The Future of the Unskilled Worker

Here's a short but fascinating video that shows us what's coming for retailers, shoppers, and minimum wage earners:

When this technology is widely adopted what will the job prospects for minimum wage workers look like? Right. So what sense does it make for minimum wage workers to demand that they be paid even more? It's as if they're deliberately trying to give their employers the incentive to automate so they can avoid the hassle of having under-educated, unskilled employees demanding they be given more money.

An article by Jeffrey Dorfman at Forbes runs the numbers and finds that raising the minimum wage to $15 and hour will result in 13.7 million lost jobs, and that doesn't factor in the effect of being able to substitute technology for workers.

So who benefits from raising the minimum wage? Here's Dorfman:

So why would labor unions fight this fight, given that they may cost millions of the people they are supposedly fighting for their jobs? There are three obvious answers to this question.

First, government employees are increasingly the bulk of union workers (with public union workers on pace to pass private sectors ones in the next year to two) and government union workers likely will make up few of those lost jobs. Government workers have stronger job protection and work for employers who can force their “customers” to cough up more revenue.

Second, there are many union contracts which include automatic pay increases tied to changes in the minimum wage. Thus, many workers who already earn more than $15 per hour will still get raises thanks to these laws. For example, California teachers have a contract that ties starting pay to twice the minimum wage, meaning that once the new California law is fully effective in 2022 all public school teachers in the state will earn over $30 per hour.

Third, although millions of workers will lose their jobs, those who keep them get substantial pay gains. For unions, the increase in union dues from higher wages will likely more than offset the loss in dues from fewer jobs. In other words, union revenue is expected to increase. While some union workers (and many more non-union workers) will lose their jobs, those who keep their jobs win big enough for total dues payments to rise. So, if you are a union not overly concerned about the fate of those job losers, a $15 minimum wage has some definite upside.

It may strike some as a cynical analysis, but it has the ring of truth.

In any case, the video above illustrates pretty starkly what the future's going to look like for those who have no skills. They're simply not going to be in the picture. Which raises a very troubling question: What does a society do with millions more unemployed and unemployable people?