Tuesday, January 3, 2017

Minimum Wage and Robots

So if you see me acting strangely
Don't be surprised
I'm just a man who needed someone
And somewhere to hide

Nice demo shown here of how increases in minimum wage motivate more investment in automation and robotics.

The economics and accounting are straightforward. As cost of labor rises, equipment that can replace labor albeit at a high fixed cost becomes more attractive. It takes less time to cover the initial investment.

As minimum wage goes up, demand for labor goes down and demand for labor substitutes (machines) goes up. ECON 101.

No comments: