Saturday, February 22, 2014

The minimum wage and “the end of work” « Hot Air

The minimum wage and “the end of work” « Hot Air: "Most of this analysis makes a lot of sense, but I would take it one step further and ask if the minimum wage debate doesn’t play directly into the effect being observed. With public policy, regulation and an uncertain environment for employers exerting downward pressure on hiring, the temptation is already there to invest in advanced technology to achieve the same productivity. Unlike the case of Great Britain, if the government drives up the cost of employing workers further, wouldn’t that incentive to automate become greater? Businesses have a target level of productivity they must achieve in a profitable manner. When labor costs are low, expensive technology isn’t as attractive and they would naturally hire more workers as described above. But when you artificially drive up the cost of labor in an already challenging environment, the opposite effect would seem natural."

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