Why Robots Love Minimum Wage

Well intentioned but blissfully ignorant.

That’s the way I’ve come to see the progressive, far-left movement that’s been gripping many American minds over the last few years.

As a member of the millennial generation, this often puts me at odds with a good portion of my peers. I’m one of the few people my age who is willing to accept, as older generations have suggested, that ours is largely entitled, overconfident, and naive.

Of course, the circumstances that led us here weren’t completely our doing. We were the Mr. Rogers and Barney the Dinosaur children. We were raised under the false notion that everyone is a unique and special snowflake no matter what and that with enough positive thinking, we could solve the many woes of the world.

But the vast majority of real-world problems cannot be solved simply by joining hands and singing “Kumbaya.” Forgiving student loan debt doesn’t magically make college free or any less wasteful, taxing the rich doesn’t lower poverty rates, and branding all police as evil-doers won’t improve the standing of the African American community.

While generally well intentioned, this kind of one-step thinking can be ironically harmful to our society. Making college “free” will only lower the quality of the education system. Taxing the rich will only provide incentives for the rich to move their money overseas. Renouncing law enforcement will only contribute to the already disproportional murder rate of black males.

Part of this well-intentioned but chaotic zeal is the recent cry for minimum wage. The hashtag #FIGHTFOR15 is now trending across the web, and terrifyingly enough, there are a lot of people out there who think a sudden hike to a $15 minimum wage would be a good idea.

As is often the case, though, this sympathetic outcry would ironically prove detrimental for the exact people it’s intended to benefit…

Not only is it true that the nonpartisan Congressional Budget Office has concluded an artificial increase to just $10.10 would result in as many as 1 million workers losing their jobs, but proponents of a $15 minimum wage are completely ignoring the inevitable acceleration of workforce automation this would cause.

If you don’t catch my drift, I’m talking about robots — robots that flip burgers, robots that mow lawns, robots that can perform low-skill labor at less than $15.00 an hour.

According to recent data from Bloomberg, job automation already threatens up to half of the U.S. workforce, even with the federal minimum wage at $7.25. Research from Oxford University made a similar conclusion in 2013, finding that 47% of today’s jobs in the U.S. could be automated in the next two decades.

Among the most vulnerable jobs at risk are those that a minimum wage hike is intended to protect: Security guards, fast-food cooks, and retail workers are all rated at automation probabilities of at least 81%.

By raising the minimum wage to $15.00, the sad reality is that we would only be speeding up the process.

Robotics and automation adoption is driven by one thing and one thing only: ROI. And by doubling the cost of low-skilled labor, companies would have major incentive to lower human headcount in favor of less expensive machines.

Here’s a recent excerpt from The Washington Post on the topic:

The industry could be ready for another jolt as a ballot initiative to raise the minimum wage to $15 an hour nears in the District and as other campaigns to boost wages gain traction around the country. About 30 percent of the restaurant industry’s costs come from salaries, so burger-flipping robots — or at least super-fast ovens that expedite the process — become that much more cost-competitive if the current federal minimum wage of $7.25 an hour is doubled.

For those who have yet to hear, San Francisco-based start-up Momentum Machines already aims to transform the fast-food industry with its automated burger machine capable of producing 360 customized burgers every hour.

In fact, the company plans to open the world’s first “smart restaurant” chain, where all cooking is done entirely by robots. The company proudly boasts on its product page: “Our alpha machine replaces all of the hamburger line cooks in a restaurant. It does everything employees can do except better.”

As for how cost-competitive Momentum Machines’ burger-bot is compared to human workers, that has yet to be seen, but doubling the federal minimum wage would surely give the company a much greater edge over the competition, or at the very least a head start.

It’s not just fast-food workers being put at risk, either. For one, Tim shared with Tech Investing Daily subscribers just yesterday the details on iRobot’s FCC approval for its lawnmower robots, which could potentially put landscapers at risk. There are also a number of companies now developing security robots to patrol commercial buildings and parking structures at night.

Private company Knightscope Inc.’s security robots have already made their way into Microsoft’s offices and various high-tech firms throughout Silicon Valley. The robot uses laser scanners, cameras, microphones, and even odor sensors to detect intruders and notify the police.

The bad news for low-skilled workers is that the destruction of their jobs by these kinds of machines is all but inevitable. The irony is that they and the people who purportedly want to help them are only bringing that future closer to reality by demanding a $15 minimum wage.

Until next time,

Jason Stutman

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