LETTER: The reality of large minimum wage hikes
As a distribution center manager for several years in Las Vegas, I can speak to the issue of living wages. In a 750,000-square-foot facility with more than 500 associates, our greatest cost of doing business was wages and benefits. While the minimum wage was $7.85 an hour, the market forced us to initially bring associates on for $10 an hour — and that gradually increased as Amazon and other competitive facilities moved in.
At $10 an hour, the company paid $20,000 a year in salary and another $10,000 in benefits. As we approached $15 an hour ($30,000 annually plus benefits), we saw our profit squeezed by Amazon and others. It soon became clear that only the companies with the most efficient supply chains would survive in the world of e-retail.
We were beginning to experiment with robots when the recession hit. A robot could replace a human at a one-time cost of $40,000. Robots come to work every day, work as safely as programmed, don’t take vacations, don’t come to work under the influence and don’t push back on their bosses. All supply chains are heavily experimenting with robots because their “living wages” are far less.
Companies squeezed by higher taxes and higher wages will find the way to survive. As for my company, it was bought out in 2014 — just couldn’t compete. The center with its 500 associates has since closed.
