On January 1, the minimum wage for Florida workers rose to $8.25, up 15 cents from 2017’s rate of $8.10. Floridians voted in 2004 to pass legislation that requires the Department of Economic Opportunity to raise the wage each year based on a formula that takes into account changes in the federal consumer price index. Since 2005, Florida’s minimum wage has increased $2.10 an hour, or 34 percent.
On the surface, that sounds like good news for the more than 39,000 Floridians who currently earn minimum wage (based on 2013 Census data.) But eventually, the raise puts these workers at risk of earning nothing at all. Everyone who has studied basic economics or managed a budget understands that the more something costs, the less you will buy. That’s why you might eat at McDonald’s several times a month, but only choose a high-end restaurant once a year to celebrate your anniversary.
Seventeen cities nationwide have targeted $15 as the “living wage,” hoping to increase the standard of living for entry-level workers in high cost of living cities like Seattle. But a 2017 study found that the Seattle initiative actually reduced the income of minimum wage workers by an average of $125 a month. The reduced income resulted from employers cutting hours and shifts to reduce labor costs.
The rising trend in minimum wage causing companies to look for ways to reduce the number of workers needed for routine tasks. Kiosks and apps for ordering, self-service drink stations and self-checkout stations are replacing counter workers and cashiers in fast food and retail, the largest employers of minimum wage workers. The alternative to increasing productivity and reducing labor costs would be to increase prices — and companies are betting that you won’t buy very many $10 Big Macs. (Blame that pesky law of supply and demand again.)
Did you fill up your car in the past week? If you did, you pumped the gas yourself. Thank Short Stop station owner John Roscoe. In 1964, he bought an electric box that let a clerk inside activate any of the pumps outside. By 2000, hundreds of thousands of gas station attendant jobs had vaporized. And we don’t really miss them — no one mourns the loss of that career path.
It’s hard to tell how — and how quickly — consumers will react to fully automated fast food or retail outlets. It’s possible that the demand for workers in these industries may actually increase when machines raise productivity and lower costs enough. The banking industry offers an interesting example.
According to a policy blog from The American Enterprise Institute, people expected the rapid adoption of ATMs in the 1990s to drastically reduce the demand for tellers in banks. It’s true that the automated tellers reduced the average number of tellers per urban location from 21 to about 13. But the increased productivity meant that it cost much less to operate a branch, and banks began to build more and more branches to capture market share. As a result, demand for bank tellers actually increased.
So it’s conceivable that eventually, automated stores will be so productive that we could see a fast food chain on almost every corner. You can decide for yourself if that’s a good thing.