Wendy’s Company recently delivered a reminder of how implementing an artificially high minimum wage, like $15 per hour, impacts job growth. For its second-quarter earnings call, the company explained “how mandated wage hikes will lead to fewer jobs for the low-skill workers that progressives claim to be helping.” Via the Wall Street Journal,
“First, CFO Todd Penegor talked about the pressure to pay higher wages and said that ‘we continue to look at initiatives and how we work to offset any impacts of future wage inflation through technology initiatives, whether that’s customer self-order kiosks, whether that’s automating more in the back of the house in the restaurant. And you’ll see a lot more coming on that front later this year from us.’”
So, Wendy’s plans to offset rising costs of human labor by installing machines to do the jobs of people. The Wall Street Journal,
“We keep hearing that these minimum-wage laws benefit restaurant workers. But since many will no longer be working in restaurants at all, the reasonable conclusion is that the activist campaigns to raise the minimum wage are mainly intended to benefit the unions that back them.”
Wendy’s CEO Emil Brolick also offered insight into how the $15 minimum wage will impact franchisees. The Wall Street Journal,
“[Brolick] replied that ‘our franchisees will likely look at the opportunity to reduce overall staff, look at the opportunity to certainly reduce hours and any other cost reduction opportunities, not just price. You know there are some people out there who naively say that these wages can simply be passed along in terms of price increases. I don’t think that the average franchisee believes that.’
“Mr. Brolick elaborated that ‘we believe that some of these increases will clearly end up hurting the people that they are intended to help. And we continue to believe that one of the great opportunities you have in a business like ours is that an entry-level person, in a very short period of time, can rise to become a manager in a restaurant, and have an income above the median household income in the United States of America.’”
Wendy’s is not the first company to replace employees with machines. Last year, McDonald’s agreed to President Obama’s wage hike amid protests. Soon after the company moved to install machines to replace workers.