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.
Surely wish more people would understand what happens with foolish demands to raise the minimum wage. I’ve seen restaurants leaving Seattle for the suburbs and also the transition to machines in some popular eateries.
Unfortunately, the under informed populous do not understand and / or believe this wage issue is totally the product of the crooked union mobsters. Perhaps a reminder that Dave Beck , a disgraced union official, ended up in prison for a length of time for some of the same games being played today.
The problem is that they are more able to sweep things under the rug these days due to government corruption. Remember the recent illegal teacher strikes? No one was taken to task for that union backed incident. The taxpayers the price for that stupid move.
It is the labor unions who benefit the most from an increase in the minimum wage simply because the union wage is often tied to the minimum wage, this as it increases do union wages which are quite obviously all ready well above minimum wage level. The minimum wage earner is now making more money which means more taxes. In many cases this new income disqualified them for state or federal aid (the goal of increasing minimum wage is to improve the living standards and reduce dependence on assistance), but those who are getting “free money” don’t want to give that up and be financially responsible so they want fewer hours to work. Go figure. Better to keep minimum wage at a low entry level pay and increase commensurate with experience and training.
It is the labor unions who benefit the most from an increase in the minimum wage simply because the union wage is often tied to the minimum wage,
Have you any examples of this? Because otherwise, it would seem that having the state raise wages via laws would weaken unions — the workers get raises without having to join, or to form, a union.
In many cases this new income disqualified them for state or federal aid …
This also means the employer is profiting from the social safety net. There’s no reason for us to allow this.
When you say “booming economy,” you need to study where that boom is occurring. For example, there was a news report yesterday on a network station that reported that yes, there is a boom..in higher wage paying positions — tech, software development, for example. Light manufacturing is returning, but with wages that are 1/4 of what they once were.
As an employer myself, I no longer hire min. wage employees. I can get that work done with online services, automation and periodic independent contractors. Why do I do that? Because the clients won’t pay me if I do not.
When you say “booming economy,” you need to study where that boom is occurring.
In Washington state, home to the highest minimum wage of all fifty states. Our local unemployment rate is lowest in the very region of the state where our local minimum wages are highest.
Light manufacturing is returning, but with wages that are 1/4 of what they once were.
You’ve got examples of that, right? (Also, you somehow neglected to mention Seattle’s restaurant sector, which continues to expand as our minimum wage rises.)
As an employer myself, I no longer hire min. wage employees. I can get that work done with online services, automation and periodic independent contractors. Why do I do that? Because the clients won’t pay me if I do not.
Glad to see you’re making our booming economy work for you!
A good argument why this state is booming could be the regressive tax system that places Washington at number 50 regarding tax systems that redistribute wealth to the disadvantaged. Every tax in Washington is based upon consumption. Why would the wealthy not land here? If we had an income tax, there would be much more equity between the wealthy and the disadvantaged, but ironically it is hard to find anyone in favore of a state income tax. You repeatedly applaud the “booming economy”, but there is a higher line of poverty here than many of the other fifty states. Greed for a lack of a better word…
Once again, if you want to improve a persons life, the only resolve is education. Not talking about paying teachers more for the “same services”. If we are to pay teachers more money considering they make a much higher mean wage than the taxpayers that fund them, make them work longer than 180 days a year. Boost the number of school days to more than 200 and pay them accordingly, and let the academics set the standards for weaning out the bad teachers. This means more than transferring them from school district to school teacher. Get them out of the system entirely.
Secondly, trade off many of the consumption based taxes for an income tax, with few exemptions, and shift it back to those that really need it.
You can argue the benefits of a higher minimum wage til the cows come home, but the reactions of chains like McDonalds and Wendy’s will flip this scam on its head over time, and the resulting damage to the poor will be difficult to repair. It’s time to properly tax the wealthy in this state.
You can argue the benefits of a higher minimum wage til the cows come home,
I’ve been citing actual economic performances in Seattle, Seatac, and Washington state, after increases in the minimum wage in each place. In return, all I’ve received are vague predictions of doom, such as:
…and the resulting damage to the poor will be difficult to repair.
That’s one of the predictions made by opponents of I-688, e.g. the Washington Restaurant Association, in 1998. It hasn’t come true.
… but the reactions of chains like McDonalds and Wendy’s will flip this scam on its head over time,
Have you any evidence either company will be closing their franchises in Seattle, Seatac, or Washington state? They can complain all they like, but words and deeds remain separate things.
I’ve seen restaurants leaving Seattle for the suburbs…
Which ones?
The same ones that advertise the “$11.00, soon to be $15.00” ones.
Please do not interrupt, Biff. I’m sure Ms. Acheson will give us her examples. (She wouldn’t just make an empty claim and leave it here to die for lack of support, now would she?)
The use of machinery and automation to reduce labor costs has been a feature of modern economic life since the start of the Industrial Revolution — long before there was any minimum wage. Why is this now suddenly newsworthy?
Apparently you are not knowledgeable in basic economics. A business will always find the least cost method of producing a product. If it is less expensive to use people than a machine businesses will do that. Conversely, if machines cost less to produce a product then machines will be used. As you mentioned machines have replaced manual labor increasingly since the industrial revolution. With each coming year more sophisticated and complex machines replaced low skilled workers. However, some highly trained personnel were needed to operate and maintain the machines.
Now, with the current state-of-the-art electronics and robotics, it will take little time before many more low skilled workers will be displaced. What employer is going to keep low skilled burger flippers that cost in excess of $20.00 per hour when a machine can do the work for less?
Over fifty years ago I, and many of my classmates, worked part time minimum wage jobs. We never did expect to job to support us but id did provide a means to get through college and then be suitable to obtain higher paying jobs that did provide a household wage. Many of us continued our education part-time which allowed us the opportunity to continue up the ladder of success.
Times have changed and if kids do not put forth the effort in to complete schooling whether college or a trade program they will have little to look forward to. Even ditch diggers were replaced by backhoes.
Well said!
What employer is going to keep low skilled burger flippers that cost in excess of $20.00 per hour when a machine can do the work for less?
Well said! I cannot argue with your superior knowledge of the implacable laws of economics.
Since we’re getting on to lunchtime, I think I’ll walk over to Dick’s Hamburgers on Broadway, and enjoy a burger with hand-cut fries, washed down with a hand-dipped shake, served to me by an employee earning at least Seattle’s minimum wage — and full health-care, and educational benefits.
Maybe when I return, you can use your vast knowledge of the laws of economics to tell me why my lunch simply was “not economically feasible”. (Good luck with that.)
“You know there are some people out there who naively say that these wages can simply be passed along in terms of price increases” And then I go elsewhere to buy.
You’re going to leave Seattle to get a burger? Really?