The Case Against a Minimum Wage Hike by Fast Food Retailers

This is a compelling counter argument against raising the minimum wage too highly.

The retail industry is just one in which workers are at risk. It’s hard to find many jobs that are not threatened by automation, by Internet expansion or by overseas competition. That includes people working in the fast food industry — where union organizers are currently pushing for a big jump in minimum pay. They should not assume that burger joints won’t eventually automate. Last year, Momentum Machines in San Francisco previewed an apparatus that created 360 burgers an hour. Noting that the fast food industry spends $9 billion a year on wages, the company predicted a lively reception for its space- and cost-saving machine.

I would be willing to bet that if the minimum wage is hiked to $15 suddenly installing these machines will become a very lucrative alternative to hiring a person to do it. With a machine you can do the following:

1. Regulate the amount that goes into each burger (you can put exactly 2 pickles, 2.5 ounces of lettuce, an exact dab of mayo and ketchup etc) so you can tell costs down to the penny.

2. Put something on the machine to track exactly how many burgers are created and when. It will allow McDonalds headquarters to do trend analysis and such and tinker with production. So if ketchup prices rise they can adjust the amount of ketchup that comes out with a few keystrokes.

3. Stop mistakes in creating the burgers. I once had the strings that tie burgers together still attached to an Ultimate Cheeseburger from Jack-in-the-box one time. That shouldn't happen with an automated burger machine.

4. Fire half or more of your staff. You pretty much only need a person running the register and filling the orders and someone to load and service the automated burger machine. That would probably be a higher paying technical job but you could probably train some staff members to do. Especially if they are getting $15 an hour. Overall there will be far less jobs in the fast food industry then we have now if this burger machine becomes economically viable.

5. Limit the store footprint if you have to reduce the rent per square foot. A burger making machine will probably take up much less space than the aisles and such that humans need. More space can be used for seating and such or just go down to the bottom line as savings in rent.

I guess raising the minimum wage to $15 might invoke the laws of unintended consequences.