States such as California and New York that are moving toward a $15 minimum wage may be killing off the archetypal burger-flipping job rather than making it better paying. Fast-food giant Wendy’s has announced that it will be adding self-service ordering kiosks to more than 6,000 of its restaurants nationwide.
Wendy’s President Todd Penegor told reporters the change was brought on partly by increased labor costs at the stores, which have seen wages rise 5-6 percent due to increases in the minimum rates set by various cities and states over the last two years. Penegor said the labor costs were partially offset by falling commodity prices, but the company was nevertheless “working so hard to find efficiencies.”
“We do continue to invest in technology to help mitigate the inflation we are seeing on the wage front, while looking for opportunities to enhance the customer experience in our restaurants. Early news reports, which said kiosks would be available in every Wendy’s restaurant by the end of the year, were not quite accurate,” Wendy’s spokesman Bob Bertini told the Washington Examiner.
Christin Fernandez, spokeswoman for the National Restaurant Association, a trade group, said moves such as Wendy’s were inevitable after California and New York moved to make fast-food restaurants pay a $15 minimum wage. Previous hikes could be absorbed as part of the cost of doing business, but $15 is a “game changer,” she said.
“As an industry of thin profit margins, restaurants are increasingly looking for ways to streamline labor costs. While automation will never completely replace the human element, unfortunately the advocates’ call for a $15 minimum wage is forcing restaurateurs to find ways to keep their businesses open and thriving,” she said.
The federally mandated minimum wage is $7.25 an hour, but states and localities are free to set the rate higher if they wish. Wendy’s has 258 restaurants in California, which raised its minimum to $10 this year and is set to raise it to $15 by 2023.
All of the California restaurants are privately owned franchises, so the higher wage costs will not be hitting the corporate parent, but instead falling on the shoulders of individual small business owners. However, the corporation would suffer if its franchisees cannot stay in business.
Matt Haller, spokesman for the International Franchise Association, said the minimum wage movement was having the effect of accelerating a trend toward automation that restaurants were already moving toward. “Higher minimum wages force franchisees and other small employers to move more quickly toward automation, higher prices and fewer jobs,” he said.
A spokesman for Fight for $15, the union-funded activist group that has been promoting higher minimum wages, could not be reached for comment.
Lawrence Mishel, president of the Econoic Policy Institute, a liberal nonprofit think tank, countered that there was little reason to expect that requiring higher wages would automatically result in fewer jobs, noting that the higher wages were essentially forcing the company to modernize, which is a good thing.
“This may even expand their business, providing more jobs for people in food preparation even if that means there are going to be fewer cashiers,” Mishel said.
