Free Markets, Free People

Economics

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Former McDonald’s CEO goes one for two

Ed Rensi is the former CEO of McDonalds and he commented on the reality of a $15 minimum wage and how most businesses will handle it:

I was at the National Restaurant Show yesterday and if you look at the robotic devices that are coming into the restaurant industry — it’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who’s inefficient making $15 an hour bagging French fries — it’s nonsense and it’s very destructive and it’s inflationary and it’s going to cause a job loss across this country like you’re not going to believe.”

He continues, “It’s not just going to be in the fast food business. Franchising is the best business model in the United States. It’s dependent on people that have low job skills that have to grow. Well if you can’t get people a reasonable wage, you’re going to get machines to do the work. It’s just common sense. It’s going to happen whether you like it or not. And the more you push this it’s going to happen faster.”

That’s the one he got right.  Here’s the one he got wrong:

I think we ought to have a multi-faceted wage program in this country. If you’re a high school kid, you ought to have a student wage. If you’re an entry level worker you ought to have a separate wage. The states ought to manage this because they know more [about] what’s going on the ground than anybody in Washington D.C.

Good grief, Mr. Rensi, why not let the market handle it?  You know, supply and demand?  What the heck is wrong with you?  You wouldn’t even be discussing this if government hadn’t intruded and decided unilaterally that you should pay your employees a certain amount of money for their labor.  It is because of government you’re even discussing automation above.  And now you think government – even state government (you know like California or New York?) – would be the solution?

Really?

And you were a CEO of a major corporation?

Wow.

~McQ

The left wants so badly for socialism to work

And that’s why they were so enamored of Venezuela.  All the leftist illuminati waxed on and on about how Hugo Chavez was a champion of the people and how he was working an “economic miracle” there, as illustrated by the 2013 Salon article by David Sirota.  In it Sirota gloats about how wrong the right is concerning Venezuela.  Headlined “Hugo Chavez’s economic miracle”, the sub-headline on the piece is classic:”The Venezuelan leader was often marginalized as a radical. But his brand of socialism achieved real economic gains.”

In light of Venezuela’s imminent collapse, I’m sure Sirota is cringing today.  As usual, the “economic miracle” Chavez had wrought under his brand of socialism worked swimmingly until they ran out of other people’s money.  Then, well, same crap, different regime.

I had to laugh, in particular, at this paragraph from “gloaty-boy”:

When a country goes socialist and it craters, it is laughed off as a harmless and forgettable cautionary tale about the perils of command economics. When, by contrast, a country goes socialist and its economy does what Venezuela’s did, it is not perceived to be a laughing matter – and it is not so easy to write off or to ignore. It suddenly looks like a threat to the corporate capitalism, especially when said country has valuable oil resources that global powerhouses like the United States rely on.

Well, laughed at his silliness or is it perhaps willful ignorance in not understanding, even when he was calling Chavez’s Venezuela an “economic miracle” what was really going on there.  No one is laughing at the purely predictable and lamentable problems the citizens of Venezuela are going through now because of Chavez.  He sold them a bill of goods and now they’re suffering the consequences.

What’s frustrating though is the useful idiots like Sirota and gang who won’t take the time to learn why socialism doesn’t work and certainly won’t look too deeply into any regime, such as Chavez’s, that shows the possibility of their long held dream of collectivism and central planning working.

If, in fact, they’d do that, there wouldn’t be guys like me, 3 years after the fact, pointing a finger at them and laughing at something they wrote about an economy that was doomed from the beginning.  As most of us noted at the time of the Chavez takeover, it wasn’t a matter of “if” his plan would fail, but “when”.  “When” is now.

Look at the video and the pictures, Mr. Sirota.  They’re not pretty.  They’re not pretty at all.

How does it feel to have been a cheerleader for the kind of desperation and chaos Chavez’s “miracle” has brought?  How does it feel to have wished a stable and thriving nation (it had its problems, but nothing even close to those now) into the state it now endures?  And tell me again why Chavez’s daughter is worth 4 billion?

You must be so proud.

~McQ

Is Europe moving away from “Social Democracy”?

