Several states plan to increase their minimum wage rates in 2026. As I ponder the effects of minimum wage increases and the proliferation of workplace machines and AI-enabled robots, it reminds me of what the great economist Thomas Sowell said about minimum wages: “the minimum is always zero.” Sowell’s reminder is that jobs are not always available and at all times for everyone. Considering AI-enabled machines like Robotaxi, robotic coffee baristas, automated packaging machines, and other industrial robots, Sowells’ reminder puts things in clear perspective—the fundamental economic law of supply and demand — directly influences minimum wage increases.
The same economic law applies to robotic workplace machines that are doing the work humans used to do. Let us be honest, robotic machines are in demand, and employers are integrating them at a rapid pace. Unless you have been living under a rock, employers are steadily increasing their use of robots and machines across all sectors of the economy. Given that these machines could replace human workers, it raises the question: how do human minimum wages rise? Put another way, if a robot can stock grocery shelves and use tools to make things as efficiently as a human, how can human wages increase? Based on economic law, they should not move at all. Employers know they cannot have their cake and eat it too, given that both increases would require their company to absorb increased wage rates and the expenses of robotic workplace machines.
We already know that for every increase in minimum wages, notwithstanding the use of robotic machines, it negatively impacts the employment of unskilled, uneducated, and inexperienced workers. Right? Yes. Since that premise is correct, why are states raising their minimum wages?
Let us start with why minimum wages rise, anyway. The idea that wages rise based on productivity is a fundamental economic principle. Productivity is the efficient use of beneficient human action and energy in the creation of products or services that are of value to the consumer. The more productive the producer is, the more value is created, and therefore, the higher the wages rise. But what about inflation? The cause of inflation does not justify the need to raise the minimum wage. Wages, like everything else during inflationary times or otherwise, rise, but the rise in minimum wages is the result and not the consequence of inflation. When minimum wages rise, what happens to machines and robotic investment? Do machines get paid wages?
Can employers pay robots wages? Robots are productive tools in all industries, making products and offering services for many companies; they are earning wages, but not in the same way as humans would. Just as humans learn through skills-based training, machines and robots also acquire relevant skills via machine learning—deep learning—and other supervised learning. Human knowledge increases and adapts as we learn, unlearn, and relearn, but does this unique human ability cost the employer more than robotic upgrades and information uploads? Granted, there are skills that robotic machines cannot replicate, but if we are fair, humans en masse no longer find it fashionable to pursue certain jobs.
A Forbes article recently projected that AI-enabled robots will eliminate human jobs soon. This article presents a misguided claim that robotics and AI are taking jobs from newly minted college graduates. I have a sneaking suspicion the culprit is the minimum wage increases. On net balance, if we continue to assert that humans are preferred over robotic machines, but robots are doing human jobs, then how can the minimum wage rates increase? If humans are indeed more productive than the average robot, then wages would automatically rise without a state decree; minimums would rise via the ‘productive principle’, which states that wages increase in proportion to the value created by the worker.
However, when minimum wages increase, it undoubtedly disemploys the younger generation who are new to the workforce, as well as those with less experience, limited education, and fewer skills. To put it bluntly, young applicants seeking their first job will face employers who, because of the minimum wage increase, can afford to pay higher rates for their preferred candidates. As a result, employers will choose someone who is not only highly experienced but also, in many cases, overqualified. Why? Employers, left to their own incentives, will choose not only who they favor personally, but in future cases, a machine, if its wages are lower and the employer’s preferences are subsidized. In other words, when states increase minimum wages, it is a tax on what they do not like and a subsidy for their preferences.
Still, they raise the minimum wages, following the increase in workplace machines and robotics, which poses a significant question about how minimum wages can increase despite the widespread adoption of machine learning. We have been misled into assuming that AI-enabled machines and robots are taking jobs, as some suggest. Again, my sneaking suspicion tells me that it is the rise in minimum wages that is the main causes of human unemployment.
