UNDERPAID FAST FOOD WORKERS AND ROBOTS HAVE FEW FRIENDS IN HIGH PLACES

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Liberal politicians fighting for fast food workers to earn $15 an hour are either thinking on excessively narrow terms or are operating from a dishonest line of reasoning.

Conservatives ranting about how fast food “robots” — or order kiosks — are corporate CEOs’ response to the coming wave of government-mandated minimum wage increases are being straight-up dishonest.

I’ll first dissect the Conservatives’ argument by quoting an axiom from management consulting maven Peter Drucker:

“Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation.”

You won’t find me disagreeing with Sage Drucker often, nor will I do so in this case.

But there’s an important underlying consideration for why a business continues to market and innovate.

The reason is pretty obvious: handful of people invested in these firms with the expectation of a financial return which beats the alternative investment options, accounting for risk, of course.

Therefore — and this is no subtle distinction — businesses innovate to satisfy the demands of investors. Happy customers, while extremely important, serve as a means to satisfy shareholders.

And this point makes the debate about fast food robots dishonest.

Contrary to what mainstream newspapers tell you, fast food CEOs did not suddenly develop the idea of testing order robots after President Obama, New York City Mayor Bill de Blasio and other so-called Liberal government leaders began to advocate for minimum wage increase mandates.

You only need to read a 2004 Fast Company article to see my point — fast food joints have been testing the idea of order robots for years.

2004. Back when President Obama was nowhere close to exercising national leverage over the wage debate, and then-US senator Hillary Clinton didn’t appear to offer any discernible clue that she even cared about the issue.

Why restaurants were thinking about robots more than 12 years ago is obvious: a business only performs two functions

Innovation can take on a variety of forms, but it typically falls into two broad categories — cost reduction and revenue growth.

Some Innovation purists may even argue that innovative acts only concern themselves with revenue growth, but that point isn’t relevant for this post.

A more relevant point has to do with the way CEOs — particularly in the profitability-challenged fast food industry these days — deal with satisfying their investors.

Revenue growth typically has a stronger long-term effect on stock price appreciation than cost reduction ever will, but growing revenue is relatively hard to do.

Cost reduction is relatively easy to execute, and helps short-term stock prices — a plus for impatient investors.

So take a good guess which stock appreciation option many fast food executives will likely think about these days?

To capsulize, robots were coming to the fast food industry whether or not the $15 an hour movement became a thing and whether or not President Obama even existed.

Because a business only performs two functions

There is reason to believe paying fast food workers a higher wage can attract stronger performers and even contribute to employee satisfaction — both of which benefit customers, and ultimately shareholders. Besides, try living on a fast food worker’s current wage, even with public assistance.

However, this is where the pro-$15 an hour argument becomes narrow-minded, and perhaps even dishonest.

I wrote a while back how a $15 an hour worker cannot afford a one bedroom apartment on their own in almost every American state.

This means underpaid employees and their politico supporters are effectively fighting for a wage increase that still doesn’t help these workers make ends meet.

And I’m sure most liberal politicians know that.

But instead of elevating the minimum wage fight to include programs for improving worker skill sets — thus increasing their earnings — or increasing the amount of opportunities for these employees to work their way to a higher social class, politicians seem content with fighting for these minimum wage earners to live just enough for the city

The Great Wage War certainly helps politicians since either stance they take can lead to more campaign donations …

… Until the next game of a debate comes along …

song currently stuck in my head: “getting it on” – dennis coffey

This entry was posted in Economics, Politics and tagged , , , . Bookmark the permalink.

One Response to UNDERPAID FAST FOOD WORKERS AND ROBOTS HAVE FEW FRIENDS IN HIGH PLACES

  1. I agree: “Robots were coming to the fast food industry whether or not the $15 an hour movement became a thing.”

    The $15 minimum wage movement probably accelerated the introduction of kiosks in the fast-food industry. If companies did this without the $15 minimum wage on the horizon, it would have caused a greater consumer backlash. Consumers would be more likely to see it as corporate greed rather than corporate survival.

    I think the long-term goal of the $15 minimum wage movement is a guaranteed annual income.

    I wrote a short post (450 words) called “Why a Higher Minimum Wage Can Result in a Lower Unemployment Rate.” If you would like to read it, I am open to any feedback: https://christopherjohnlindsay.wordpress.com/2016/05/11/minimum-wage-unemployment/

    P.S. There is no LIKE button on your posts. You should add one.

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