How You Can Profit From the Demise of the Minimum Wage Worker

Will technological advances, and a federal minimum wage increase, annihilate minimum wage workers?

Jun 14, 2014 at 11:31AM


REEM-C and REEM. Photo credit: JosepPAL via Wikimedia Commons

Should the federal minimum wage be increased? This is a complicated question. On one hand you have the fact that despite the increase in the cost of living, the federal minimum wage hasn't been increased since July 2009. On the other hand, you have the fact that the Bureau of Labor Statistics, or BLS, estimates that of the 58.8% of workers making an hourly wage in 2013, only 4.3% made at, or below, the minimum wage.

Regardless of where you fall in this debate, one thing you might not have considered is the possibility that minimum wage workers could be a dying breed, and that raising the minimum wage could hasten this demise. Here's why.

The technology curse
There's no question that technological advances have made our lives easier and more efficient. But, the flip side of this is the fact that in certain situations, machines can now take the place of human employees. For example, in a restaurant in China -- appropriately named "Robot Restaurant" -- robots cook, wait, and entertain diners, all while cutting costs for the owner of the restaurant.  


Atlas robot. Photo: DARPA via Wikimedia Commons.

In addition, San Francisco-based company Momentum Machines has developed a robot that can make 360 gourmet burgers per hour, all without human aid. More importantly, Momentum Machines says on its website(emphasis mine): "The labor savings allow a restaurant to spend approximately twice as much on high quality ingredients and the gourmet cooking techniques make the ingredients taste that much better." 

The above examples aren't the only robots in development, or use. Boeing (NYSE:BA) makes robots that are useful to the military. Unbounded Robotics is developing a "room service" robot that can deliver food, pick up trays, and inspect hotel rooms. And Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) recently acquired Boston Dynamics makes the Atlas: a humanoid robot that could be the platform for a first-responder robot.

More importantly, these are just a few of the robots in development and currently in use, but they're an example of what robots can be used for, and how technology is advancing at a rapid pace. 

Why this could affect minimum wage workers
According to the BLS, there are a number of characteristics that make up the typical worker making at, or below, minimum wage:

  • They tend to be young: "Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the federal minimum wage or less." 
  • They tend to be unmarried -- approximately 66.8% have never been married, compared to 20.7% who are married, and 12.5%, which are listed as "other." 
  • They tend to be less educated -- approximately 28.1% don't have a high school diploma, 29.7% are high school graduates with no college, 28.3% have some college but no degree, 6.1% have an associate degree, and 7.9% have a bachelor's degree and higher. 
  • They tend to be employed in service-related jobs: "Almost two-thirds of workers earning the minimum wage or less in 2013 were employed in service occupations, mostly in food preparation and serving-related jobs." 

The above characteristics are important because they show that most workers making minimum wage or less are high school to college age and not married (and thus less likely to be supporting a family). And two, most of the people making minimum wage are employed in a position that doesn't require advanced skill.

Consequently, there are two things that can be extrapolated from these points from the BLS study: One, those employed in minimum wage jobs aren't there for a career (thus increasing turnover); two, because the jobs themselves require minimum skills, robots could be a perfect way to cut escalating labor costs. As Bill Gates stated on MSNBC months ago: "If you raise the minimum wage, you're encouraging labor substitution, and you're going to go buy machines and automate things -- or cause jobs to appear outside of that jurisdiction. And so within certain limits, you know, it does cause job destruction." 

The runaway technology train
Robots are playing an ever-increasing roll in everyday life. For workers making at or below minimum wage, this could be a problem. Labor costs are a significant portion of businesses' expenses, and increasing that could further encourage employers to look at the possibility of automating jobs, just like Gates said. That's not to say that raising the minimum wage is necessarily a bad idea, but it is to say that there could be unintended consequences in doing so. On the flip side, increasing the use of robots could be beneficial to higher-skilled jobs, thanks to a surge in demand for this type of technology.

Regardless of what happens, companies specializing in robotics stand to make a pretty penny as robots become more commonplace -- and it's almost inevitable that they will. Consequently, investors might want to take a closer look at the above companies specializing in robotics, or consider investing in an ETF such as Robo-Stox Global Robotics & Automation ETF(NASDAQ:ROBO), a stock index focused on robotics, automation, and related technologies.

Are you ready for this $14.4 trillion revolution?
Have you ever dreamed of traveling back in time and telling your younger self to invest in Apple? Or to load up on at its IPO, and then just keep holding? We haven't mastered time travel, but there is a way to get out ahead of the next big thing. The secret is to find a small-cap "pure-play" and then watch as the industry -- and your company -- enjoy those same explosive returns. Our team of equity analysts has identified one stock that's ready for stunning profits with the growth of a $14.4 TRILLION industry. You can't travel back in time, but you can set up your future. Click here for the whole story in our eye-opening report.

Katie Spence has no position in any stocks mentioned. The Motley Fool recommends Google (A shares) and Google (C shares). The Motley Fool owns shares of Google (A shares) and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers