Free Markets, Free People

Ignorance is bliss – until you’re out of work

The more I watch this ignorant populist desire to raise the minimum wage (as far as I’m concerned, the minimum wage is $0) to $15 dollars, the more I wonder why people don’t actually think about the issue and its ramifications before staking out a position “for” the hike.

Oh, wait … think.  Yeah, never mind.  It simply doesn’t happen anymore.  And by the way, the thinking one must do isn’t rocket brain surgery.  It’s pretty much common sense.  So, given the local burger flipper wants $15 bucks an hour to keep flipping those burgers, what is at risk.  Well, mostly, his or her job:

Many chains are already at work looking for ingenious ways to take humans out of the picture, threatening workers in an industry that employs 2.4 million wait staffers, nearly 3 million cooks and food preparers and many of the nation’s 3.3 million cashiers.

Of course they are.  Why?

“When I first started at McDonald’s making 85 cents an hour, everything we made was by hand,” Rensi said — from cutting the shortcakes to stirring syrups into the milk for shakes. Over the years, though, ingredients started to arrive packaged and pre-mixed, ready to be heated up, bagged and handed out the window.

So what does that mean?

Crowded. That’s how Ed Rensi remembers what life was like working at McDonald’s in 1966. There were about double the number of people working in the store — 70 or 80, as opposed to the 30 or 40 there today — because preparing the food just took a lot more doing.

That’s right, as automation and packaging and pre-mix advanced, fewer workers were needed.  It had nothing to do with wages, per se, it had to do with efficiency.  What produced the most money for the work involved.

How does one make a profit?  Well one way is by being efficient.  I.e. producing product at a lower cost than your competition.  So how is the fast food business doing in that department?  Not so hot.

The market research company IBISWorld has calculated that the average number of employees at fast-food restaurants declined by fewer than two people over the past decade, from 17.16 employees to 15.28. And restaurants tend to rely more on labor than other food outlets: According to the National Restaurant Association, dining establishments average $84,000 in sales per worker, compared with $304,000 for grocery stores and $855,000 for gas stations.

So, raise double the wage and what happens to the already poor efficiency?  Right, it goes down.

Then add to that the fact that no manager is going to work for the same wages as his employees.  So if management is earning $15 an hour now, what does that have to go to in order to keep good people (it is one of the primary reasons unions back all minimum wage increases – because they get an increase too)?  And what does that do to the price of a burger?

It makes it skyrocket.

Given that, what will employers in an already inefficient market likely choose to do?  Well right up at the top of the list is a note to reduce staff.  And then there’s “introduce efficiencies” to keep costs down.

Like:

The labor-saving technology that has so far been rolled out most extensively — kiosk and ­tablet-based ordering — could be used to replace cashiers and the part of the wait staff’s job that involves taking orders and bringing checks. Olive Garden said earlier this year that it would roll out the Ziosk system at all its restaurants, which means that all a server has to do is bring out the food.

Robots can even help cut down on the need for high-skilled workers such as sushi chefs. A number of high-end restaurants use machines for rolling rice out on sheets of nori, a relatively menial task that takes lots of time. Even though sushi chefs tend to make more than $15 an hour, they could be on the chopping block if servers need to make $15 an hour, too.

A service contract is much less costly than payroll benefits and there’s no sick leave or missed days involved.

As technology advances, even more jobs will be eliminated.  Not necessarily because employers want to eliminate them, but because bird-brained idiots want to force them to pay $15 for a $5 job.    Who gets hurt?  2.4 million wait staff, 3 million cooks and 3.3 million cashiers.  Yes, that’s right, the stupidly conceived push for a $15 minimum wage will jeopardize 8.7 million jobs.

And as we’ve been asking for a long time, what is $15 x 0?

~McQ

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23 Responses to Ignorance is bliss – until you’re out of work

  • Be interesting to see how many of these maximum minimum wage locations keep themselves afloat with an influx of undocumented Democrats to do the jobs under the table.

    But that would never happen of course.

    I hope all the ‘Americans’ who vote for this crap enjoy their 5.5% unemployment rate.

    • Good article. I made the mistake of ordering a pizza from a pizza place while on a job in San Francisco a few years ago. The price was insane, double or triple what I paid in Denver. Now when I have a job in CA I just go to Trader Joe’s, buy their not-too-bad frozen, and cook it on site. $6 vs. $20, it’s a no brainer. And while my customer is paying, I think it’s a ripoff charging the the customer so much money for a lousy, 12″ pizza.

