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Living wage: Chains will be forced to replace humans with robots

Medieval doctors bled their patients with leaches. Far from improving their condition, it left them worse off. Raising the wages of fast-food workers to $15 an hour would produce similar results for those the proposal is intended to help.

In America, minimum-wage workers are better paid than the average worker in Mexico. Why? It's not because U.S. employers are more generous than their Mexican counterparts. Nor do Americans somehow deserve better pay.

American minimum-wage earners make more because they produce more. Better education and greater capital investment make American workers more productive, raising their earnings.

Competition forces businesses to pay workers according to their productivity. If companies pay less, their employees will jump ship to competitors. And if they pay workers more than they produce, they go out of business.

For better or worse, fast-food jobs are relatively low-productivity positions, typically filled by inexperienced workers. Most fast-food customers want a quick, inexpensive meal. They will not regularly pay premium prices for a burger and fries.

Doubling McDonalds' wages would raise their total costs by 25 percent — well above profit margins. But raising prices would drive customers away.

If Congress mandated fast-food restaurants to pay $15 an hour, they would have to change operations to deliver the kind of productivity to justify those higher costs. That would mean replacing current workers with machines and hiring fewer, more skilled workers to maintain them.

Restaurants could do this in a variety of ways, such as using iPad kiosks instead of cashiers to take orders, or installing the new robotic burger flipper that makes up to 400 hamburgers an hour.

At current wages these high-tech investments make sense for only a few restaurants; if wages doubled they would become widespread. The end result: far fewer jobs in the fast-food industry and higher pay for those who remain.

Those who consider such a trade-off worthwhile miss the economic role of minimum-wage jobs. For most workers, they are entry-level positions where they can gain experience that makes them more productive and helps them command higher pay in their next job.


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