The “Feel the Bern” gang want to be just like the European social democracies, but as I’ve pointed out before, if any of the European countries were a state in the US, they’d be among the bottom two or so.  And while the benefits are wonderful when you’re living off of other people’s productivity, that can only go on for so long.

France … yes, that’s right, France … seems to be at least figuring it out a little bit.

The French cabinet has given the go-ahead for Prime Minister Manuel Valls to force through highly controversial labour reforms.

An extraordinary cabinet meeting invoked the French constitution’s rarely used Article 49.3, allowing the government to bypass parliament.It came after rebel MPs from the governing Socialist party had vowed to vote down the bill.The reforms will make it easier for employers to hire and fire workers.

[…]

The government says relaxing workers’ protection will encourage businesses to hire more people and help to combat chronic unemployment.

As one is prone to say, “baby steps” are necessary when learning to walk.  And apparently those old nasty laws of economics are finally bitch slapping France enough that they’re at least willing to do something positive to help stimulate business and hopefully then grow their economy.

The American Interest notes:

Valls’ decision is part of a long-running trend: For decades, the decline of the blue social model has been pushing many European countries, including ones we think of as social democracies, to abandon some of the more statist features of their economic agendas. Policies that worked relatively well in closed, stable, national economies of the mid-20th century fail to deliver in the open, dynamic economies of the 21st—and even center-left governments are forced to adapt to this reality once they take power.

Indeed, the “blue social model”, the Bernie Sanders (and to a slightly lesser extent, the Hillary Clinton) model, is, in fact, been running off the rails and not at all delivering what it has promised.  But that seems to be the case with all blue social models and their components (ObamaCare anyone?).

Of course the trending away from that model is being roundly ignored by the left in the US.  Just as the economic wrecks that are Cuba and Venezuela are blamed on “extenuating circumstances.”

The left will never face the reality of their utopian central control’s failure everywhere and in whatever flavor it is tried.  There’s a reason for that.  It goes against everything that actually works.  Without “perfect knowledge” and then the means to implement it in a direct and timely fashion – two things which will never be achieved – it will always fail.  Most importantly, central control simply runs against human nature and therefore authoritarian governance to impose true socialism on the citizens.  And yes, the light form of that is indeed “social democracy” but to become anymore “socialist” requires government to move in a more authoritarian way to enable those sorts of “reforms”.  Instead, what you see in Europe is resistance coupled with a realization that this just isn’t working as advertised.

Thus the “trend” as discussed.  As more of the blue model is scrapped and countries begin to realize gains, other European countries will likely follow suit.

Meanwhile, in the US, we’re apparently considering adopting the model they’re moving away from.  And it certainly will be a rousing success.  They can’t make it work in countries with about one-eighth our population, but with the “competent” politicians and bureaucrats we have here, we’re sure to make it work.

Uh, huh.  Really.

~McQ

If you think Bernie is expensive

Hillary Clinton admits not only to a tax increase but a 1 Trillion dollar tax increase.  To spend on the debt?  Well, no.  New spending! Freeloader spending!

If you know how government works, they’ll admit to $1 trillion in new taxes and claim its what they’ll spend, but my guess is the real spending will end up being 4 to 5 times that much.  And that in the land of $18 Trillion debt.  Check out this interview.  Whatever happened to “no new taxes”?

Daily News: So on taxes, that I did call for among other things, a surcharge on incomes over $5 million, 30% minimum, the Buffett rule, over a million…

Clinton: Over a million. Yeah, right.

Daily News: …and then to carried interests, a change in capital gains that would reward people for holding for six years or more, I believe it is. How much revenue do you foresee coming off that and what will be the impact on growth?

Clinton: Well, I have connected up my proposals for the kind of investments I want to make with the taxes that I think have to be raised. So on individual pieces of my agenda, I try to demonstrate clearly that I have a way for paying for paid family leave, for example, for debt-free tuition. So I would spend about $100 billion a year. And I think it’s affordable, and I think it’s a smart way to make investments, to go back to our economic discussion, that will contribute to growing the economy.

Now I’m well aware that this is a heavy lift. I understand that. But I think connecting what I’m asking for to the programs, to the outcomes and results that I’m calling for give me a stronger hand, and that’s how I’m going to go at it.

