As minimum wage increases gain momentum, so does move to automate. Coincidence?

The Associated Press reports California is poised to lift the statewide minimum wage to $15

California legislators and labor unions have reached a tentative agreement that will take the state’s minimum wage from $10 to $15 an hour, a state senator said, a move that would make for the largest statewide minimum in the nation by far.

“This is not a done deal,” Sen. Mark Leno, D-San Francisco, told The Associated Press on Saturday. “Everyone’s been operating in good faith and we hope to get it through the Legislature.”

From The Hill

Gov. Jerry Brown (D) is expected to make the formal announcement as early as Monday.

According to the L.A. Times, the minimum wage will jump from $10 to $10.50 an hour in 2017 and will increase by $1 every year after that until reaching $15 an hour in 2022. 

USC scholar Peter Gordon comments on the implications of increased labor costs. 

We do know that tech will get better and opportunities to substitute for low-skilled labor will only grow. Are politics and technology accelerating away from each other? It’s a scary thought.

Gordon links to a recent WSJ op-ed by Andy Puzder, CEO of CKE restaurants (Carls, Jr. and Hardee’s). Puzder writes that the move to automate in the restaurant industry is driven by consumer preference and by costs. With respect to costs, he cites increases in the minimum wage, paid sick leave and the Affordable Care Act.

Dramatic increases in labor costs have a significant effect on the restaurant industry, where profit margins are pennies on the dollar and labor makes up about a third of total expenses. As a result, restaurants are looking to reduce costs while maintaining service and food quality.

As an example of where the trend may lead for certain industries, Gordon notes a Swedish convenience store that operates round the clock without any employees at all.

Seattle Times business columnist Jon Talton also considers the challenges technology poses for middle class workers. 

A study from the previous year by Carl Benedikt Frey and Michael Osborne examined the vulnerability of more than 700 occupations. They found that about 47 percent of the American workforce was at risk.

University of Washington professor Pedro Domingos, author of “The Master Algorithm: How the Quest for the Ultimate Learning Machine Will Remake Our World,” warned me late last year that we were in for a rough ride.

“Over the next five to 20 years, some occupations will disappear, but lots of occupations will be created,” he said.

He acknowledges that in several major local industries technology has produced substantial productivity gains along with job growth. 

Amazon is an aggressive user of robots. Yet it also employed 230,800 humans at the end of 2015 (not counting seasonal workers), a nearly 50 percent increase over the previous year.

People work alongside robots at Boeing’s assembly plants.

With or without the mandated increases in labor costs, the increased use of automation – robots and restaurant touch screens – will continue. But there’s little doubt that increases in the minimum wage and other mandated benefits is adding topspin to the trend. As we wrote in our foundation report,

Washington employers and residents alike place a high priority on the equitable compensation and protection of those in the workforce. Policymakers must carefully consider wage and benefits mandates … to ensure that such protections are maintained in a cost-effective manner so that employers can create more job opportunities for Washington citizens.

And policymakers must also assure that students and workers have the skills required to succeed in an employment world in which by 2020, 70 percent of Washington jobs will require postsecondary education or training — jobs likely to be more highly compensated and less likely to be replaced by automation.