‘Fight for $15’ Protest Only Fights the Future

Original Article: http://www.jsonline.com/news/fight-for-15-protest-only-fights-the-future-b9913064z1-207799861.html

  • Author: Michael Saltsman

  • Publication Date: May 2013

  • Newspaper: Milwaukee Journal-Sentinel

  • Topics: Living Wage, Minimum Wage

A small percentage of Milwaukee’s fast-food workforce walked off the job this week, demanding a greater than 100% increase in the minimum wage — to $15 an hour from Wisconsin’s current $7.25 an hour.

Though the strikers have targeted fast-food chain restaurants, their real battle isn’t with restaurant management at all; it’s with the restaurant’s price-conscious customers. And if the workers get their way with a $15 minimum wage, they will only hasten the service industry’s move toward automation and self-service, where the customer (or even a computer) performs a task that used to be part of someone’s job description.

Setting aside their heated social justice rhetoric, it’s clear that the labor-aligned strikers are butting up against some basic economic realities of the service industry. Fast-food restaurants, along with other labor-intensive businesses such as grocery stores and gas stations, keep just a few cents in profit from each sales dollar after paying for food, labor and other expenses. In other words, a $15 wage mandate — which would add over $15,000 a year to the cost of each full-time minimum-wage employee — can’t just be absorbed.

This leaves employers with one of two unpleasant options: Raise prices, or reduce costs. But higher prices to offset a wage hike of this magnitude aren’t realistic — imagine how you’d respond if the 99-cent menu became the $2.99 menu. Instead, restaurant operators have to provide the same service with fewer employees.

This means that customers end up serving themselves instead of being served by an employee. For example: Today, we might bag our own groceries at a supermarket checkout or pump our own gas at the station (except in New Jersey and Oregon, where it’s against the law). Even self-service soda refills at fast-food restaurants were developed as a labor-saving device.

In other cases, a robot can be “hired” to do the job instead of an employee. The technology is already here: San Francisco-based Momentum Machines recently announced a new robotic burger-flipper that does the work equivalent of three full-time kitchen employees. That’s 360 burgers per hour, with no strikes, benefits or wage demands.

At current labor costs, Momentum’s burger-flipper pays for itself within the first year. But at $15 an hour for an employee, the investment would pay off in a matter of months.

This trend toward automation doesn’t just affect the kitchen. In 2011, McDonald’s announced it was installing touch-screen ordering terminals at 7,000 European locations, making the cashier position effectively obsolete. California Pizza Kitchen, Chevys Fresh Mex and other table-service chains are experimenting with computer terminals that let customers order and pay at the table, with minimal service from a server required.

These changes don’t become inevitable until the cost of service gets trumped by customers’ desire for low prices. But once the jobs are automated, that’s one less entry-level position for a less-skilled employee to work his or her way up the career ladder — no small concern in a state where over 20% of teens who would like a job this summer can’t find one.

The striking Milwaukee workers might be well-intended, but they’re only fighting the laws of economics — and that’s a fight they can’t win.

Michael Saltsman is the research director at the Employment Policies Institute.