Dec 27, 2016 09:43 AM EST

Wage Issues: Increasing Minimum Wage Could Lead To Fewer Jobs?

Workers have been pushing for an increase in minimum wage for a long time now. They argue that they cannot feed their family and cannot afford basic necessities at the current minimum wage level. Another argument they use to get employers on their side is that higher minimum wage could mean increased productivity levels.

Tim Worstall, a fellow at the Adam Smith Institute, agreed with the argument that workers could be induced to work more if they are getting a higher wage for their effort, Forbes reported. However, he argued that increased productivity levels could mean that there will be fewer jobs available.

He cited the reasoning made by Sir Charlie Mayfield, chairman of the John Lewis Partnership. Mayfield, who also serves as a government adviser on productivity, said higher minimum wage could push employers into increasing the use of automation in workplaces, which could lead to the decline in the number of jobs available for humans.

The arguments of Worstall and Mayfield rest on the fact that employers will always choose the cheaper option when it comes to production. If a machine costs lower than the wages of the number of humans it would take to finish a task, employers will not hesitate to implement automation. Lower wage expenses could contribute to higher profit after all.

McDonald's Corp. is one of the corporations that has been beleaguered by workers asking for higher minimum wage, Jobs & Hire previously reported. The fast-food giant agreed to settle with its workers to the tune of $3.75 million.

Worstall advised those who have been lobbying for a higher minimum wage to stop using higher productivity levels as an argument for their cause, but he did not offer an alternative option. The automation option that could lead to fewer jobs would just hamper the cost because it could lead to lower employment levels. However, workers and employers need to resolve the issue first because it remains uncertain whether full automation would be a thing in the near future.


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