Tag Archives: economics 101

Workers Fight. . . to Automate Their Jobs

The news out of Illinois tells us that as many as 2,000 people, including 325 uniformed employees, descended on McDonalds’ headquarters recently in advance of the company’s annual shareholders meeting to demand that the company pay workers’ “what they are worth.” I am not privy to the convoluted calculations involved, and have no idea how the employees arrived at the magic number, but the general feeling seems to be they are all worth $15 an hour.

This is part of a movement pushing back against a minimum wage that many feel is too low and does not provide a livable wage. The movement bears watching because it could lead to significantly more automation, reducing the need for workers in many industries and, thus, the amount of workers’ comp and other types of insurance that cover them.

Let’s look at the core argument for a moment.

The workers at the demonstration are correct that the federal minimum wage of $7.25 an hour does not provide a livable wage. I don’t think it was ever intended to.

Honestly, I believe many people have lost sight of what the minimum wage was supposed to be. It was an “entry level” wage designed for low-skilled workers or those just entering the workforce. It was never intended to be a family-supporting, bill-paying, life-creating wage. We were supposed to start there and work our way up. And by work our way up I mean develop skills and expertise and leave that minimum wage job forever behind us — to be filled by some other unskilled or inexperienced worker.

It doesn’t matter if that new skill was fixing engines or operating on the human brain; we were supposed to do something with our lives. Not any more. Today we define worth by the rate of our respiration and pulse. “I am,” therefore you owe me. My own brother-in-law subscribes to this belief and constantly references some poor sap he read about who has worked for a fast food restaurant for a bazillion years and only makes $8 an hour. My brother-in-law really does not have a response when I say, “Wow, he should quit and find someone who values him more.”

Whether or not you agree with me, the issue here is pure, unadulterated economics. Here is what is likely to happen if the push for an increase in the minimum wage to $15 an hour succeeds.

  1. My brother-in-law, who in addition to speaking for the little man constantly complains that a fast food soda costs $1.50 when the cup and ingredients only cost the restaurant “like a nickel,” will have to get used to paying $2.50 for that soda. He is diabetic, so he shouldn’t be drinking that swill anyway.
  2. Unions, many of whom have contracts tied to the minimum wage as a base, would see immediate raises for their workers’ across the board. (That, by the way, is the real key behind unions’ support for fast food workers)
  3. Finally — and this is the BIG finally — you will see automation in these low-end jobs like you’ve never witnessed before.

That, in the end, is what these workers are really fighting for. They are fighting to be replaced by machines. It is Economics 101. Automation is not feasible at $7.25 an hour. It is at $15 an hour. A visit to a McDonald’s of the very near future may find self-service kiosks similar to those in some retail stores or airports. Customers could place their orders and pay on their own. Some of the food may be produced by automation, as well. A large machine, half freezer and half deep fryer, might cook and dispense the French fries based on what the kiosk systems tell it to do. Fast food restaurants already have self-serve soda machines based on the same principle; the fast food industry merely will expand the use of automation to other jobs within the facility.

I should not need to add that machines don’t complain, don’t have personal issues, don’t call in sick, don’t require benefits and never file grievances or workers’ compensation claims.

This automation, of course, will not be limited to the fast food industry. This will happen throughout the service and retail sector.

If the fight for a $15-an-hour minimum wage succeeds, that will make some people quite happy. The unions will be ecstatic. The robotics industry will be elated.