How robotics affects the $15 minimum wage

Be careful what you wish for.

This old adage may come back to haunt advocates of $15-per-hour minimum wage laws.

Coupled with new Labor Department rules concerning overtime, shift assignments and classification, wages for entry and/or lower level jobs can become unsustainable.

{mosads}While these changes are said to help lower-income workers, they may in fact escalate changes in business practices that will effectuate massive workforce dislocation. Companies now paying relatively unskilled workers to perform job-related repetitive activities will seek alternatives.

Even before the new changes, companies were starting to look at ways of automating many routine tasks. In particular, this trend focused on mechanical or robotic substitutes for customer-faced interchanges.

Executives have a very real example to use as a guide where human personnel were replaced by machines. This change happened in the banking industry with the introduction of ATMs.

By the 1960s, financial institutions began to realize the cost of conducting transactions via in-person cashiers was becoming too expensive. Over time, they began educating customers to use an ATM. Consumers at first resisted, and then embraced, the new robots.

The weaning process away from personal contact occurred over decades before it totally succeeded. But it is complete today. The changes in workforce makeup took decades. But in the end, robotic machines replaced human hands.

In fact, one bank in 2015 discovered it had more people involved with ATMs than cashiers. But the study showed the bank was making more profits per transaction than previously.

While these changes affecting people took time, many experts predict mass dislocation in the workforce due to the new rules and hourly pay floor, and that continued robotic expertise growth will be shorter and more disruptive. Any industry with customer-facing, repetitive transactions by lower-wage workers is ripe for change.

What quickly comes to mind is the hospitality industry: hotels, fast-food establishments, transit hubs, etc. These sectors employ many lower-wage earners, particularly young people and retirees.

Sector leaders are moving quickly to implement alternative applications, many robotic in nature. For example, fast food establishments are taking steps to automate food ordering. In Japan and elsewhere, robotic desk units check-in and -out hotel guests.

Both of these examples serve as harbingers of change expected in the next five years. Customers will interface more and more with robotic applications, not human workers. 

The principal workers most affected will be the lowest earners with the least education and skills.

Despite general public unawareness, once placed in an operation, robotic units more often than not quickly demonstrate their worth. For example, when automated cashiers were installed in a fast-food chain, mistakes in providing change were reduced 2 percent, according to an expert from a leading supplier.

It is not just the hospitality industry but a whole raft of other sectors where robotics are expanding mankind’s activities while at the same time reducing the number of people required to support them.

Happily, this trend in workforce substitution has an upside as well as downside.

What is not often talked about is the fact these new tools will need development, manufacturing and servicing support. This means retraining for some and different education for our nation’s youth.

In a poll (conducted in April-July 2015 for the National Robotics Education Foundation by Information Strategies Inc.) of 200 senior corporate executives on the industrial sectors they thought would create the most jobs for our nation’s youth during the rest of the decade, 81 percent mentioned robotics as a top area.

Today, there are an estimated 150,000-plus unfilled positions in robotics-related workplaces in the U.S. alone, according to industry surveys. These positions often pay higher-than-average salaries for even the most basic service openings, according to another Information Strategies Inc. survey for the National Robotics Education Foundation.

By 2020, robotic job openings are expected to grow to almost 500,000 positions. In their comments, executives polled said all of these areas and many more will require individuals who can design, build, program, operate and maintain these machines.

(The poll was taken before the new work rules and hourly pay issues became more concrete.)

Subsequent focus groups indicate a growing realization by corporate executives that they may need to substitute robotics-trained employees for current lower-level work. Even if they have to pay higher-level employees to build and service more robotics applications, profits will grow.

Robotic application are also getting smarter. Once a robotic application learns a task, it never forgets unless reprogramed. Also, as artificial intelligence programs become more sophisticated, the robot builds its own memory and learns. Change can be frightening, but the world is changing and more education is needed so individuals can justify $15 hourly wages.

This nation spends billions of dollars educating its youth. More dollars need to be expended and/or redirected to provide students with a more intimate, exciting understanding of robotics and its future.

Laing is chairperson, and Atwood is executive director, of the National Robotics Education Foundation (NREF), a nonprofit serving communities preparing students for careers in science, technology, engineering and math (STEM).