Yesterday at an airport restaurant, while I waited for my flight, I ordered a cheeseburger with the onions on the side, spicy fries with extra ketchup, and a Diet Coke — all without ever talking to a server. Each table was equipped with iPads, displaying a user-friendly menu.
All it took was the swipe of a finger and within minutes my food arrived at the table. And when I finished eating, I could pay at my convenience using the same iPad. I was thankful for the quick, hassle-free service. The last time I ate at an airport restaurant, one with normal servers, I almost missed a flight due to slow service.
{mosads}It’s not the first time I had placed an order using a touchscreen — restaurants like Chili’s and some Panera Bread locations have also replaced humans with touch screens. The iPads allow restaurants to money on labor and the customers to enjoy a quick, hassle-free ordering experience. The situation is obviously bleak, however, for workers in the service industry who face losing their jobs to machines.
Regulation like Obamacare has made it increasingly expensive for companies to have full time employees on the payroll. And a national federal wage hike — which many around the nation are pushing for — would make the cost of hiring service workers even higher. So it’s not surprising, then, when many companies opt for self-servicing technology in place of employees to save money.
Currently, thousands of union-backed low wage workers are taking to the streets, demanding that the federal minimum wage to be raised from $7.25 per hour to $15 per hour. And thousands more are making their voices heard on Twitter using the hashtag #FightFor15.
Turns out, the of Americans agree with them: 53 percent of Americans favor a minimum wage hike. While it’s sweet that people care about the standard of living for their fellow Americans, many don’t realize that a $15 minimum wage could put the very employees they are trying to help out of work altogether.
Minimum wage increases often harm those they are intended to help by pricing low skilled workers out of the market. Why would McDonald’s, for example, pay a full time employee $15 per hour to take orders when it can get a touch screen to do the same thing nearly cost-free? Amid the current national outcry for a minimum wage increase, McDonald’s has already started the transition to automation: Earlier this month, the company announced a rollout of self-service iPads.
McDonald’s isn’t the only business turning to avoid the burden of high minimum wages; Eatsa, a fully-automated restaurant, has five locations in cities that have embraced a $15 minimum wage. If the $15 minimum wage goes national, companies around the nation will likely start revamping their business models to rely more heavily on technology.
A 2016 report by the National Federation of Independent Business (NFIB) showed that raising the federal minimum wage to $12 per hour could reduce private sector employment by 1.8 million jobs over 10 years, and would increase the cost of labor to employ those works by 65 percent – with no guarantee that the value those workers bring to the business would increase. A $15 minimum wage would result in even more jobs lost and a higher cost of labor.
Another factor often not recognized is that small businesses would be disproportionately affected by a minimum wage increase. NFIB estimated that 57 percent of the job loss would come from small businesses, as they rely heavily on entry-level hourly employees. The pain is far greater for the little guys – it’s like the difference between being hit by a semi-truck when you’re on a bicycle or in a Humvee.
As I write about in my new book Government Gone Wild, money for an increase in the minimum wage has to come from somewhere and it leaves businesses with just three options to choose from: investors (who would see lower profits), customers (we would pay more for products), and workers (companies would hire fewer people). Competition in the marketplace will determine who pays.
If a particular market is rife with competition, a business will do whatever it has to do to keep prices at levels customers will still pay. So in that scenario, workers will have to be sacrificed to lower the bottom line. When a government mandate leads to people being laid off, how is it helping anyone?
We have already seen the disastrous results of minimum wage hikes instated at the state level. On election day, voters in Washington, Colorado, Maine, and Arizona voted to raise the minimum wage.
Of course the voters’ intentions were good, but immediately after the election locally owned restaurants and other companies have struggled with the increased costs of doing business. Others have passed the costs onto their customers with higher prices.
Here’s the bottom line: Workers should be able to negotiate their wage based on the value they bring to the workplace. If minimum wage hurts people at risk for living in poverty, why do we insist on raising it?