On Tuesday, former McDonald's CEO Ed Rensi made news by going on Fox Business and declaring that ongoing protests in the campaign for a $15 minimum wage were encouraging the automation of fast food jobs.
The segment goes on for seven minutes, but here's the meat of it:
I was at the National Restaurant Show yesterday and if you look at the robotic devices that are coming into the restaurant industry — it’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who’s inefficient making $15 an hour bagging French fries — it’s nonsense and it’s very destructive and it’s inflationary and it’s going to cause a job loss across this country like you’re not going to believe
This is not Rensi's first time railing against the idea of a $15 minimum wage. He did so as recently as April, when he wrote a piece for Forbes claiming that the campaign to raise the minimum wage is "built upon a fundamental misunderstanding of a restaurant business such as McDonald’s."
Here are a few other pieces of automation news from this week:
- Pizza Hut Asia's restaurants will be getting some robotic help in the form of the SoftBank's humanoid Pepper robots.
- Foxconn, the Chinese supplier of many Apple and Samsung parts, confirmed that it's planning to replace 60,000 jobs through automation.
- The current CEO of McDonald's, Steve Easterbrook, said he didn't think they'd be replacing human workers with automated ones. "Ultimately we’re in the service business," he said during a shareholder meeting. "We will always have an important human element." Though, as The Guardian's Jana Kasperkevic points out, he didn't mention the minimum wage.
And, for good measure, let's add that a couple weeks ago Wendy's announced it'd be installing self-service kiosks, apparently in response to rising minimum wages. White Castle hinted at the same.
New York and California are ramping up to a $15 minimum wage. And Seattle, which enacted a progressive minimum wage increase that will eventually hit the $15 mark, has yet to see any economic catastrophe from the hike.
But the fact is, automation is probably coming for jobs no matter what the minimum wage. The threat of automation has been trotted out as a counterargument to minimum wage increases for years now. In 2014 the introduction of self-service kiosks at Panera Bread was seen as a grim omen, even as the company said it didn't plan job cuts because former cashiers would simply deliver food to tables.
The arguments that Rensi and others make about the supposed dangers of a higher minimum wage often hinge on the idea that jobs are being taken from teenagers and other workers entering the workforce. But the Bureau of Labor Statistics lists the median age of restaurant workers as 28.5, and the vast majority are adults. The jobs threatened are not, as Rensi and his cohort so often insist, first-time jobs that help people make some spending money; they are jobs on which people are expecting to live.
But they're not making enough to live on, and the cost of a low minimum wage is passed on to that most revered of all groups: taxpayers. The UC Berkeley Labor center issued a report last year explaining that low-wage fast food workers (among others), "increasingly cannot make ends meet," and that more than half of fast food workers required some sort of public assistance.
Maybe the most telling example of how specious it is to pit automation against raising the minimum wage comes from Tim Worstall, opining for Forbes. Worstall writes, "Clearly we’re going to make sure that the poor of America live better than many people elsewhere simply because America is a rich country."
This is simply not true. But, taking this as his premise, he continues to argue that increasing the minimum wage will speed up automation—making things worse. Let me quote him at length here, with my emphasis:
The important thing to understand is that how much labor is employed to do a task will depend upon the price of labor. Say that robotic french fry-making arm does cost $35,000. You have to pay a human worker $7.25 to do that job. You may or may not buy the robot, thinking that with the costs of maintenance of the machine and the greater adaptability of the human, a series of people is a better idea.
Now change that price of labor to $15 an hour. Not everyone will immediately go for the machine, but some people will because economics happens at the margin.
It’s also true that automation is coming, as it has been for the past couple of centuries. But is there a real point in bringing it along any faster? That is what a $15 minimum wage will do, meaning inevitably, some people lose their jobs.
The argument here is, effectively, robots will come eventually, and in the meantime low-wage workers should take an unlivable wage while knowing that your boss may fire you to install a robotic arm anyway. That argument is that some of America's poorest workers should trade a living wage for job stability that isn't even stable. It's an argument that's been made for far too long, even without the help of looming robotic arms.
Ethan Chiel is a reporter for Fusion, writing mostly about the internet and technology. You can (and should) email him at firstname.lastname@example.org