Minimum wages and automation

I recently attended a chamber of commerce event that featured a discussion with state senators and representatives. There were several topics, but one in particular caught my attention — the minimum wage. It seemed most of them were in favor of raising it.

I feel sorry for anyone having trouble making ends meet. Even so, a legislated pay raise is not the answer. It’s impossible to raise everyone’s wages without also increasing their cost of living.

All businesses, especially small businesses, have to make a profit to stay in business. When we increase their costs, they have to raise their prices. Although employees may get a raise, their cost of living increases will provide a net gain of zero or even less.

Even worse, increasing prices often chases customers away. The increased cost of labor forces businesses to cut costs, forcing layoffs. Employees get a raise, but many get their hours cut or lose their jobs. How humane is that? The only way to get a real raise is to increase the value of our service, either by doing a better job or by studying to develop new, more valuable skills.

Yes, it’s a hard reality, but that’s the way it is. We compete with people all over the world for our jobs. How many people have lost their jobs because their companies have moved operations offshore? The more expensive labor becomes, the more attractive offshoring becomes.

The second big threat to our jobs is automation. If you’ve got a job that is mostly routine — look out. The more routine a job is, the easier it is to automate. The threat is not just to blue-collar workers. A lot of accountants have lost customers to TurboTax and other accounting programs. Lawyers are losing routine work to legal software programs. Many production control and materials acquisitions professionals have been replaced by material requirement planning (MRP) systems. It’s hard to
find a profession that hasn’t been affected.

Many department stores now have self-checkout. What they’re really doing is transferring their work to their customers, but Amazon is opening stores with no cashiers and no checkout. When you take an item and put it in your cart, it goes on your credit card. You never stand in line. You just come in, get what you want and leave. You’ll see the charges on your monthly credit card bill. If this catches on, where are all those cashiers going to work?

Although fast-food jobs were never meant to be careers, some people find themselves stuck in them. And automation is a threat here as well. If we can automate automobile manufacturing, automating the production of a hamburger is pretty easy. Fast-food outlets are experimenting with kiosks. Insert your credit card, punch a few keys to indicate your preferences and out comes your order, piping hot and untouched by human hands. Where are all those burger flippers going to work if this catches on?

Increasing the cost of labor accelerates the automation trend. The raise sounds great until we realize we’ve priced ourselves out of the market. A lot of people hate their jobs until they lose them. Then they wish they had them back.

If we want to fix the low wages, we have to fix the education system. How much is someone who can’t make change from a dollar really worth? Not being able to speak and write the only language you know cohesively using correct grammar and spelling is another huge disadvantage.

Many New Hampshire companies are having trouble finding qualified people. They’re not looking for rocket scientists. In many cases, they’re willing to train new employees, but prospective candidates have to have the basic skills.

A major goal of education has always been to create a desire for learning. There are a lot of people with the right attitude overcoming their education deficits by learning on the job and steadily rising in the ranks. There are a lot of millionaires with no college educations, but they know how to learn.

Ronald J. Bourque, a consultant and speaker from Windham, has had engagements throughout the United States, Europe and Asia. He can be reached at 603-898-1871 or RonBourque3@gmail.com.