Daily News: So if I understand you correctly, if you look at your proposals for college costs and for family leave, for infrastructure investments…

Clinton: Well, that’s a little bit different, because infrastructure investment, I’m still looking at how we fund the National Infrastructure Bank. It may be repatriation. That’s one theory, or something else. It’s about $100 billion a year.

Daily News: A hundred billion a year, so that comes out to about a trillion dollars…

Clinton: Over ten.

Daily News: …over ten years.

Meanwhile, never mentioned, is what happens to an already hurting economy when government decides it can spend money better than those who earn it?  Well the same thing that happens in any planned economy.  People who earn the money quit doing so since it simply isn’t worth it.  When marginal rates rise to the point that if you spend your time earning more, most of it goes out in taxes, well then you put together a plan to maximize what you get to keep and you don’t commit to any extra earning that will be mostly taxes.

Does the government spending drop when the planned tax revenues drop?

Have you ever seen it do so?  Do you have any idea of how we’ve amassed the $18 trillion dollar debt we have?

So yeah, let’s elect this criminal crackpot and economic illiterate and finally pull the flush chain.  Let’s just let it all go down the drain.

What a political season we’re being subjected too.  And idiot on the right and two socialist crackpots on the left.

Meanwhile, the apparent hot topic is whether or not North Carolina has the right to have men use a men’s room and not the women’s room.

Freaking nuts!

~McQ

An update of a couple of topics we’ve been following

First, the University of Missouri, where the SJWs, with the help of a professor who didn’t think much of the 1st Amendment and was fine with committing battery to deny it, is having a rough year.  Consequences from this bit of nonsense have really hit the bottom line:

Following a drop in students applying for housing, the University of Missouri will not be placing students in two dorms for the fall 2016 semester.

Mizzou will be closing the Respect and Excellence halls (ironic names, given the circumstances) in order to utilize dorm space “in the most efficient manner” to keep costs down.

In March, the university announced that it saw a sharp drop in admissions for the coming school year, and will have 1,500 fewer students. This will lead to a $32 million budget shortfall for the school, prompting the need to close the dorms in order to save money.

“Dear university community,” wrote interim chancellor Hank Foley in an email to the school back in March. “I am writing to you today to confirm that we project a very significant budget shortfall due to an unexpected sharp decline in first-year enrollments and student retention this coming fall. I wish I had better news.”

You see, those who are looking for a college have alternatives.  And when they see a college or university that they perceive, right or wrong, to be out of control, they are likely to take their business elsewhere.  Afterall, they’re paying the bill.  So, take note all you institutions of higher learning who tend to fold like a wet paper box when a few students protest, you too may end up closing a couple of dorms if it goes the way of Mizzou.  Fair warning.

Oh, and speaking of alternatives, New York government has decided to be “wonderful” with other people’s money and has hiked the minimum wage to $15 (over a time period).  That’s double the wage of today.  White Castle, an NY institution, isn’t taking that well since it will have a very heavy impact on their profitability (they make a 1 to 2% profit after expenses, including labor).  White Castle’s CEO says there are few alternatives.  If it was about price increases only, they’d have to increase their prices by 50%.  He’s pretty sure that’s a no-go because of competition for dining out dollars.  So, what’s he left with?

In the hyper-competitive restaurant industry, margins are slim — Richardson says that, in a typical year, White Castle hopes to achieve a net profit of between 1 and 2 percent — and if labor costs go up, many restaurants will turn toward labor-cost-cutting automation or business models that don’t require many employees. That means a lot of kids won’t get that first job. After decades of baggage check-in kiosks at airports, ATMs, and self-check-out lines at the supermarket, is it really so hard to imagine automation replacing the kid behind the counter at burger joints?

And what is lost to more young, inexperienced and thereby low-wage workers?

“We know that Millennials aren’t thinking they’ll stay at White Castle for 30 years,” Richardson says. “We view it as the start of the path. That’s true if you stay at White Castle or move on to something else. The skills you gain, you can take to the next role: learning how to apply for and get a job, learning how to show up, learning a work ethic, making a paycheck, and having fun.”

But this is about more than wages — White Castle has offered benefits and retirement programs for decades. It’s about the opportunity to work, to take the first step up the ladder of life, to get started.