      I’m really, really glad I don’t live in—and spend my money in—CA.

      • Prices were off the wall 20 year ago when I was there. It a real estate thing. Its already stressing acceptable prices which is partly why min wage hike side effects manifest there quickly.

        • It’s also a labor law thing. This one is especially costly to employers. It’s almost as if the City is saying “go away, we don’t want your business.”

  • Sonic Drive-In is already fairly automated. I presume there’s a cook or two inside somewhere, but the only employee I ever see is the carhop that rolls the food out to me.

  • I may have related this before, but there’s a cool graphic somewhere with Venn diagrams of two populations and their intersection.

    The first is people who believe you’ll make people smoke less if you raised the cost of cigarettes.

    The second is the people who think when you raise wages you don’t lower employment.

    The intersection is Collectivists.

    • Like the “educators” who decry rote memorization while promoting the “whole language” method of learning to read.

      • Hey! If they see the word asshat enough, they’ll intuitively know what it means.

        And people wonder how you could get the name sha-theed from the word spelled shithead.

  • I’ve told progressives before that the universal minimum wage is zero. Most don’t seem to comprehend the fact that people won’t pay you more than you are worth. They are stuck on the FDR notion of , “The right to a useful and remunerative job in the industries or shops or farms or mines of the nation. The right to earn enough to provide adequate food and clothing and recreation.”
    Of course, anybody in reality knows this is bunk. You really, really, really do have to bring something useful to the table.

    As for McDonald’s workers, I’ll wager that should the $15 hour minimum wage lead to mass layoffs then the excuse will go like this: They’re better off not working for a company the produces unhealthy food for poor people.

    • I expect McDonalds has pretty much pre-processed everything they can and they would likely drop the human interface as the next step. No more counter girl. All automated. Voice Recognition is there. As well as touch screens. There will be 2-3 people who are paid well maybe even more than $15 who keep the show running and work their asses off. Everyone else bye-bye.

      The next stop would be go to the supermarkets. Frozen Big Macs. Burgers in a restaurant will be dead.

      • If you remember the days where there wasn’t a micro wave in every kitchen or break room – you can understand the lure of ‘fast food’.

        Now, meh – lunch heats in under a minute, worst case 5 minutes.

        Well, except the fries just never taste as good 🙂

      • I get what you are saying. Fast food could probably be reduced to a vending machine and a microwave. I’ll go to the grocery store and get a Stouffers before I’ll go to McDonalds.

        • Ah, that’s such a 1990s viewpoint. This is 2015, and it will soon be 2020. I’ve been using “fully robotic fast food restaurant” as a personal robotics milestone for a long time, and this will only speed it up. Even if the fully robotic fast food restaurant still ends up needing one minimum-wage human on premises to deal with various mixups and paper over first-generation deficiencies, we’re really quite close to having the technology be economically feasible for high-traffic locations.

          And note that I say “economically feasible” rather than “existing”. Frankly, the tech already exists, especially if you spot the restaurant a cut-down menu with all the really robotically-inconvenient foods removed initially (like salads). It just hasn’t been economic quite yet. Fortunately our governmental overlords have worked out how to solve that problem.

    • Or, as Crazy Nanny Pelosi put it…”Freed from job lock”.

      Orwell would be impressed.

      • But now they can live their dreams man!
        Don’t you want other people to live their dreams!
        What do you have against people dreaming of surfing full time or drawing chalk artwork on sidewalks!????
        Riding their mountain bikes every day, being healthy and happy!
        Is asking you to pay just a little more so they can have their dreams too much to ask????

      • “Freedom’s just another word for nothin’ left to lose!”

    • Its a notion that any job should be a living wage. That has never been. But they’ve proselytized this around already to a large number. They are queued up for a major push. They so much want labor riots, its not funny.

      • From each etc.

        When you have national level politicians like Idiot Pelosi who thinks it’s our responsibility to pay so someone else can have their dream job, we’re nearly there.

  • LOVE IT

    A real sushi artisan- and the best ones are exactly that- will never be replaced, especially at the top restaurants, but as you go down the chain, the bottom rung will in fact be axed. And in that case, what chance does a burger flipper have?

    Unskilled work is low compensation for a reason. And the heartless SOB in me wants to note that if you’re trying to support a family of four flipping burgers because you have no other marketable skills…..you’ve done it wrong and deserve the mess you’re in.