I recently wrote about how fast-food workers in the United States need to be careful about what they wish for – that their demands for raises up to $15 an hour could result in their having no jobs at all. Chains such as McDonald’s and Burger King might find it more in their interests to replace their human robot-like labour forces with real robot labour forces, leaving human workers with zero income.
The debate continues, but there is some strong logic forming as to why this robotic replacement isn’t just fanciful science-fiction, but rather a very likely thing to happen in the next few years.
The fast-food wage battle is quickly turning into the nexus point of the festering American inequality problem; if the chains aren’t careful, this could turn into Occupy Wall Street: The Sequel. Occupy McDonald’s, anyone?
As we well know by now, the income gap between the wealthiest and poorest Americans has been growing for decades and shows no signs of stopping. That’s bad for all sorts of social reasons, with inequality driving unrest, crime, violence and even revolution in the extreme cases.
Media outlets are catching on to the issue and are arguing for what seems like the most obvious solution: give the striking fast-food workers what they want. It’s better for the country overall, after all, if some of the wealth that is going to shareholders is instead redistributed to the workers. Happier workers mean more efficient companies, which means better profits for shareholders, right?
An article on Salon singles out west-coast chain In N Out Burger (my favourite, by the way) as a particularly good example of this sort of approach. The privately held company pays workers significantly more than competitors and gives them paid holidays. Workers, in turn, are happier and turnover among them isn’t as high. As a regular customer, I can attest to that – In N Out employees generally don’t seem miserable to be working there. And they make great burgers to boot.
But In N Out is privately held and a relative minnow to its larger rivals. The chain has about 300 locations, which is a drop in the bucket compared to the more than 34,000 McDonald’s has. It’s an open question as to whether any food company can achieve that sort of scale without paying employees poorly.
The other side of the argument is perhaps best presented – amazingly – by Robert Frost, an engineer at NASA. Originally writing on Quora and republished on the Huffington Post, he wrote that a nation-wide raise to $15 was not just a terrible idea, but also impossible. For one thing, standards of living differ across the United States, so such a uniform raise wouldn’t make sense:
An apartment in the suburbs of Houston is about 1/5 the cost of an apartment in New York City. Fifteen dollars an hour in say McAllen, TX would be a nice salary.
More importantly, there are the issues of responsibility and incentives. If every fast-food worker got a raise to $15, everyone else in the company would also need a similar pay jump, otherwise what’s the point of working more difficult jobs? Frost uses an analogy of workers in a grocery store to illustrate the issue:
If suddenly bag boys and stock persons are making the same salary, no one is going to take on the additional responsibilities of being a stock person and stock persons will not be rewarded for the greater skills they have as compared to the bag boys. This continues on up the line.
Fast-food raises would also have a ripple effect. If a teenager could make $15 flipping burgers, why would they settle for less when mowing your lawn or shoveling your driveway? The cost of all goods and services would go up.
The essence of the argument is that fast-food jobs are low-paying and therefore undesirable on purpose. They’re meant to be temporary employment for some quick supplemental income, not career destinations.
If there are problems with the wages being paid, the issues stem from elsewhere – namely poor education opportunities, or minimum wage laws that set the bars too low. Those are the issues that need fixing; a forced raise is a band-aid solution that could actually make things worse for everyone in the long run.
Nevertheless, the fast-food chains are fast becoming the poster boys for America’s growing inequality problem, and it looks like they have only two ways out. The first is that they give workers what they’re looking for, in which case they’ll have to completely reorganize how they do business and likely cause a major re-alignment of the overall economy. Suggestions that the companies just eat the additional expenses and turn lower profits are simply naive of how the system works.
The second option is that the chains automate even more of their businesses, which will involve the elimination of as many jobs – and striking workers – as possible. The remaining human workers might indeed see pay raises, since they’ll have more responsibilities, but that’s not exactly what the strikers have in mind.
Reconfiguring the entire economy or further automation? It seems obvious which course of action is more likely.