Thursday, May 26, 2016

Pizza Hut Tests Softbank's Pepper Robot: The Higher The Minimum Wage, The Faster Automation Will Spread

By Forbes, May 24, 2016 

This is something that ought to make enthusiasts for a higher minimum wage think carefully.

This may only be a test but it is what the future has in store: more automation. And the higher the minimum wage, the faster this sort of technology is going to spread–thus destroying jobs.

The underlying and more basic point is that economics happens at the margin. When we change relative prices we change where that margin is. It might be profitable to use human labor at one price for labor, another for capital. The position changes if we raise the price of labor relative to capital. Well, no, the situation will change at some change in relative prices. I think we could make a reasonably convincing case for the decision about this little robot to be somewhere in that range of human labor costing $2.30 an hour to $15 an hour.

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