“Out-of-work kids who don’t have an opportunity to work get in trouble. We want to offer kids jobs, offer kids work,” Richardson says. “There’s dignity in that.”

Somehow, though, the concept of starter jobs that pay low wages (and with the minimum wage, it’s usually more than they are worth) has become lost in all of this and we see government stepping in to make them “career” jobs for some idiotic and economically unsound reason. The result is predictable, although it will likely be hidden. You won’t see numbers because the numbers in question are those who are never hired because the wage floor is too high. And they’re going to be the “out-of-work” kids who don’t get that first chance to experience a job and what it takes to succeed.

Instead an alternative will do the work. A kiosk will greet the customer, takes his order and money and do so at a price point well below a $15 an hour worker. This isn’t rocket science and the math isn’t hard at all – $15 times 0 hours equals what?

~McQ

Being “wonderful” with other people’s money

Or, the definition of politics today (and how Margret Thatcher defined socialism).  Today’s “wonderful” people?  Well they’re all in California.  Example one:

San Francisco on Tuesday became the first city in the United States to approve six weeks of fully paid leave for new parents — mothers and fathers, including same-sex couples, who either bear or adopt a child.

California is already one of only a few states that offer paid parental leave, with workers receiving 55 percent of their pay for six weeks, paid for by employee-financed public disability insurance. The new law in San Francisco, passed unanimously by the city’s Board of Supervisors, mandates full pay, with the 45 percent difference being paid by employers.

That’s right friends, the price of being nice means charging employers 45% more for paid family leave just for the privilege of doing business in San Francisco. Isn’t that just “wonderful”?

Well of course it is … just ask the clueless:

The United States, which guarantees up to 12 weeks of unpaid parental leave, is the only developed country that does not guarantee all new parents paid parental leave. Expectant mothers get 18 weeks of paid leave in Australia, 39 weeks in the UK, and 480 days in Sweden.

That’s right, they do it in … say it with me, Europe!  You know, the group of countries, all of which were they states in the US, would be poorer than Mississippi.  That’s what we want, isn’t it boys and girls!

It is the responsibility of others to pay for our choices! Because, you know, it’s the fault of the employer its employees get pregnant and miss work.  They should pay them for that time.  And what the heck, they can just socialize the payment by raising their prices, can’t they?

And, of course, they can socialize even more with California’s new $15 minimum wage.  Because everyone knows that employers ‘owe’ employees a “living wage”.  However, don’t forget members of California’s various governments up to their necks in giving away other people’s money – employers still have choices, and you can believe when they are feasible and affordable, they will exercise them.

When that happens, Cal Pols, you can hold a math quiz with everyone who finds themselves looking for work because employers took their business elsewhere or automated.

The question?

“What’s $15 dollars times zero hours?

Oh, wait, I forgot  … government run schools.

Never mind.

~McQ

The age of job automation

It’s closer than you think.  Last Friday I put a bit up in Stray Voltage about Dominos testing a robot delivery service in New Zealand.  And I intimated that that sort of automation would be something that would displace labor if labor got too expensive – like $15 for the minimum wage.

Over the weekend I happened across a couple of more articles.  One featured the CEO of Hardee’s and Carl Jr.’s talking about an automated restaurant he’d seen in San Francisco.  And, sure enough, his focus was on labor savings ($15 minimum wages specifically):

The CEO of Carl’s Jr. and Hardee’s has visited the 100%-automated restaurant Eatsa — and it’s given him some ideas on how to deal with rising minimum wages.

“I want to try it,” CEO Andy Puzder told Business Insider of his automated restaurant plans. “We could have a restaurant that’s focused on all-natural products and is much like an Eatsa, where you order on a kiosk, you pay with a credit or debit card, your order pops up, and you never see a person.”

Pudzer’s interest in an employee-free restaurant, which he says would only be possible if the company found time as Hardee’s works on its northeastern expansion, has been driven by rising minimum wages across the US.

“With government driving up the cost of labour, it’s driving down the number of jobs,” he says. “You’re going to see automation not just in airports and grocery stores, but in restaurants.”

