Home / Blog / Article


September 21 2016

What Happens When Minimum Wage Hikes Meet Robots?

Patrice L. Onwuka

Minimum wage increases will be on the ballot in several states this November and, while advocates are hoping for more money, they’re missing the major changes in the economy that will eventually put low-skilled and lower-wage workers out of work.

Uber just launched a test of its autonomous (or self-driving) vehicles, but other industries also face disruption by technology. Warehousing, retail, and food service are all undergoing their own revolutions as robots and technology replace workers.

Innovation will make our lives better in many ways. Just look at what future visits to Walmart have in store for us. Walmart just filed a patent for self-driving carts to make shopping at its stores easier. A Roomba-like motorized device is attached to the bottom of a shopping cart and allows shoppers to use their smartphone to get the cart to take it where they want it to go cutting down on the time it takes to search of items. Quartz reports:

Customers use their smartphone or other mobile device to summon the internet-connected device. From there, the cart is controlled by a centralized computer, and navigates the store using its sensors. The shopping cart will serve as a guide to different items the shopper is looking for throughout the store.

It’s a fascinating to consider how our shopping experience will be enhanced.

However, many workers will eventually be replaced by autonomous technology –changing our labor force and economy in ways that don’t bode well for low-skilled workers. Forget assembly lines, human labor is being replaced by automated systems that can lift more weight, move miles per hour faster, don’t need to take lunch breaks, operate in the dark, and don’t require a raise or bump in pay. 

A new generation of autonomous bots claims to do for distribution and fulfillment what Google and Uber are doing with autonomous cars. The advantage pioneers in this space offer is the ability to minimize three big costs of human-staffed distribution: labor, time, and space. In one example, autonomous robots from the company Symbotics can drop off and retrieve one case of products in a minute – five times faster than a worker. The robots need just 28 inches to traverse the aisles of a warehouse compared to 10 to 12 feet, which means companies can stock far more in warehouses and still move products faster with robots or shrink the size of warehouses.

The technology is costly upfront but as big retailers adopt them, the prices will come to down and slowly we’ll see the industry transformed, which should be worrisome for the estimated 867,300 people who work in warehouses according to the Labor Department. Labor unions are worried as the Wall Street Journal reports:

The International Brotherhood of Teamsters, representing 122,000 grocery-warehouse workers, has been put on the defensive by the rise of automation, said Steve Vairma, head of the union’s warehouse division. “Employers are looking to move more and more into automation,” he said, “and I think we’re going to be faced with those challenges in contract negotiations in coming years.”

Wal-Mart said it is testing Symbotic’s system for use in up to two of its large distribution centers. Wal-Mart is interested in how the robots allow it to store more products in its warehouses.

Symbotic said its system allows food retailers and wholesalers to cut distribution-center labor costs by 80% and operate warehouses that are 25% to 40% smaller.

…  labor costs are “going to hit the grocery industry really hard,” MWPVL founder Marc Wulfraat said. “Most young people would rather work at a desk than hoofing cases around.”

The grocery industry along with retail and food service are particularly the industries affected by labor costs such as minimum wage increases.

In November voters in Maine, Colorado, Arizona, South Dakota, and Washington along with several cities will answer the question of whether the lowest-wage workers should all get a wage bump. The arguments on either side seem to be short-sighted pitting a temporary income boost against short-term job losses as companies cut staff4.

However, it’s more serious than that. Advocates of higher wages should factor into their calculations that employers will look for ways to minimize the costs attached to labor. Hiking minimum wages then only hastens their decision to adopt technology that entirely replaces labor. What good is a higher wage when you’re job is gone and the industry you work in has phased out the only jobs you can do?

We need to address how we educate and prepare younger workers for an ever evolving economy that is increasingly eliminating low- and no-skill jobs.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
Follow us