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Minimum Wage Increases Could Speed Up Robot Adoption in the U.K.

January 4, 2018

British government policies to boost income for poorly paying jobs could actually incentivize firms to automate instead.

Economics 101: When human labor costs more, robots look appealing. Higher minimum wages make more businesses consider investment in machines that cost less in the long run. In U.S. manufacturing, a $1 increase in minimum wage drove employment in automatable jobs down a percentage point.

New stats: A report by Britain’s Institute for Fiscal Studies (IFS) says that by 2020, government increases in minimum wage for workers will mean 12 percent of U.K. employees benefit from the policy. That’s triple the number covered by the minimum wage in 2015.

The labor hit: The additional folks receiving minimum wage have jobs highly susceptible to automation, like receptionists and cashiers. The IFS warns that if minimum wages rise further, so 25 percent of workers receive them, many jobs currently too expensive to automate—think office workers—could be taken by machines.

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Illustration by Rose WongIllustration by Rose Wong

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