The Evolution of Technological Substitution in Low-Wage Labor Markets

This paper uses minimum wage hikes to evaluate the susceptibility of low-wage employment to technological substitution. We find that automation is accelerating and supplanting a broader set of low-wage routine jobs since the Financial Crisis. Simultaneously, low-wage interpersonal jobs are increasing and offsetting routine job loss. However, interpersonal job growth does not appear to be enough – as it was prior to the Financial Crisis – to fully offset the negative effects of automation on low-wage routine jobs. Employment losses are most evident among non-Asian people of color who experience outsized losses at routine jobs and smaller gains at interpersonal jobs.