Unions Fight for 15, Get Robots Instead

Posted by Emily Leayman on Wednesday, March 1st, 2017 at 5:00 pm - Permalink

By Emily Leayman

In business, robot workers aren’t just the result of technological improvements. They’re a clear response when labor demands a $15 minimum wage.  

The latest example is fast food chain Wendy’s, which announced this month it would bring self-ordering kiosks to 1,000 stores by the end of the year.

This plan would affect 16 percent of Wendy’s locations, The Columbus Dispatch reported.  The company’s decision stems from labor costs and young customers’ preference for ordering with kiosks.

Although installing machines brings upfront costs, the company saves money in the long run. Installing three kiosks would cost each store $15,000 on average, but savings from labor costs and increased sales would pay for the kiosks in two years, according to David Trimm, chief information offer for Wendy’s.

Even though the kiosks are replacing some jobs, kiosks’ streamlined ordering process makes the jobs easier for employees in the kitchen. Some Wendy’s locations already feature kiosks, and franchises and customers have been requesting them, said Trimm. If customers continue to demand kiosks in large numbers, businesses could hesitate to pay cashiers at any minimum wage. 

This is not the first indication of employers opting for machines over a high minimum wage. In 2016 McDonald’s and Panera joined Wendy’s in introducing kiosks and committed to expanding them in stores nationwide.

Wendy’s had warned that minimum wage hikes could mean the replacements of workers with kiosks in 2015. Management said minimum wage hikes would result in higher prices and reduced labor. The transition from human to unpaid robot cashiers is not surprising when Wendy’s saw a 5 percent wage inflation last year. This year, wages could rise 4 percent, according to Chief Operating Officer Bob Wright.

Wendy’s expansion of robotic cashiers comes after four states approved minimum wage increases on Election Day 2016. Arizona, Colorado and Maine are increasing the hourly minimum wage to $12 in coming years, and Washington to $13.50 by 2020. In the most recent case, the Missouri Supreme Court gave St. Louis a go-ahead on an $11 minimum wage.

During the past 20 years, just two of 20 state wage increase proposals have failed. California, New York and D.C. are the only areas currently phasing in a $15 minimum wage.

The result is customers carrying the burden for businesses not able to absorb wage hikes. Businesses with low profit margins—small retailers and fast food restaurants—often pass on the costs of pay hikes onto their prices, according to the Heritage Foundation’s James Sherk. That burden is regressive for low-income Americans who frequently rely on these kinds of businesses.

On the other hand, the Fight for 15 movement geared toward low-wage workers has ironically been funded by big union donors. The Service Employees International Union spent $20 million on the Fight for $15 campaign in 2015, according to financial disclosures.

Workers should take Wendy’s changing workplace as a lesson that companies can opt for machine labor rather than paying workers a higher minimum wage. In the end, earning less than $15 is still better than having hours cut—or not having a job at all.