Update/Context: First published in 2017 and revisited in 2020, this article continues to be highly relevant as the national conversation around minimum wage intensifies. Since then, some states have gone beyond the $15 minimum wage, with one recently implementing a $20 minimum for certain restaurants and food establishments. This has had significant consequences: some businesses have been forced to close, while others have raised prices dramatically, with a simple hamburger now costing over $20. As we look ahead, the rise of automation and artificial intelligence (AI) is adding a new layer of complexity to this issue. While higher wages aim to support workers, they may also accelerate the shift toward job automation, creating a difficult balance between fair pay and long-term economic sustainability.

Mandatory $15 Minimum Wage and Unintended Consequences 

Some states have already mandated it.  It sounds good, at first, but the mandatory $15 minimum wage may have some unintended consequences, many of them, well, not so good. 

Automation and robotics are coming to the workplace and they are coming fast.  Entire warehouses are served by robotic carts retrieving merchandise to be sent to customers.  Fully ambulatory robots are programmed to do some of the mundane tasks on the assembly line; mundane tasks currently being performed by minimum wage earners.  The cost of such a robot is about $22,000 and it will last five to eight years.  That’s a bit more than the current minimum wage for one year, but less than the $15.00 mandatory minimum wage.  A current commercial offers a franchise opportunity where the main feature is a robot that will serve your yogurt creation.  (This is a terrible business model.  In a year or two, robots will be serving all kinds of items in all kinds of restaurants.  Robots will become more common.) 

In spite of what any politician says about “bringing jobs back to America”, the minimum wage jobs will not be coming back.  There are too many people in the world willing to work for much less money than the current minimum wage, let alone a new $15 minimum wage. 

All this does not bode well for those earning the minimum wage at current levels.  States raising the bar to $15 incents businesses in those states to do more automation and offshoring of low-level jobs, thus reducing their employment levels. 

We can expect higher unemployment among those in the minimum wage sector; especially youth in the urban areas that need “starter” jobs to learn and enhance skills.  Is that really what we hope to achieve with this clamoring to a higher minimum wage? 

Minimum Wage Jobs Are Starter Jobs 

Minimum wage jobs are supposed to be “starter” jobs.  People take them to get “started” and then aspire to excel in the way they do those jobs so they can begin to move up the ladder into higher paying positions.  The minimum wage was never supposed to be a fully “living” wage. 

Somehow, in our society, we’ve raised a generation or two of people that have the idea they should be able to take a “starter” job and have a comfortable life without aspiring to grow and improve their skills and wage level in the workplace. 

Our schools and training programs can help by not only providing technical knowledge and skills, but also providing the aspiration for life-long learning and self-improvement so our citizens won’t expect a minimum wage job, no matter what the hourly rate, to give them a comfortable life.