This discussion by Charles Schwab & Co highlights that the ratio of workers to non-workers is dropping and may reach 1 to 1 in another 20 years in many parts of the world.
When labor is abundant businesses make less investment in “productivity enhancing technology”. Presumably the opposite is true – as labor supply shrinks, businesses will invest in more automation. This comes at a time when the capabilities of automation are increasing rapidly while the costs are dropping dramatically.
When the global labor supply became more abundant, spending on productivity enhancing technology by businesses became less attractive or necessary. Wages stagnated along with productivity and spare capacity helped keep inflation in check. But as labor becomes more scarce, the opposite should occur: greater investment in productivity enhancing technologies, faster wage growth, and tighter capacity leading to higher—but not runaway—inflation.
Inflation may be kept from a destructive resurgence and social programs for the elderly from becoming overburdened if productivity rebounds with more business investment in productivity-enhancing technologies, including robots and artificial intelligence.
As noted repeatedly on this blog, automation is coming anyway – rising minimum wages are not the cause of increasing use of automation. However, rising wages, including mandated higher minimum wages, accelerate the adoption of new tech to eliminate jobs.