20 states increased their minimum wage this year. There continues to be talk about a national minimum wage hike. Labor organizations are agitating or $15.00 an hour.
Have we reached the point where it’s cheaper to hire robots than humans?
(Some) robots are cheaper
Some robots are literally cheaper than human beings who do the same job. The national minimum wage is $7.25 and you are legally required to give human workers some breaks and to pay payroll taxes, even if you don’t give them benefits. That usually makes your workers cost at least 1.25 times their hourly wage. You can rent a robot for as little as $8.00 an hour.
That makes the robot cheaper.
If all you need is to have a lot of identical objects moved from one place to another — say, putting a piece of metal into a press — then you might be better off hiring the robot.
Upfront costs
Upfront costs change the equation, if your needs can’t be met by a low-cost rentable robot. The annual wage for a full-time worker at the national minimum wage of $7.25, multiplied by 1.25 to account for taxes and breaks and assuming two weeks of paid vacation, is $18,850. You don’t have to pay that all in one lump sum, of course.
Buying a robot will usually cost at least $25,000, and that’s usually an upfront cost. Maintenance costs are lower and your robot might serve you for many years, so the eventual cost over hour will probably be lower. However, many small to medium businesses find the initial cost, plus programming and installation expenses, not to mention training humans, forbidding.
The tipping point
But we’re talking here about the federal minimum wage. Nearly half of states and plenty of cities as well have higher minimum wage rates.
What’s more, the labor shortage and inflation are driving up what we might call the realistic wage — the amount you can offer and actually get applicants. Keeping workers once they’re hired may also require some extra dough, especially if you’re asking your human beings to put a piece of metal into a press all day long. Some jobs are really more suited to robots and to humans.
In addition, the labor shortage makes it hard to find employees at any price.
We’ve already reached the point at which automation is as cost-effective for many companies as hiring humans. We may soon reach the point at which it costs less.