The Effects of Minimum Wage Hikes

July 1, 2008

Yesterday night I was grocery shopping at the local Meijer. When I went to check out, it dawned on me that they had replaced about a dozen more cashiers with self-scan registers. I will spare you another tirade about the so-far-imperfect technology: it’s nice to be able to check out without waiting in line for the two cashiers on duty at 10pm, but it’s a pain in the ass when the register gives you an error after every item. Even when there is nobody else in line, and I only have one or two items, I’m still not convinced that these machines are saving me time.

But I’m fairly convinced that these machines are saving Meijer stockholders a boat-load of wage expenses. Installing a dozen more U-Scan registers was probably a substantial initial capital outlay, but it’s also eliminating a number of low-wage employment opportunities. Because the minimum wage is in the midst of a 40% hike, which came as no surprise to anyone, a number of people who were making $10 an hour (plus incidental benefits, taxes, etc.) scanning groceries are now unemployed (or about to be unemployed) and watching a machine scan groceries that they can no longer afford to buy without welfare assistance. When the wages due to labor are held artificially high, a few lucky employees are able to reap the benefits, but the rest of them are out of luck as labor-substitutes like capital equipment are made artificially more attractive from a profit-and-loss POV.


Posted in: American Politics, Economics Lessons, Seen and Unseen

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