The minimum wage wars are heating up. Last week the nonpartisan Congressional Budget Office published a report on the economic costs and benefits of raising the minimum wage. The good news: Raising the minimum wage from $7.25 to $10.10 by the end of 2016, as the President has proposed, could lift 900,000 families out of poverty. The bad: It could eliminate an estimated 500,000 jobs.
People on both sides of the debate touted the findings in the report that bolstered their arguments while dismissing the evidence that contradicted their view. Exhibit A is a television commercial produced by the Employment Policies Institute, a research group funded by industry, airing this week nationally on Fox News and in D.C. on cable channels including CNBC, CNN, and MSNBC.
Since the minimum wage debate began decades ago, economists, business owners, activists, and public policy makers have been arguing about the merits of the minimum wage as a tool for helping the poor. On the one hand, there’s the obvious benefits of higher wages. On the other is the fact that employers will cut jobs to offset rising labor costs. In this year’s debate, the minimum-wage opponents have another weapon in their arsenal: The rise of new technology that they say will replace humans more quickly if the government gives employees a raise.
In the advertisement, actors playing a checkout clerk at a grocery store and a waiter at a restaurant slowly fade until they disappear, while customers use a self checkout lane to buy their groceries and a touchscreen tablet to order their food. In the background, a voice intones: “President Obama wants to raise the minimum wage by nearly 40% and that may sound like a good idea. But if customers won’t pay for it, it forces employers to install technology that takes the place of entry-level jobs. Every time you use a self checkout lane or even a touch screen ordering system, it’s a task that used to be part of someone’s job description. When you raise the minimum wage a new government report confirms that up to one million jobs will disappear.”
There is no way to predict with certainty how new technology will impact service jobs in the coming years with or without a raise in the minimum wage. But as this debate unfolds, you can be sure business will try to use that uncertainty to their advantage.