The Minimum Wage War Continues As Companies Consider Automation

The Minimum Wage War Continues As Companies Consider Automation

As a customer of fast food franchises,  like McDonalds, Starbucks and KFC, we look to these places for a quick, low cost solution when we are on the run or just plain hungry. Many of us, even the healthy ones, go to a fast food place at least once a day.

But what about the worker’s behind the counter who can barely afford to buy their own hamburger? Most of these people are receiving minimum wage, which varies from state to state, with the federal minimum wage rate standing at $7.25/hr. President Obama came out earlier this year calling for an increase in minimum wage to at least $9/hr to offset the cost of inflation.

Most American’s support this wage increase with 92% of Democrats, 62% Republicans and 80% Independents standing behind a minimum wage increase to $10.10 per hour, which is almost $3 higher than it is right now. If the Fair Minimum Wage Act is passed, it will raise the federal minimum wage from $7.25 to $10.10 per hour by 2015.

This seems fair to me and something I certainly support.  Many of the  fast food workers are not college educated and what for some, is a temporary work situation, and has become a full time career. America is creating lower paying jobs as the need for service workers increases and the U.S. economy picks up. Retail has never paid well, yet with hard work there has always been a path for the unskilled to make money in management.

Scott DeFife, EVP of policy and government affairs at the National Restaurant Association says, “Nine out of ten salaried workers, including owners and managers, started out as hourly workers. The fact is, only 5 % of restaurant employees earn minimum wage and those that do are predominately working part time and half are teen-agers.”

The recent strike of fast food workers, where hundreds of workers at restaurants in 50 U.S. cities waked off their jobs demanding decent pay, comes as a growing number of minimum wage workers are not teenagers, but adults trying to support their families, since the Great Recession.

Yet, it appears we have a new type of worker that needs to be acknowledged. Currently only 16% of these jobs go to teens as apposed to 25% a decade ago. It appears that the workers are also more educated than in the past with 753,000 holding a bachelor’s degree or higher according to the U.S. Bureau of Labor Statistics.

As the debate continues, it is a fact these workers do need to make a more reasonable wage, yet $15/hr is way too high for companies to digest, especially for an entry level worker with no college education. The managers in the fast food industry do make decent money and the path to management should be promoted more at these companies as to elevate the entry level worker. I don’t think these lower paying jobs were set up to be a long-term solution.

What concerns me is that our economy will lose many of these positions if the price to keep these many unskilled laborers on is too high. Companies will figure a way not to need the additional employees, anymore. Look at CVS’s new in-store model. It has eliminated most of its workers by installing a self-check out system. I didn’t like it at first, but now find it easy.

My advice for the striking fast food workers is to be reasonable and be happy for a $10.10/hr minimum wage. By demanding $15/Hr, they are going to force companies to do business without them.

What are your thoughts?


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    I am an Avid Supporter of the Fast Food Workers, as well as their demands, and have made around 170 comments in their favor on Huffington Post within the past 20 hours :

    I can promise any Fast Food Company that, were they to switch over to full automation, they would PERMANANTLY LOSE my business. I also believe that there is widespread support for the Fast Food Workers, so I’d suspect that millions of others would follow suit.

    Besides, I really prefer having my order taken by a Human Being.

    However, if some Fast Food Exec Board was will willing to part with a small fraction of their earnings/stock options/whatever to give it’s Workers better pay - AND stick to this arrangement, that Fast Food Company would have my business for the rest of my life.

  • John, thanks for your comment . I agree that the minimum wage needs to come up but an increase to $10.10/hr is a 40% increase. It takes time for companies to change their staffing structure and I just don 't want to see more layoffs and people on unemployment which further sets them back on their career.

  • Terri, I agree with you concern, and I want the minimum wage to go up, but it will cause some changes. I myself am an Industrial Engineer and work to design large warehouses and retail operations. Often these business decisions are simply based on spreadsheets that factor in costs of labor vs automation equipment. 40% or more increase will drastically change these cost models, and pay-off for automation equipment will go from 5 years, to less than 3 years. When you look at amortization, cost of capital, and other factors, this is a big deal. These effects may not be seen in front facing positions at a cash register, but in loading docks, distribution centers, etc. you will see a drastic shift from human labor to more conveyors, equipment, robots, etc.

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