EDITORIAL: Minimum wage hikes hastening demand for automation

The Fight for $15 activists already face the hard economic reality that practically doubling the minimum wage is a surefire jobs killer — that’s been shown in numerous studies and on the ground in places such as Seattle. Yes, the employees make more per hour, but there are fewer hours and fewer employees — along with higher product prices.

Then there’s the speeding locomotive of technology.

As CNBC’s Sarah Whitten reported earlier this month, McDonald’s plans to add self-service ordering kiosks to 1,000 stores per quarter over the next eight to nine quarters. The fast-food giant already has kiosks in place at some locations, including in Southern Nevada.

In response to McDonald’s move, HotAir.com’s John Sexton wrote: “The Fight for $15 has been proclaimed a success everywhere it brought about an increase in the minimum wage but, as almost anyone could have predicted, the end result is going to be more automation and, probably, fewer jobs.”

McDonald’s insists that it isn’t necessarily cutting staff but simply reassigning workers to other jobs in the restaurant. In addition, reason.com assistant editor Christian Britschgi noted that the company has consistently stated the kiosks are “less about avoiding the costs of human workers and more about capturing benefits that come with new technology.”

Mr. Britschgi pointed out that the kiosk maker, Zivelo, touts more accurate order-taking, easier upselling and faster ordering, while allowing companies to “redeploy the workforce to more strategic customer retention and dining room management initiatives.” McDonald’s CEO Steve Easterbrook told CNBC that customers dwell more at the kiosk and thereby select more, boosting the average sale.

Nowhere in those talking points, however, was the mention of lower labor costs. Automation was probably coming to the fast-food industry regardless. But there’s almost no question that higher wage costs — whether it’s a $15-an-hour minimum wage in some localities or more modest moves to $11 or $13 — hastened the automation process.

And it won’t stop at Mickey D’s. Mr. Sexton pointed out that with the industry leader’s mass adoption of kiosks, on-the-fence competitors will probably follow suit, with Wendy’s, Shake Shack and Subway suggesting similar moves.

Whether you’re a Fight for $15 activist, a proponent of automation or somewhere in the middle, it’s best to remember what the true minimum wage is: zero dollars for those who would dramatically overestimate the value of unskilled labor in entry-level jobs.

With kiosks and mobile ordering apps already in play, and more technology to come, economically challenged politicians and activists are only throwing fuel on the fire by demanding job-crushing minimum-wage hikes.

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