Minimum Wage Mechanization
Part One
When the minimum wage is increased, there comes an assumption that there will be a negative impact on employment. Despite this expectation of unemployment, historical trends have shown that no such rise in unemployment exists overall, but can be found with specific groups. Workers are now easily replaced by technology in low skill fields and businesses have the option of switching over to machines for the same tasks. While an increase in minimum wage has little impact overall, youth employment suffers due to mechanization.
Part Two There is little observed impact in an increase in minimum wage on the overall employment. Minimum wage workers make up a very small portion of the American workforce, with only 2.6% of all American salary workers earning minimum wage (DeSilver, 2014). With only a small subset of workers actually affected by changes to the minimum wage, the broad overview of employment is not going to change. The majority of workers are already paid more than the minimum hourly so many businesses do not experience a change in costs. Even …show more content…
Faced with two tasks of equal complexity, a business is motivated to mechanize the more costly process (Feng & Graetz, 2015). Once the costs of human labour outweigh the costs of mechanization businesses have the incentive to switch. Many of the jobs paying workers a minimum wage are low skill and involve a high turnover, such as in fast food or the restaurant industries (Desilver 2014). In these situations, replacing workers with machines is a cost effective solution. With a single fixed expense, several variable expenses (worker salaries) can be eliminated entirely, removing a cost of production. Given that a business’ primary goal is to turn a profit, if mechanization has lower costs than actual employees businesses will switch at the expense of youth
When the minimum wage is increased, there comes an assumption that there will be a negative impact on employment. Despite this expectation of unemployment, historical trends have shown that no such rise in unemployment exists overall, but can be found with specific groups. Workers are now easily replaced by technology in low skill fields and businesses have the option of switching over to machines for the same tasks. While an increase in minimum wage has little impact overall, youth employment suffers due to mechanization.
Part Two There is little observed impact in an increase in minimum wage on the overall employment. Minimum wage workers make up a very small portion of the American workforce, with only 2.6% of all American salary workers earning minimum wage (DeSilver, 2014). With only a small subset of workers actually affected by changes to the minimum wage, the broad overview of employment is not going to change. The majority of workers are already paid more than the minimum hourly so many businesses do not experience a change in costs. Even …show more content…
Faced with two tasks of equal complexity, a business is motivated to mechanize the more costly process (Feng & Graetz, 2015). Once the costs of human labour outweigh the costs of mechanization businesses have the incentive to switch. Many of the jobs paying workers a minimum wage are low skill and involve a high turnover, such as in fast food or the restaurant industries (Desilver 2014). In these situations, replacing workers with machines is a cost effective solution. With a single fixed expense, several variable expenses (worker salaries) can be eliminated entirely, removing a cost of production. Given that a business’ primary goal is to turn a profit, if mechanization has lower costs than actual employees businesses will switch at the expense of youth