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Minimum wage increases lead to more robotics and automation, says new report

Minimum wage increases lead to more investment in robotics and automation systems, according to a new study.

The report, People Versus Machines: The Impact of Minimum Wages on Automatable Jobs, analysed the US Census Bureau’s Current Population Survey data from 1980 to 2015.

The paper was published by the National Bureau of Economic Research, and authored by Grace Lordan and David Neumark. 

In their remarks, the authors say they study the effect of minimum wage increases on employment in automatable jobs – jobs in which employers may find it easier to substitute machines for people – focusing on low-skilled workers from whom such substitution may be spurred by minimum wage increases.

They add: “Based on CPS data from 1980-2015, we find that increasing the minimum wage decreases significantly the share of automatable employment held by low-skilled workers, and increases the likelihood that low-skilled workers in automatable jobs become unemployed.

“The average effects mask significant heterogeneity by industry and demographic group, including substantive adverse effects for older, low-skilled workers in manufacturing.

“The findings imply that groups often ignored in the minimum wage literature are in fact quite vulnerable to employment changes and job loss because of automation following a minimum wage increase.”