Minimum Wage Sucks

We all know the stories of how little our parents made when they started out, but consider the following:

I work in an industry that provides equipment and systems for the recycling industry. While most of the separation of what you throw into the big blue bin is done mechanically, some human intervention is still required. Most often the people performing these tasks earn minimum wage or close to it. So along comes Congress and up goes the minimum wage. Now these folks take home a little more cash, right?

Here's what really happens. When we design our systems we are constantly weighing the cost of automation versus using manual labor. As labor costs increase, higher levels of automation become economically viable. In other words, increasing the minimum wage ultimately results in fewer manual labor (minimum wage) jobs. In fact the increased machinery needed to automate the previously manual function creates more demand for higher-skilled and higher-paying jobs such as welders, fitters, and engineers.

Unintended consequences strike again.