Across the nation, fast food and other low-wage workers have been protesting to get the minimum wage increased to what they consider a “living wage,” or around $15 per hour, and while they may have been successful in some states, we’re starting to see why it’s such a horrible idea to artificially increase labor costs. Fast food restaurant Wendy’s is the latest company to respond to the wage hikes, and it’s safe to say that there’s some people who aren’t going to be all that happy about it.
Of course, conservatives and anyone with a brain have been warning that flipping burgers isn’t worth $15 an hour, so raising the minimum wage would most certainly result in job losses, but those crying loudest refused to listen. Well we were right, once again, as Wendy’s is about to deploy thousands of labor-saving devices in its restaurants across the country, all because of the increased cost of wages.
Check it out, via Investors:
Wendy’s (WEN) said that self-service ordering kiosks will be made available across its 6,000-plus restaurants in the second half of the year as minimum wage hikes and a tight labor market push up wages.
It will be up to franchisees whether to deploy the labor-saving technology, but Wendy’s President Todd Penegor did note that some franchise locations have been raising prices to offset wage hikes.
McDonald’s (MCD) has been testing self-service kiosks. But Wendy’s, which has been vocal about embracing labor-saving technology, is launching the biggest potential expansion.
Wendy’s Penegor said company-operated stores, only about 10% of the total, are seeing wage inflation of 5% to 6%, driven both by the minimum wage and some by the need to offer a competitive wage “to access good labor.”
It’s not surprising that some franchisees might face more of a labor-cost squeeze than company restaurants. All 258 Wendy’s restaurants in California, where the minimum wage rose to $10 an hour this year and will gradually rise to $15, are franchise-operated. Likewise, about 75% of 200-plus restaurants in New York are run by franchisees. New York’s fast-food industry wage rose to $10.50 in New York City and $9.75 in the rest of the state at the start of 2016, also on the way to $15.
Hate to say “told you so,” but told you so. This is what happens when impatient people call on government to “fix” a problem in their lives that they very easily could have fixed themselves with a little effort.
Now what you’re going to have at Wendy’s are fewer workers with more skills to oversee the automated devices in order to justify paying them a higher hourly rate. Meanwhile, the people that were supposed to be helped by an increased minimum wage will be hurt the most since they’ll be out of a job.
Isn’t big government just wonderful?