Today’s media reports have breathlessly lauded a nationwide walk-out among employees of various fast food chains. The “beef” (no pun intended) is that workers are demanding a minimum wage of $15 dollars an hour, twice what most of them are paid now. They claim they cannot make ends meet on the federal minimum wage, and for those workers who are heads of households with children, they are right. However, there are many things wrong with doubling the wage of a fast food worker as the remedy to just trying to get by.
But consider how large retailers have evolved. Thirty years ago there was no such thing as a self-check-out lane. I used to walk in to my local big box retailer, and there was very little that was high tech about the check-out lanes. Scanners were just starting to be used to check out and price merchandise, but the clerks had to personally scan each item with a hand wand. In spite of the burgeoning computer technology, a warm body was still needed.
Fast forward to today. Most large retailers have at least one self-check-out lane, where the customer does most of the work of scanning and bagging groceries. Every so often a customer service worker will assist with the self-check-out but for the most part, the shopper is on her own. I sort of like it that way…I get a satisfaction from bagging my own groceries the way I want to bag them, and not having to make small chat with a clerk when I am counting change. And there is a reason why retailers have adopted self-check-out machines: Capital is cheaper to them than labor.
How does this relate to today’s walk out? It is simple. If higher wages are forced on the fast food industry, capital will replace labor in the fast food industry as well. It will take some time though. There is still an excess supply of people who are willing to work at the federal minimum wage. The unemployment rate among teenagers is the highest out of all age groups. In some cities, it is above 50 percent. It boggles my mind that people demand $15 dollars an hour when there are teenagers in places such as Washington, D.C. who would be happy to work for $8.25 an hour. The fast food industry will seek out those people. But once those who are willing to work are employed, any excess demand for labor will be supplied in the form of machines. It does not matter what is mandated by a city or the federal government, or what is demanded by protestors. Businesses seek to maximize profits, and if they must replace human capital with automation, they will do it.
What does this mean? It means that many more people who once had jobs in the fast food industry will be unemployed. On the bright side, it means that many more skilled workers will be required to develop, program and support the technology that these restaurants will use. These computer automation jobs will require greater skill and pay higher wages.
The bottom line is, those who want to make $15 dollars an hour flipping burgers should put their picket signs down and instead pursue education and skills that warrant higher pay.