January 7, 2018
The Sacramento Bee
Outwardly, the McDonalds restaurant just off Highway 101 in Pismo Beach doesn’t look any different from the 1,500 or so others in California.
But when you walk into this one, you immediately encounter a robotic kiosk that allows you to order your hamburger or other fast food on a touch screen, rather than verbally with a human worker at the counter.
It’s an experiment in automation, or at least mechanization, to reduce operational costs, and not the only one.
Faced with rising labor costs, thanks in part to a big boost in California’s minimum wage, and shortages of workers, employers throughout the state are trying to replace human labor with machines.
Amazon’s highly automated warehouses that have seemingly sprung up overnight throughout the state are testaments to that desire, as are intensified efforts in large-scale, labor-intensive agriculture to develop machinery that can handle even the most delicate crops such as strawberries.
While workers with high technical skills and/or high levels of education will still command high pay and have no shortage of opportunities in California, there’s a lot of turbulence in the lower realms of the state’s job market, such as fast food and agriculture.
Gov. Jerry Brown and legislative leaders boast that they’ve been helping California’s low-skill workers by raising minimum wages, writing more generous family leave policies and, in the case of farm workers, mandating an eight-hour work day.
But there’s a raging debate among economists over whether such mandates actually help low-income, low-skill workers, or hurt them by eliminating jobs and/or curtailing working hours.
The minimum wage increase is the mostly hotly debated policy.
Brown and legislators are raising California’s minimum wage from $10 an hour in 2016 to $15 by 2022 and indexing it to inflation thereafter, even though Brown, as he signed the bill, commented, “Economically, minimum wages may not make sense.” Some cities have gone even further.
Critics are pointing to a University of Washington study, released last June, about what happened after Seattle embarked on a similar course, comparing it to other larger cities in Washington.
The UW researchers concluded that “employment losses associated with Seattle’s mandated wage increases are in fact large enough to have resulted in net reductions in payroll expenses – and total employee earnings – in the city’s low-wage job market.”
The study drew sharp rebukes from liberal economists, such as those at the University of California.
A few months later, UC’s Labor Center issued its own study, declaring that “California’s $15 minimum wage law will substantially increase lifetime earnings among low-income workers (and) by boosting the earnings of low-income workers, the $15 minimum wage policy will enable them to save for retirement (and) will result in a significant increase in Social Security benefits for young low-income workers, and a modest increase for mid-career low-income workers.”
Oddly, both may be correct.
Boosting minimum wages will, indeed, prod employers to find ways to reduce their labor forces and thus, as the UW study found, may decrease “total employee earnings,” but those who can hold onto their jobs may, indeed, as the UC Labor Center declares, see their incomes rise and their retirements become more secure.
If that’s the outcome, the losers won’t be employers or their employees but those who don’t get hired because their potential jobs have been eliminated by automation, such as that order-taking kiosk in Pismo Beach.
While politicians habitually tout only the upsides of their decrees, any big policy change, such as increasing the minimum wage, always has negative consequences for somebody, even if they are not immediately evident.