The St. Louis Board of Aldermen passed a minimum wage increase bill, which survived a court challenge. Consequently, this year the minimum wage in the city of St. Louis will rise to just over $10 dollars per hour. There is a problem. With only St. Louis city raising the minimum wage, businesses have the option of moving outside of the city limits in order to keep control over their payrolls, or automating their employees out of jobs to absorb the costs. Why are we going through this at all? The city’s budget is running a $20 million dollar deficit. Increasing pay without a corresponding increase in output is absurd.
And that is one of the salient points left out of the minimum wage debate; entry-level jobs in retail and fast food are a means to learn how to work. These types of jobs are also supplemental income for adults, and part time work for teens and college students. Once an employee has worked an entry level position, learned the ropes and increased her or his skills, the next step is to move up within that workplace or move out to a better paying job. Another road out is to get skills training during off hours so that better employment is more easily within reach.
Supporters of increasing the minimum wage cite a loss of spending power because of inflation. In 2006 Missouri voters tied the minimum wage to the consumer price index through the passage of a ballot initiative, yet somehow our wage has failed to keep up with inflation. Any proposed increase should be gradual and put before the voters for consideration as a ballot initiative to be implemented statewide.
Cynics point to single mothers and couples with children working at these minimum wage positions and being unable to support a family. This is ridiculous, not because these situations do not exist but because the value of a job doesn’t increase because the worker in question has difficult circumstances. The value of unskilled employees does not increase because they are down on their luck. In two years, entry-level McDonalds employees in the city will earn as much as or more than emergency medical technicians. Long before that happens, we will see automation take the place of many of these workers.
There is plenty of evidence to support opposition to the city’s wage hike: Wendy’s Inc. just announced a rollout of more than 1,000 self-serve kiosks, made available to 6,000 restaurants nationwide in response to $15 per hour wage activists winning battles in more liberal states like California. The minimum wage there is $10 an hour and will gradually increase to $15. Oregon voters passed legislation to increase their minimum wage to $15 per hour over the next few years. New York City raised their fast food worker pay to $10.50 per hour as well. Clearly, these cities don’t mind some people losing their jobs to automated kiosks and online ordering apps.
Can a city that has already experienced a major loss of population and has stagnant business growth afford to engage in this folly? A recent study by the University of Oxford, “The Future of Employment: How Susceptible are Jobs to Computerisation” found that over the past 30 years, computers have replaced human workers as bookkeepers, cashiers and telephone operators. But the most important detail is this: up to 92 percent of jobs in the food service industry, fast food jobs included, are susceptible to automation.
Researchers Maarten Goos and Alan Manning posit in “Lousy and Lovely Jobs: the Rising Polarization of Work in Great Britain” that there is a general “hollowing out of middle income routine jobs” while “high income cognitive jobs and low income manual jobs” continue to produce increasing job opportunities. While I disagree that entry-level food service and retail work is middle income, their point is well made. Any human function that can be sequenced and programmed, such as taking orders, flipping burgers or operating fry baskets can and will be automated to save money.
As some cities and states foolishly rush to increase the minimum wage, more companies will automate to protect their bottom line. There used to be an understanding that once employees gained work experience and time on the job, their pay would increase. This new infatuation with using activism to force employers to pay more money for the same amount of labor and level of experience will not end well. Companies that pay more because their business model and bottom line permit them to do so have already increased employee compensation. That is as it should be.