Living wage: Paying it would force chains to replace humans with robots

2013-09-23T00:00:00Z Living wage: Paying it would force chains to replace humans with robotsBy James Sherk Arizona Daily Star
September 23, 2013 12:00 am  • 

Medieval doctors bled their patients with leaches. Far from improving their condition, it left them worse off. Raising the wages of fast-food workers to $15 an hour would produce similar results for those the proposal is intended to help.

In America, minimum-wage workers are better paid than the average worker in Mexico. Why? Not because U.S. employers are more generous than their Mexican counterparts. Nor do Americans somehow deserve better pay.

U.S. minimum-wage earners make more because they produce more. Better education and greater capital investment make American workers more productive, raising their earnings.

Competition forces businesses to pay workers according to their productivity. If companies pay less, their employees will jump ship to competitors. And if they pay workers more than they produce, they go out of business.

For better or worse, fast-food jobs are relatively low-productivity positions, typically filled by inexperienced workers. Most fast-food customers want a quick, inexpensive meal. They will not regularly pay premium prices for a burger and fries.

Doubling wages at McDonald’s would  raise prices, driving customers away.

If Congress mandated fast-food restaurants to pay $15 an hour, they would have to change operations to deliver the kind of productivity to justify those higher costs. That would mean replacing current workers with machines and hiring fewer, more skilled workers to maintain them.

Restaurants could do this in a variety of ways, such as using iPad kiosks instead of cashiers to take orders, or installing the new robotic burger flipper that makes up to 400 hamburgers an hour.

At current wages high-tech investments make sense for only a few restaurants; if wages doubled they would become widespread. The end result: far fewer jobs in the fast-food industry and higher pay for those who remain.

Those who consider such a trade-off worthwhile miss the economic role of minimum-wage jobs. For most workers, they are entry-level positions where they can gain experience that  helps them command higher pay in their next job.

Businesses value skills like reliability, discipline and the ability to accept instructions. Fast-food jobs instill these basic skills in inexperienced workers.

Most Americans started out in a job paying within a dollar of the minimum wage. Few stay there long. The average fast-food employee stays at his or her restaurant for less than a year. These are simply gateway jobs, the first step on a career ladder. That is why the vast majority of fast-food workers are under the age of 25.

Super-sizing fast-food wages would eliminate many of these entry-level jobs, making it harder for young people to land that all-important first job and start climbing the ladder of success.



James Sherk is a senior policy analyst in labor economics at The Heritage Foundation.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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