Good old government.  Helping out again, aren’t they (another way to make you more dependent on them)?  As Pudzer says:

“This is the problem with Bernie Sanders, and Hillary Clinton, and progressives who push very hard to raise the minimum wage,” says Pudzer. “Does it really help if Sally makes $3 more an hour if Suzie has no job?”

Well no, it doesn’t. And then there’s this:

“If you’re making labour more expensive, and automation less expensive — this is not rocket science,” says Pudzer.

Well no, it’s not – er, except to Bernie supporters.  But then it isn’t necessarily easy to automate everyone’s jobs either.  But it is getting easier as technology develops.

Take the restaurant that Pudzer was talking about:

“I would call it different than a restaurant,” said David Friedberg, a software entrepreneur who founded Eatsa. “It’s more like a food delivery system.”

Last week, I was in a fast-moving line and browsed on a flat-screen monitor the menu of eight quinoa bowls, each costing $6.95 (burrito bowl, bento bowl, balsamic beet). Then I approached an iPad, where I tapped in my order, customized it and paid. My name, taken from my credit card, appeared on another screen, and when my food was ready, a number showed up next to it.

It corresponded to a cubby where my food would soon appear. The cubbies are behind transparent LCD screens that go black when the food is deposited, so no signs of human involvement are visible. With two taps of my finger, my cubby opened and my food was waiting.

The quinoa — stir-fried, with arugula, parsnips and red curry — tasted quite good.

And he saw no one other than other customers.  Says the author of the article:

Whether a restaurant that employs few people is good for the economy is another question. Restaurants, especially fast-food restaurants, have traditionally been a place where low-skilled workers can find employment. Most of the workers are not paid much, though in San Francisco employers of a certain size must pay health benefits and in 2018 a minimum wage of $15.

Ironic, isn’t it?  That the prototype “food delivery system” is established in a city in which government has decided it will set the wages.  The laws of economics, or “rocket science” for the Bernie supporters, begs to differ.  There’s no real advantage in terms of labor savings, if the market sets the minimum wage, but mandated wages?  Well, then it comes down to viable alternatives – and cost-wise, this is suddenly viable.  The lower wage job holders of America say – thanks government.

And beyond the obvious, there are advantages to automating:

By not hiring people to work in the front of the restaurant, he said, they save money on payroll and real estate. (There will always be at least one person available to help people navigate the iPads and to clean up.) The kitchen is also automated, though he declined to reveal how, and the company is experimenting with how to further automate food preparation and delivery.

And, fewer to call in sick, give benefits, sick days and paid vacations too.  Make an employer’s job easier, more efficient and more enjoyable and the employer will take that route every time.

“We can sit and debate all day what the implications are for low-wage workers at restaurants, but I don’t think that’s fair. If increased productivity means cost savings get passed to consumers, consumers are going to have a lot more to spend on lots of things.”

Consumers have a choice – spend more for the same thing to help someone else have more money or spend less for the same thing and have more to spend on other things they want or need.  Wal-Mart says they will choose the latter.  So do those pesky laws of economics.

The food industry isn’t the only industry that’s going to see this though:

Automation is transforming every industry. Business owners look to substitute machines for human labor. It happened to blue-collar workers in factories and white-collar workers in banks and even law firms. With self-driving vehicles, it may happen in the taxi and trucking industries. Robots and artificial intelligence machines are expected to transform health care.

Coming sooner rather than later … possibly sooner than we think.

Nowhere is the potential for job automation so obvious as it is in the on-demand economy, where many startups have grown fat with venture capital despite poor unit-economics. Uber is spending heavily to hasten the development of driverless cars. Instacart, Postmates, and other delivery-heavy startups are unlikely to stick with humans once machines—which don’t take sick days, need bathroom breaks, or threaten to unionize—can do the same jobs.

But even if you don’t work in the on-demand economy, chances are high that you or someone you know will eventually be in the same position as Fox-Hartin. Machines already exist that can flip burgers and prepare saladslearn and perform warehouse tasks, and check guests into hotels. Companies like WorkFusion offer software that observes and eventually automates repetitive tasks done by human workers. And automation has also crept into knowledge-based professions like law and reporting. When in 2013 researchers at Oxford assessed whether 702 different occupations could be computerized, they concluded that 47% of U.S. employment was at risk of being lost to machines.

