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Will a Higher Minimum Wage Add to Amazon's One Million Job Bodycount?

Stocks in this article: AMZN GOOG BA SMP IXYS AVAV RTN IBM SIEGY ADEP IRBT ROBO

NEW YORK (TheStreet) -- In an interview with The Seattle Times, Nick Hanauer, a venture capitalist who invested early in Amazon (AMZN), stated that the dominant online retailer had "probably killed one million jobs in our economy." While it is difficult to quantify the future, should the minimum wage be increased, Amazon and companies in robotics, such as Google (GOOG) and in drones, such as Boeing (BA) will also gain. Firms in these industries are already benefitting as companies strive to be more competitive in the present wage structure.

There was an article in The Atlantic Monthly by Adam Davidson, "Making It in America," that actually did offer a very simple formula for replacing human workers with machines such as robots or drones.

The piece was about Standard Motor Products (SMP), a manufacturer with factories in Greenville, S.C. There are only "good guys" in the story: management obviously cares about its employees, who work hard. But to survive, Standard Motor Products will buy machinery when it is less than two years what a worker costs. The math here is simple as a result if the minimum wage is increased: if pay and other costs rise, more machinery such as robots and drones will replace employees.

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Compounding this is the proven tendency of high tech equipment to get cheaper and cheaper over time.

That will benefit companies in the drone sector such as IXYS (IXYS) and AeroVironment (AVAV). There are certainly bigger entities such as Boeing and Raytheon (RTN), but AeroVironment and IXYS offer a much more focused play on drone growth. IXYS produces the semiconductors needed for operating drones. AeroVironment makes and sells drones.

It is much the same story with robotic stocks.

Blue chips such as Amazon, Google, IBM (IBM), Siemens (SIEGY) and others have robotic operations. Siemens spends $5 billion annually in robotic research. In 2012, Amazon paid $775 million for Kiva, a robotics company. Google has bought many robotic entities, such as Shaft and Redwood Robotics. For pure plays there are Adept Technology (ADEP) and iRobot  (IRBT). Adept Technology builds and sells industrial and mobile robots. Doing the same, iRobot has two divisions: Home Robots, and Defense and Security Robots. For those who want broad exposure to the sector there is the RoboStox Global Robotics and Automation Index (ROBO) exchange traded fund.

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