The ‘Fight for $15’ is a job killer
Original Article: http://www.chicagotribune.com/site/ct-perspec-0425-wage-20130425,0,459628.story
Author: Michael Saltsman
Publication Date: April 2013
Newspaper: Chicago Tribune
Topics: Minimum Wage
When the Workers Organizing Committee of Chicago initiated last week’s strikes at the city’s fast-food and retail outlets, the protesters rallied around the cry “Fight for $15” — that is, a minimum wage that’s almost double Illinois’ current $8.25.
WOCC’s rhetoric is aimed at employers and “rich executives,” but what it doesn’t realize is that its fight isn’t with management — it’s with price-conscious consumers. A $15 minimum wage will only hasten the service-industry trend toward automation and self-service, where either the customer or a computer performs a task that used to be part of someone’s job.
In other words, the WOCC isn’t fighting for $15 — it’s fighting to end job opportunities.
Employers aren’t shifting toward technology because they’re bad people, but rather because they’re faced with some intractable economic realities. Labor-intensive businesses like grocery stores and restaurants keep just 1 to 3 cents in profit from each sales dollar they get from a customer.
Government-mandated increases in labor costs can’t just be absorbed, and raising prices often leads to a drop in sales. (If raising prices was not an issue, employers would gladly pay the higher labor costs.) That’s why employers have adapted to past wage hikes by figuring out how to provide the same product with fewer employees. We’ve all experienced this trend: Today, we might bag our own groceries at a supermarket checkout or pump our own gas. Even self-service soda refills at fast-food restaurants were developed as a labor-saving device.
A $15 minimum wage — which would add more than $14,000 a year to the cost of a full-time minimum wage employee in Illinois — would dramatically accelerate this trend.
Price hikes aren’t an option — picture your response if McDonald’s Dollar Menu became the Three-Dollar Menu — so robots instead lead the way. The technology is here. Recently, San Francisco-based Momentum Machines invented a robotic burgermaker that does the work equivalent of three full-time kitchen employees. The machine cranks out approximately 360 burgers an hour — without ever making wage demands or walking out on the job.
Momentum estimates the burger technology pays for itself within the first year, based on a typical fast-food business’ current annual labor costs.
With a $15-an-hour base wage, it could pay for itself in a matter of months.
This trend toward automation doesn’t just affect the kitchen. McDonald’s, for instance, has already installed touch-screen ordering terminals at 7,000 European locations, making the cashier position effectively obsolete. Chevys Fresh Mex and other national table-service chains are experimenting with similar terminals that let customers order and pay at the table without service help.
These changes don’t become inevitable until the cost of service gets trumped by customers’ demand for low prices. But once the jobs are automated, that’s one less entry-level position for a less-skilled employee to work her way up the career ladder.
However well-intentioned the WOCC’s demands are, the group is only fighting the laws of economics. And in a fight like that, robots will be the winners, rather than workers.