Partial automation and the technology-enabled deskilling of routine jobs

Abstract

Evidence shows technology automates middle-wage occupations’ routine tasks. I argue technology only partially automates these, simplifying them so that they can be performed by less-skilled workers. Thus, post-automation costs include technology and low-wage workers to use it. The minimum wage raises these costs, lowering the profitability of automation and slowing the adoption of routine-replacing technologies. I test this claim using new cross-state variation in the minimum wage (induced by state price differences) and new cross-industry variation in the importance of low-skilled labor for technology (measuring using the Current Population Survey Computer Use Supplement and the Dictionary of Occupational Titles). Because low-skilled workers are needed alongside technology, I show that a low minimum wage increases the automation of routine jobs.