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There is new evidence that raising the minimum wage pushes business

owners to replace low-skilled workers with automation. And it shows

that old, young, female and black low-skilled workers face the highest

levels of unemployment after a minimum-wage increase.

Economists Grace Lordan of the London School of Economics and David

Neumark of UC Irvine studied 35 years of government census data for

their working paper, which was released in August, titled "People

Versus Machines: The Impact of Minimum Wages on Automatable

Jobs."

"Based on [current population survey] data from 1980-2015, we find

that increasing the minimum wage decreases significantly the share of

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automatable employment held by low-skilled workers," the study says.

These automatable jobs include positions like supermarket check-out

clerks, who can be replaced by self-service checkout cashiers, and

assembly-line workers in manufacturing plants, who can be replaced by

robotic arms. Low-skilled workers, for the study, are defined as those

who have a high school diploma or less.

"We find that a significant number of individuals who were previously in

automatable employment are unemployed in the period following a

minimum wage increase," the study says.

And while most minimum-wage research focuses on teenagers, this

study looks at the influence raising the minimum wage has on many

other populations. "These effects are among the largest for individuals

employed in the manufacturing industry, and are larger for the oldest

and youngest workers, for females and for blacks."

Raising the minimum wage is a deeply polarizing issue. While some

argue raising the minimum wage squeezes businesses, forcing them to

lay off workers, others argue it is beneficial for both individual workers

and the economy as a whole.

The federal minimum wage is $7.25 per hour, but 30 states and the

District of Columbia have higher state minimum wages that go as high

as $11 in Washington state, and $11.50 in the District of Columbia,

according to Lordan and Neumark. Some cities have their own rules,

too, such as Seattle, which has a minimum wage of $15 per hour.

Minimum wage is not the only cause for automation. Billionaire tech

titan Elon Musk has warned that advances in technology are happening

so fast that the government will end up having to pay people cash

handouts to live.

"There is a pretty good chance we end up with a universal basic income,

or something like that, due to automation," Musk tells CNBC in an

interview last year. "Yeah, I am not sure what else one would do. I think

that is what would happen."

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Elon Musk: Robots will take your jobs,government will have to pay your wage

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Billionaire entrepreneur Richard Branson has echoed the sentiment.

"With the acceleration of [artificial intelligence] and other new

technology ... the world is changing fast," Branson writes in a post

published this week. "A lot of exciting new innovations are going to be

created, which will generate a lot of opportunities and a lot of wealth,

but there is a real danger it could also reduce the amount of jobs."

While many low-skilled workers will be replaced by automation,

developments in technology will create some new jobs, too.

"[F]irms may hire other workers who perform new tasks that are

complementary with the new technology. For example, a firm using

more robots may hire individuals to service, troubleshoot, and maintain

these new machines," the study from Lordan and Neumark says.

These jobs, though, are likely to require more education and training

than the lower-skilled jobs being replaced. And, notable even to the

study's authors, those higher-skilled jobs that are created by new

technology tend to be filled by women.

"Interestingly ... we find positive effects for females in higher-wage

jobs," the study says. "This suggests that employment prospects for

some workers in higher-wage occupations are boosted by minimum

wage increases, consistent with a story in which some jobs are lost to

automation, while others are created.

"However, those that are created are for higher-wage workers among

the lower-skilled workers, and perhaps — given that result emerges for

women — among jobs less likely to involve manual or physically

demanding labor."

See also:

Elon Musk: Robots will take your jobs, government will have to pay

your wage

Elon Musk says robots will push us to a universal basic income—here's

how it would work

Mark Zuckerberg: Alaska's cash handoutprogram "provides some good lessons forthe rest of the country"

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Cash is dead, smart refrigerators manage grocery budgets and drones

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Catherine CliffordSenior Writer

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