The price of retail self-service checkout machines falls. What happens to the demand for cashiers and the wage for cashiers?
a.) The demand for cashiers will increase, but the wage will fall.
b.) The demand for cashiers will decrease, and the wage will fall as well.
c.) The demand for cashiers will decrease, but the wage will rise.
d.) The demand for cashiers will increase, and the wage will rise as well.
The correct answer and explanation is:
The correct answer is b.) The demand for cashiers will decrease, and the wage will fall as well.
Explanation:
When the price of self-service checkout machines falls, retailers are more likely to adopt or expand the use of these machines because they become cheaper to purchase and maintain. Self-service checkouts perform the task of processing transactions without the need for a human cashier, which leads to a reduction in the demand for human labor in checkout roles.
As a result, the demand for cashiers decreases because fewer cashiers are needed to handle transactions. Since fewer cashiers are required, there is less competition for cashier positions, and the wage for cashiers tends to fall. The supply of cashiers remains relatively constant, but the demand has decreased, so employers are less willing to pay high wages for a position that is less in demand.
This dynamic is similar to what happens in any labor market when technological advancements or innovations reduce the need for human labor. Automation, in this case, reduces the necessity for cashiers, leading to lower demand for workers in the field. Consequently, the wages associated with this job category decline, as employers have less incentive to pay high wages when technology is available to perform the same work more efficiently.
Therefore, both the demand for cashiers decreases and wages fall as the self-service checkout machines become more widespread and affordable for retailers.