Let’s Add Jobs, Not Robots

CBIA surveys show that credit availability in Connecticut is very good and getting better each quarter.
Interest rates remain benign, so lending is affordable for most firms. And the banks are aggressively marketing affordable loans.
So why, when capital is cheap, are advocates and the Labor Committee determined to make labor (already not cheap in Connecticut) even more expensive, with proposals to boost starting wages to $15 an hour or more?
Add basic and mandatory benefits and payroll taxes and you really see $15 an hour effectively costing $21 an hour or more.
The advocates for boosting the starting wage say the increase will have no effect on businesses, but requiring that employers pay a higher wage does not magically provide them with the money to do so.
Adding more costs to employers, especially small businesses, doesn’t create more jobs.
The legislature needs to do everything it can to make it easier to grow and keep jobs—not prompt businesses to automate functions being performed by people.
As my colleague Eric Gjede notes, a recent survey of Connecticut businesses found that the rising cost of doing business has caused 47% of respondents to automate, or contemplate automating, faster than they had previously anticipated.

The worldwide use of industrial robots, for example, has surged from 60,00 units added annually in 2009 to 229,000 in 2014.
These robots work 24/7, take no breaks, use no workers’ or unemployment comp, and need no health insurance.
McDonald’s in Australia and France use automated kiosks for ordering and payment, erasing the need for almost all counter help.
Much closer to home, restaurants in Connecticut are using tablets to take orders and pay the bill.
The owner of multiple fast-food places in Bridgeport recently told me the latest minimum wage increase trimmed 2% off his gross (and more off his profits).
He said at $15 hour he'd probably close the units and sell the prime real estate for other uses, laying off over 250 workers.
Let’s add jobs to Connecticut’s workforce.
These wage proposals, promoted as a way of helping workers, actually kill entry-level jobs and destroy the path to better jobs for less-skilled workers.

---

Pete Gioia is an economist with CBIA. Follow him on Twitter @CTEconomist.