Conventional wisdom for decades has held that research has been inconclusive on the impact on business raising the minimum wage has. Advocates of hiking the wage claim it improves the economy by putting more money in workers pockets. Critics argue that rising cost of labor puts people out of work. Recent evidence has favored the critics. A recent Harvard study suggested that for every one dollar increase in the minimum wage restaurants with a Yelp rating of three stars or less have a 14% increased chance of going out of business. The study focused on restaurants in the San Francisco Bay Area. The City of San Francisco has a minimum wage of $13.00 an hour which will increase to $14.00 on July 1 and to $15.00 on July 1, 2018.
Despite this, Wisconsinites will be bused to Chicago Tuesday to protest for a $15.00 an hour minimum wage outside a McDonald’s Corporation shareholders meeting:
Three buses will leave Milwaukee to bring protesters to the “Fight for $15” effort in Chicago. The Fight for $15 was revealed years ago to be little more than a thinly veiled effort to unionize McDonald’s employees. Despite the fact most McDonald’s stores are actually run by franchisees, or local business owners, the SEIU seems to feel it can get $15 an hour and, ultimately, unionization for McDonald’s employees. Workers pinning their financial dreams of the Fight for $15 may want to get familiar with the “Faces of 15.” It’s a website featuring a collection of businesses negatively impacted by an increase in the minimum wage:
Unions and activists say the costs of minimum wage hikes are negligible. But the real faces of $15—and of other dramatic hikes in the minimum wage—are the employers who struggle to offset those costs. As these stories show, their actions often mean fewer opportunities for the employees these laws are meant to help.
- Garment maker “Made in L.A.”
- AG Ferrari
- Abbot’s Cellar
- Apparel Manufacturer
- Ashley Furniture-California (840 jobs)
- Bacci Chocolate Design
- Betty’s Neighborhood Restaurant
- Black Oak Books
- Bob And Ron’s Fish Fry
Those ten provide just a sampling. There are are dozens more listed from around the United States, totaling thousands of jobs lost. And if McDonald’s franchisees don’t go out of business, the fast food giant already has plans to cut their labor costs. From Forbes, November, 2016:
Earlier this month, McDonald’s announced the nationwide roll-out of touchscreen self-service kiosks. In a video the company released to showcase the new customer experience, it’s striking to see employees who once would have managed a cash register now reduced to monitoring a customer’s choices at an iPad-style kiosk.
It’s not just McDonald’s that has embraced job-replacing technology. Numerous restaurant chains (both quick service and full service) have looked to computer tablets as a solution for rising labor costs that won’t adversely impact the customer’s experience. Eatsa, a fully-automated restaurant concept, now has five locations—all in cities or states that have embraced a $15 minimum wage. And in a scene stolen from The Jetsons, the Starship delivery robot is now navigating the streets of San Francisco with groceries and other consumer goods. The company’s founder pointed to a rising minimum wage as a key factor driving the growth of his automated delivery business.
As minimum wage earning employees board buses for Chicago next week, someone might want to tell them that a short trip on a bus could leave the paying jobs they have far, far behind in the rear view mirror.