I was having a discussion with my roommates last night about the minimum wage. During the course of our conversation I realized I was having a difficult time articulating my argument, as were my roommates. Everyone involved is college-educated and relatively well informed, but it became very clear that we had taken a stance without a thorough understanding of our position. I suspect that is the case for most Americans who take policy stances based strictly on part affiliation. Minimum wage increases are either terrible for business or a moral imperative as a society, with little room for any middle ground.
I've said it before, but this is where I think writing is so powerful. It's an excellent medium for developing a point of view and teaching yourself how to form a position on a subject. I tend to be more reserved when it comes to minimum wage increases, here is why...
- As technology continues to act as a substitute for human labor it will become more cost effective for businesses to automate jobs rather than employer humans. A simple example would be cashiers at fast food restaurants, grocery stores, etc. These are occupations that seem very likely candidates for automation. If we wants companies like Wendy's or Safeway to continue to staff people in these positions we have to make it economically feasible for them to do so, and raising the minimum wage for these low skill jobs actually creates more incentive to automate. While it might be politically unpopular/impossible I could see a time when we have to abolish the minimum wage in some cases in order to allow humans to compete with computers.
- People earning the minimum wage represent a fairly small percentage of total US workers, somewhere in the neighborhood of 3%. Of that 3% more than half are between the ages of 16-24. This suggests that these workers are most likely employed for the first time and have very few marketable skills and are also not the sole breadwinners of their households. These are also workers who are most likely part-time workers and are currently attending school. It is the same people who earn minimum wage today who will earn well-above minimum wage down the road as they increase their earning power.
- One of the most common arguments for increasing the minimum wage is that there are a large percentage of single parents who earn minimum wage. In fact, only 4% of minimum-wage workers are single parents working full time. Furthermore, the average family income of a minimum wage worker is $53,000, well above the poverty line.
- Most studies suggest that when there is an increase in the minimum wage there is also a decrease in low skilled jobs.
As I'm writing this its clear that someone on either side of the debate could come out with a laundry list of statistics and studies supporting their stance, which I have no interest in doing. A fundamental question we're all going to have to answer though is how will technology affect employment? I believe that a significant percentage of low skilled jobs will be automated in the coming decades. If you accept that premise then the question becomes how do we ensure there are enough jobs to go around? It's not logical to argue that making human labor more expensive is the smart move when technology tends to drive costs down exponentially over time.
There are a number of tools and programs that can be used to combat this trend, I just don't believe raising the minimum wage is the right one over the long term. The debate ultimately needs to be reframed from "what is fair" to "what is practical in the long run if technology will continue to disrupt traditional forms of employment."