Filed under: Capitalism, Economy, Law, Regulation, Taxes, The United States | Tags: Increasing Automation, Minimum Wage Employees
At The Federalist, “11 Facts About the Minimum Wage That President Obama Forgot to Mention.” Excellent summary.
Most interesting: A full-time minimum wage worker in 2014 will make 24 percent more than the federal poverty limit. A single individual who earns the current federal minimum wage and works full-time will earn $14,500 in a year (50 weeks per year x 40 hours pe week x $7.25 per hour. The federal poverty limit for 2014 for a one-person household is $11,670.
One third of minimum wage workers either dropped out of or never attended high school. Educational attainment is clearly a significant factor in determining a worker’s hourly wage. According to BLS, over 36 percent of minimum wage earners — 568,000 our of more than 1.5 million — lack a high school diploma. Do read the whole thing.
In The Wall Street Journal: “The Employee of the Month Has a Battery: Minimum wage hikes are accelerating the trend toward automation — and fewer workers — in services.” (pay wall)
Ten years ago it might have seemed far-fetched that a customer could order food in a restaurant without speaking to anyone. But it’s a reality now as service employers across the country—including Chili’s, Chevys Fresh Mex and California Pizza Kitchen—introduce tabletop ordering devices. A few clicks on an iPad-like device and the food is on its way.
Technology has made these changes possible, but that’s not what’s driving their implementation. Steady federal and state increases to the minimum wage have forced employers in retail and service industries to rely on technology as the government makes entry-level labor more expensive. Now Democrats are pushing to raise the federal minimum wage to $10.10 from $7.25 at the behest of President Obama, who argued in his State of the Union address that the increase would “help families.” Lawmakers should consider the technology trend a warning.
When you stop and think about it, mechanization has been creeping along without our really noticing. First there were vending machines for candy and pop, eliminating a clerk, and then vending machines started offering all sorts of different things — ice machines, coin exchanges, maps and books. Cash machines, gas stations ( I can remember when gas stations had helpful young men who washed your windshield, checked the oil, filled your gas tank and checked your tires). Now grocery stores and Home Depot stores have automated check out lines.
Tablet-based ordering is coming into vogue at U.S. restaurants: Chefs polled by the National Restaurant Association recently ranked computerized menus as the top tech trend for 2014. Airports in locations like New York City and Minneapolis now feature “restaurants” that are waitstaff-free. In 2011, McDonald’s announced it was replacing human cashiers with touch-screen alternatives at more than 7,000 European locations.
>Customers may find the new technology convenient, but the thousands of young adults who used to earn money filling these roles won’t. The data suggest employers are acting from economic necessity rather than spite. Profit margins in restaurants range from 3%-6%. They are even more modest at grocery stores, at 1%-2%.
Where this is all going, I don’t know. People are increasingly more reluctant to have interaction with other real people. They are absorbed in their smart phones. Now we have Google glass. Surgery is increasingly done by robot. But that is done to increase precision. Jeff Bezos is talking about delivering your packages from Amazon to your doorstep by drones.
Companies must choose between increasing their prices or reducing costs to maintain limited profit margins. It’s a Brave New World. Prepare for the burger-flipping robots from Momentum Machines that replace three full-time kitchen staff, make no wage demands and stage no walkouts.