Will Automation Take Over if the Minimum Wage Goes Up in Texas?

Lawmakers in the state have long feared too much government interference in the economy, but now considerations about automation on the part of businesses is offering another concern when it comes to boosting wages.

by Bob Sechler, Austin American-Statesman / February 26, 2019
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(TNS) — Aversion among some state lawmakers to government intervention in the private economy has been an obstacle to raising the decade-old minimum wage in Texas. But another issue — fear of robots — now might be a close second.

Several members of a House committee voiced concerns Monday about greater reliance on automation and artificial intelligence by Texas businesses, and the potential for job cuts that could result, if the state's mandated minimum wage of $7.25 an hour is raised for the first time since 2009. The federal minimum wage has also remained at that level since 2009.

"This is one of the things we have to be worried about when we have computers and other methods (of performing certain job functions) — we could cut out employment for some folks," said state Rep. John Raney, R-College Station.

He made the comments during public testimony on two proposals to increase hourly minimum pay for Texas workers. House Bill 194, sponsored by state Rep. Ron Reynolds, D-Missouri City, would raise minimum hourly pay in the state to $15 on Sept. 1, while House Bill 290, sponsored by state Rep. Senfronia Thompson, D-Houston, would raise it to $10.10 in stages over four years.

Raney and some others on the House Committee on International Relations and Economic Development cited the prevalence of self-serve checkout kiosks at retailers and the increased use of automation at fast-food restaurants as potential risks to low-skill workers if the mandated minimum pay rate is increased.

But backers of the bills said other states have raised their minimum wages without spurring job losses.

"I wasn't prepared to talk about automation and robots," René Lara, the Texas AFL-CIO's legislative director, said at one point in the hearing. But he went on to call fears about an imminent wipe-out of low-skill jobs because of automation overblown.

The so-called "living wage" in Texas -- meaning the amount a person must earn to support themselves and their family -- currently sits at $11.48 an hour for a single adult and at $23.42 a hour for a single adult with a child, according to the Massachusetts Institute of Technology. In Austin, the figures are even higher, coming in at $12.56 an hour for a single adult and $25.13 an hour for a single adult with a child.

"There are people who are working and not making enough money (to support themselves), and they're holding down a full-time job," Thompson said during the hearing. "We have to do something."

Thompson, who has sponsored similar legislation in the past that was unsuccessful, also couched her proposal as a good business decision for the state. "What happens when people make more money? The money goes right back into the economy," she said.

But Annie Spilman, Texas state director of the National Federation of Independent Business, voiced opposition to both bills, saying wages in Texas have been climbing without an increase to the required minimum wage because of competition for workers amid what has been a record low unemployment rate.

Businesses "understand that they have to provide competitive wages and competitive benefits," Spilman said.

Still, she said many also operate on "very thin margins," and warned that a state mandated increase to their expenses could result in fewer work hours for employees, delayed hiring for open positions or even job cuts.

In response to a question during the hearing, however, Spilman said her organization might be willing to support an increase in the state's minimum wage if it included exemptions or other protections for small businesses.

©2019 Austin American-Statesman, Texas. Distributed by Tribune Content Agency, LLC.