF paywalled), which analyzed how changes to the minimum wage from 1980 to 2015 affected low-skill jobs in various sectors of the U.S. economy. 

Federal minimum wage is currently $7.25 an hour, the same level it's been at since 2009. But 30 states have laws on the books that mandate a higher wage—it's $11 in Washington State, for example, and Seattle recently voted to phase in a pay hike that would bring it to $15 by 2022. Such measures are designed to ensure that "minimum wage" is the same thing as a "living wage."

Interestingly, a study of Seattle's new law, released in June, suggested that cuts to working hours meant people were actually losing as much as $125 a month.

The new analysis, by Grace Lorden of the London School of Economics and David Neumark at the University of California, Irvine, suggests that there's a similar negative effect among people who work minimum-wage jobs that machines can do. The researchers found that across all industries they measured, raising minimum wage by $1 equates to a decline in "automatable" jobs—things like packing boxes or operating a sewing machine—of 0.43 percent.

That may not sound like much, but we're talking about millions of jobs across the entire U.S. economy. And certain industries were affected far more than others—in manufacturing, an uptick of $1 in minimum wage drove employment in automatable jobs down a full percentage point.

Of course, we know that automation is already gobbling up jobs in the U.S. (see "Who Will Own the Robots?"). This latest study suggests that even wage policies designed to help America's workforce may instead be speeding up that process.

Deep Dive

Uncategorized

Maximize business value with data-driven strategies

Every organization is now collecting data, but few are truly data driven. Here are five ways data can transform your business.

Modern security demands an empathy-first approach to insiders

While attention is often focused on threats from outside the organization, employees too can pose a risk to security—even inadvertently.

The book ban movement has a chilling new tactic: harassing teachers on social media

Educators who stand up to conservative activists are being harassed and called “groomers” online, turning them into potential targets for real-world violence.

OpenAI is ready to sell DALL-E to its first million customers

But the company has had to rush out fixes to the image-making model’s worst flaws to do so.

Stay connected

Illustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at customer-service@technologyreview.com with a list of newsletters you’d like to receive.