~McQ

Oil production as a weapon

Just an interesting thought.

Saudi Arabia, among others in the middle east, have been getting rich off oil for decades.  So has Russia.  The Saudis, for one, have used these riches to spread a radical version of Islam through  out the world.  Russia has used its money to begin to rebuild its empire (and military) again and bully its neighbors.

What if the flow of oil money could be cut to a fraction of what it once was?  Wouldn’t that have the effect of at least slowing the ability of these nations to act as they are now?  While I have no idea the level of the effect, it can’t help but have some.

So why aren’t we, as a country, exploiting this?

Oil production in the United States will reach a record high by 2021 as efficiency gains help domestic producers to combat the low prices that are likely to force hefty output cuts this year and next, the International Energy Agency (IEA) said on Monday.

After an initial dip this year and next, U.S. output is expected to climb to 14.2 million barrels per day (bpd), the IEA said in its medium-term outlook, citing the “free-for-all” that has come to characterize today’s oil market.

Because, let’s face it, this is good news for the US and especially for the US consumer.  For one thing it seems to be breaking the OPEC cartel’s stranglehold on pricing.

An agreement this month between major OPEC and non-OPEC producers to freeze output at January’s levels to bolster the oil price was viewed as unlikely to have any significant short-term impact.

Again, a positive.  The day of sheiks dictating how much oil you’ll get and how much you’ll pay seem, if this report is true, to be over.

The pain of oil prices falling to about $30 a barrel — their lowest since 2003 — has been widespread, but it has hit OPEC countries particularly hard.

At current crude prices the IEA estimates that oil export revenue for OPEC as a whole will drop this year to $320 billion from a peak of $1.2 trillion in 2012 and $500 billion last year.

So good old American know-how and efficiency developed in the private sector has made it worthwhile to pump shale oil at a profit.  And that is having a fantastic effect for the consumer in the market as well as helping to cut funds to those who would use them to act aggressively in the world.

Seems to be a win-win to me.

But then, if we had a government that actually was on the ball and saw the advantage to this, we wouldn’t have a president who is proposing a $10 a barrel tax on oil would we?

~McQ

Who changed the deal?

That’s the question here.  Which entity decided, arbitrarily, to change the conditions of the agreement?

DC officials are furious as Walmart has reneged on a promise to build stores in lower-income areas of the city. Walmart announced last week that they will be shuttering 269 stores throughout the country. (The already-existing three DC stores will remain open.) The company cited the unexpectedly high building and labor costs as to why they would not move forward with the additional locations, but was more open in a meeting as to how DC’s labor laws, including its higher minimum wage, are making it harder to operate a business.

Let’s see.  Was raising the minimum wage to $15 an hour within the District a part of the deal?  Do you think Walmart would have agreed to build had it known that such a raise in labor costs was in the offing?  My guess is “no”.  Thus the citing of “unexpectedly” high … labor costs.   And obviously, it also costs more, then, to build the store in a union town, because when the lowest paid worker gets a raise such as this, guess what happens to the pay of the higher paid workers?  That’s why unions back the minimum wage.

The WaPo sheds some more light on the subject:

Evans said that, behind closed doors, Walmart officials were more frank about the reasons the company was downsizing. He said the company cited the District’s rising minimum wage, now at $11.50 an hour and possibly going to $15 an hour if a proposed ballot measure is successful in November. He also said a proposal for legislation requiring D.C. employers to pay into a fund for family and medical leave for employees, and another effort to require a minimum amount of hours for hourly workers were compounding costs and concerns for the retailer.

“They were saying, ‘How are we going to run the three stores we have, let alone build two more?’ ” Evans said.

Exactly!  When the government that made the deal then changes the conditions, it isn’t the company which is the problem.  It is the government assuming the power to set the labor cost for the company (plus this new fund that’s likely to pass into law) which is at fault.  If anyone should be “furious” it is the company and the citizens now denied the low cost of goods Walmart would have brought to those neighborhoods.  A perfect example of the government engaging in “bait and switch”.

So who, exactly, is it that gets hurt?

Why the very people they were purported to want to help.

The poor.

What a surprise.

~McQ

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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