(Post by Rick Dacri, January 10, 2017)
Minimum wage increases force businesses to automate, killing jobs. Nonsense. McDonald’s and Wendy’s announce self-serve kiosks to replace low paying workers in response to threatened legislative wage hikes. Designated Labor Secretary Puzder criticizes minimum wage hikes saying they threaten the restaurant industry. It all makes good headlines, but the reality is businesses primarily automate to improve productivity and efficiency. It is smart business and while jobs may be lost, it is a natural evolutionary process and not a direct response to increased minimum wages.
Back in the 1970’s, when I first began my professional career (yes, I am that old), I watched how a three person manufacturing process was automated using robots and conveyors, eliminating all 3 of those jobs. While that may seem devastating to these workers, no one lost their job as the CEO realized he needed those people. We retrained those displaced workers (that was my job) to do higher skilled, better paying jobs. That was a better, more cost-effective way to operate the business. And it paid long-term dividends.
Automation is not new and not a direct response to minimum wage hikes. Do you think employers simply respond to that? Think back to the advent of self-serve gas pumps (can you even remember when that began?), ATMs, self-serve grocery checkouts and airline ticketing, automated phone sales and telephone operators, travel agents, data entry operators and clerk typists, to name just a few. These respective industries eliminated jobs, not in response to minimum wage hikes, but to upgrade operations. This is the reality of the modern economy.
Good companies continuously seek ways to reduce costs, while improving operations. Labor costs is a favorites and easy target and when wages go up, sometimes layoffs happen. But in a tight labor market, frankly any market, it isn’t always the best route.
Business should focus on their bottom line and wages do impact that. But a well trained, adequately paid, and engaged workforce yields better results, at less cost.
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