Amazon Go Launch Highlights Minimum Wage Debate

By Gloria Taylor

Last weekend, Amazon unveiled their new high-tech grocery store Amazon Go. The new store promises no lines, no cashiers. You simply walk-in, with the Amazon Go app on your smartphone, take the items you want and “just walk out.” This new shopping experience is an attempt to redefine the grocery market in a way many services have tried with varying degrees of success.

The announcement of this new technology that tracks a shopper determining what goods they walk out with would effectively end the need for many low skill jobs found in a traditional grocery store. While the first Amazon Go does not open to the public until early 2017, it’s important to look at how a current political force, the minimum wage lobby, has contributed to the rise of companies substituting labor for technology.

Amazon isn’t the first to make this shift. Fast food giants Wendy’s, McDonald’s, and even Panera have started to use kiosks for customers to check out in response to cities and states across the country voting for minimum wage increases. It does not make sense for the fast food giants – and their franchises – to pay wages well above the market value. With the high profile push for higher wages, businesses have to respond to the threat that a $15 dollar federal minimum wage would pose to their existence by substituting increasingly more expensive labor with technology. Money simply doesn’t grow on trees, despite what the government might want you to believe.

While increasing minimum wage laws aren’t the only force behind the shift to labor replacing technology, the reality is that if a business can cut its labor cost and increase its profit all while improving the customer experience–odds are it will. Creative destruction, a term coined by economist Joseph Schumpeter, illustrates that as the markets innovates, it frees up resources to shift elsewhere and replaces existing economic arrangements. That’s what’s going on here. So investment in technology to radically improve a consumer’s experience shouldn’t be looked down on as a job destroying product of capitalism.

Progressives’ relentless insistence on a “living wage” that pulls people out of poverty has created an environment where businesses must adjust, harming the very workers  minimum wage advocates try to protect. That’s just the beginning of the problems with the wage fight. In reality, raising price floors on wages doesn’t actually lift people out of poverty. Most of the people affected by such an increase are well above the poverty line. If the true objective is to lift people out of poverty, creating the environment for an economy where business can grow and add jobs without fear of mandated wages should be the policy focus.

214 Massachusetts Avenue NE, Suite 400, Washington, DC 20002
© 2019 Heritage Action for America. All Rights Reserved.