In the current debate over potentially increasing minimum wage, a number of fast food workers have recently hit the streets in several cities for one day strikes in the attempt to call attention to their plight. Which is they don’t make enough money to make ends meet. Many libertarians and conservatives have scoffed at these protesters and in many comment sections you can read the various “I’d fire ‘em”, “get back to work you lazy bum”, or the always effective “that’ll teach you for having six kids and not going to college” counter-arguments. While these comments may have some validity, we shouldn’t lose sight of the fact that it is indeed hard to make ends meet working a minimum wage job. Empathy can and does make you a better person. However, this doesn’t mean we should compromise and agree that the minimum-wage should be increased. It simply means your arguments must come from the heart, not from your angry place.
But I digress…….
There are libertarians out there that can articulate the economic/political consequences of an increased minimum wage much better than I, so I will let them. You can find their articles and blogs. Google can help you with that. What I will touch on is another effect of increasing minimum wage for fast food workers. They will be replaced by advancements in automation, or robots if you may.
Fast food restaurants are normally franchises. Individually owned and operated. McDonalds Inc. doesn’t pay the wages at your local McDonalds, most likely the franchisee (i.e. the owner) pays those wages. In exchange for a franchise fee and usually higher start up costs, the franchise owner receives numerous benefits in the form of training, support, marketing, and specialized equipment. Next time you’re in a local major fast food franchise take a look at the equipment and setup you see in the kitchen. Now compare that to your local mom and pop burger joint, and you’ll know what I’m alluding to here. This of course doesn’t mean mom and pops are inferior to major chains (I much prefer a burger at a mom and pop to a major chain taste wise). just imagine which of the two could better handle a sudden rush of 100 guests.
The corporations behind fast food chains need franchise fees in order to be profitable. Franchisees need a business model that can make their investment worthwhile as well. If an increase in minimum wage is imposed on these two parties, they will seek the easiest path to reestablish their profits, which will be through improved automation and different business models that simply do not need as many or no human workers at all.
Take a look at a few videos here…………..
Automation in the fast food industry has traditionally rolled out at a leisurely pace and generally resulted in a better dining experience for the consumer and a safer working environment for the employee, with the loss of few jobs. The emphasis of the automation was to increase efficiency and quality, not necessarily to replace human workers. Giving the crew of 8 the ability to handle a lunch rush of a 100 guests an hour.
Attempts to increase minimum-wage will disrupt this model. Look for an increase in automation at the expense of the number of workers need to fully staff a franchise. You’ll go into your local McDonalds, there will be 4 people working total, surrounded by a myriad of new technology designed so that they indeed will be earning that coveted $15 an hour. The other 4 former crew members, you guessed it, will join the ranks of the unemployed. Maybe they could take part of their unemployment check and buy a vending machine pizza.