Other shoe drops as $15 minimum wage spurs Wendy’s to pursue automated ordering

By Eric Boehm  /   May 13, 2016  /   News  /   60 Comments @ Watchdog.org

Supporters of a $15 minimum wage are about to get a heaping helping of reality.

Self-service kiosks will be made available to the more than 6,000 Wendy’s franchises in the United States, the company announced on Thursday. Individual restaurant managers will decide whether to install them as an alternative to having human beings take customers’ orders.


BEEP BOOP CAN I TAKE YOUR ORDER:
Automated ordering machines, like these at a
McDonald’s in Spain, are coming to the United States
 as a response to higher minimum wages

According to Investors Business Daily, which reported the news, Wendy’s executives said the decision was driven by a tight labor market and higher minimum wages in many states.
After all, a computer kiosk doesn’t need to be paid $15 an hour to take orders.

Wendy’s President Todd Penegor told IBD that franchise locations have been raising prices to offset wage hikes and said the company is wary about both wage hikes and a possible recovery in commodity prices and is “working so hard to find efficiencies.”

McDonald’s is also experimenting with self-service kiosks. Wendy’s might also introduce mobile
California and Oregon have recently passed bills to hike the minimum wage to $15 an hour and $14.75 an hour, respectively, over the next few years; other states are considering the same.

Economists warn that a drastic increase in the minimum wage could cause low-skilled workers in the service sector to be replaced by machines.

“If you’re making labor more expensive and automation less expensive — this is not rocket science,” Andy Puzder, CEO of Carl’s Jr., another fast food chain, told KFOR-TV in March.

A 2013 study from the University of Oxford found that 92 percent of food preparation jobs, including those in the fast food industry, were susceptible to being replaced with automation.

And the most recent edition of the annual Duke CFO Global Business Outlook, which surveys more than 600 businesses, found that about 70 percent of respondents that currently pay less than $15 an hour said they would pursue more automation if forced to pay a higher minimum wage.

Jack Karsten and Darrell M. West, a pair of researchers at the Brookings Institution, concluded last year that the intersection of higher wages for low-skilled workers and falling cost of computer technology would make things harder for workers at the bottom of the economic ladder.

“A higher minimum wage changes cost considerations for businesses seeking to automate more of their operations,” Karsten and West wrote. “Increasingly, low-skill workers will not only have to compete with each other for jobs at higher wages, but also with computers.”

Wendy’s decision to use more automated ordering machines is not a surprise — it’s the next logical step in the fast food industry, spurred on by political decisions in several cities and states.
Rather than making $7.50 or $8 an hour, those workers who lose their jobs to machines will be making a minimum wage of $0.00.

 

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Eric Boehm is the national regulatory reporter for Watchdog.org. He lives in St. Paul, Minnesota. His work has appeared in Reason Magazine, National Review Online, The Freeman Magazine, The Philadelphia Inquirer, The Washington Examiner and Fox News. He was once featured in a BuzzFeed list-icle. Follow him on Twitter @EricBoehm87.

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