Over the past few weeks, I have seen several libertarian Facebook pages post pictures like this one:
With a caption that says: “THIS is what happens when you raise the minimum wage.”
It gets the point across. Many entrepreneurs are already struggling to make ends meet in this cruddy economy. I have no doubt that a $15 minimum wage regulation (like the one proposed in Seattle) would accelerate the trend towards robot cashiers as a way for businesses to lower costs.
The number of stores with self-checkouts machines has risen dramatically in recent years. You’ll find them in Wal-Mart, Home Depot, CVS, Safeway, and other big name stores.
Is the rise in automation a bad thing though?
There are pros and cons for customers.
Many customers prefer machine cashiers to human cashiers. They find the self-checkout machines to be convenient, quick, and painless. They are great for people who just want to buy what they need and leave with limited human interaction. (Let’s be honest: some of us aren’t big fans of awkward small talk.)
There’s about a 1 in 10 chance that a human fast food cashier will get your order wrong. That’s not a worry with the touch screen robots.
Other people find them to be difficult to use or they prefer customer service from a human.
But whatever your personal tastes, it’s not true that machines are reducing jobs.
Can we finally put this economic fallacy to rest?
Economists call this the Luddite fallacy. It’s named after 19th-century English artisans, called the Luddites, who destroyed textile machinery fearing that these machines would replace their human labor and increase unemployment.
They were wrong.
“The new technology proliferated, textile industry employment rose,” writes Andrew J. Coulson of the Cato Institute. “Among other reasons, increased efficiency drastically lowered the prices of textile goods, that shot demand through the roof, and to meet the new demand new workers were required to operate and maintain the new machinery.”
Technological progress is not the enemy. Modern day Luddite types are failing to see the whole picture. Machines do not overall reduce employment. Someone has to make the self-checkout machines, after all. It’s important to look at all of the consequences—not just those that are easily seen.
There are many good reasons to oppose government-enforced minimum wage hikes. I wouldn’t include a rise in technology on that list.
Innovation does not kill jobs. Bad government policies do.