People Versus Machines: The Impact of Minimum Wages on Automatable Jobs

44 Pages Posted: 17 Aug 2017 Last revised: 3 Mar 2022

See all articles by Grace Lordan

Grace Lordan

London School of Economics & Political Science (LSE) - London School of Economics

David Neumark

University of California, Irvine - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 2017

Abstract

We study the effect of minimum wage increases on employment in automatable jobs – jobs in which employers may find it easier to substitute machines for people – focusing on low-skilled workers for whom such substitution may be spurred by minimum wage increases. Based on CPS data from 1980-2015, we find that increasing the minimum wage decreases significantly the share of automatable employment held by low-skilled workers, and increases the likelihood that low-skilled workers in automatable jobs become nonemployed or employed in worse jobs. The average effects mask significant heterogeneity by industry and demographic group, including substantive adverse effects for older, low-skilled workers in manufacturing. We also find some evidence that the same changes improve job opportunities for higher-skilled workers. The findings imply that groups often ignored in the minimum wage literature are in fact quite vulnerable to employment changes and job loss because of automation following a minimum wage increase.

Suggested Citation

Lordan, Grace and Neumark, David, People Versus Machines: The Impact of Minimum Wages on Automatable Jobs (August 2017). NBER Working Paper No. w23667, Available at SSRN: https://ssrn.com/abstract=3018326

Grace Lordan (Contact Author)

London School of Economics & Political Science (LSE) - London School of Economics ( email )

David Neumark

University of California, Irvine - Department of Economics ( email )

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