Minimum-Wage Folly Will Usher In Robot Revolution

EnglishPuerto Rico, like many other US jurisdictions, is toying with the idea of raising the minimum wage to US$15 per hour — part of the so called living-wage movement. This latest socialist “workers-rights” craze, like so many before it, simply ignores reality. It also ignores math.

The best way to guarantee a better life for minimum-wage workers is to lower the minimum wage while lowering taxes and easing regulations.

Raising the minimum wage, however, is merely an attractive campaign slogan. It will not go away, even if the politicians promising it have been briefed on how it negatively affects the economy and minimum-wage workers.

An anti-Ebola laser robot, functioning in US hospitals. (@HaydonKerk)

But reality is about to rear its ugly head in a way never seen before in human history: we are on the verge of a robot revolution.

Akin to the early days of the internet, we are in the first stages of vast and sweeping changes in robot technology. In a period of just 15 years, the internet — barely noticed and used in the early 1990s — became the powerhouse of business, finance, and politics by the mid-2000s. Today, we can hardly imagine our lives without social media and the other trappings of the wired world.

The same is now happening in robot technology. From robot toys to Amazon’s proposed drone-delivery system and robots on the battlefield, robots are popping up everywhere. Given the common use of vending machines, at what point do robots outperform humans in the service sector? Perhaps the real question is at what wage do robots outperform humans? Technology-consulting firm Gartner estimates that one in three jobs will go to robots in the next 10 years.

One need not run the numbers to know that a $15 minimum wage will make fewer people employable, and robot replacement more viable. That should give politicians pause before they start proposing another increase in the minimum wage. It won’t be long before some young kid tinkering in his garage with robots will start a new company designed explicitly to offer low-cost robots to replace most minimum-wage employees.

Many lawmakers may simply try to ban the robots to “protect jobs.”  While that might limit them for a while, it would only work if everyone were to apply it. If one country chooses technology over socialism, all other countries will have no choice but to follow suit or fall behind.

As nation after nation goes robotic, millions of minimum-wage workers will find themselves unemployed and unemployable in a new robot-dominated world. Those countries or jurisdictions that refuse to make the transition will simply decline unless they are paying their workers far less than it costs to replace them with robots.

There is a way that Puerto Rico can benefit from this paradigm shift. Education officials could make robotics a core class beginning in grade school. It should be continued throughout high school and be required for graduation. Understanding how robots work and are programmed and maintained will give Puerto Rican school children and young adults a leg up in the new robotic world order.

The world is once again entering a major change in the way business is done, and far too many politicians are either shortsighted or just pretending not to see.

Fergus Hodgson edited this article.

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