Will California wage hikes replace workers with machines?

Good news for computer folks—government and radical groups are making sure you always have a well paying job. Bad news for the young, the unskilled, women coming back into the employment market, radicals pushing or a $15 minimum wage are also pushing to keep you unemployed and in poverty. Sadly, you will continue to vote for politicians that WANT you dependent on government to survive.

“After the minimum wage ordinance was approved, LoGuercio invested in a $150,000 industrial dishwasher he had been eyeing to save on utility costs. The machine will also allow him to stop paying six to eight people who earn $10 to $11 an hour washing dishes. LoGuercio expects to recoup his costs in nine months, and save a couple of hundred thousand dollars a year going forward.

The owner will make an extra $200,000 a year, thanks to the hike to $15 an hour minimum wage. But-6-8 workers will be on welfare! This is how income inequality operates—government policies killing opportunity—but making some wealthier!

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Will California wage hikes replace workers with machines?

by Pauline Bartolone, CalMatters, 11/22/15

After the City of Los Angeles passed an ordinance this summer to increase the minimum wage to $15 an hour by 2020, Richard LoGuercio spent the following weekend driving around a nearby city, looking for warehouses to move his business.

“I am just screwed,” said LoGuercio, owner and president of Town and Country Event Rentals in Van Nuys, which employs 450 people, more than half of whom earn between $10 to $13 an hour. Moving his shop to another county could help him escape the mandated wage increase.

“Labor has kind of become our enemy, because it’s just so high,” he said.

When the minimum wage goes up to $15 an hour, LoGuercio estimates his labor costs will increase by 62 percent. He says he fears his labor costs may rise even further because his more experienced workers will need to be paid more than a new employee.

“I’m in favor of (raising) the minimum wage, but not so much and not so fast,” said LoGuercio, who says he’s weighing his options for cutting labor costs.

“Wherever technology can help, that’s where we’re looking into.”

After the minimum wage ordinance was approved, LoGuercio invested in a $150,000 industrial dishwasher he had been eyeing to save on utility costs. The machine will also allow him to stop paying six to eight people who earn $10 to $11 an hour washing dishes. LoGuercio expects to recoup his costs in nine months, and save a couple of hundred thousand dollars a year going forward.

“It’s a start,” he said.

Employers: Minimum wage increases will put more machines in the workplace

Employer groups opposed to raising the minimum wage say labor costs are already driving decisions to replace human labor with technology. They say higher minimum wages will accelerate automation trends in the workplace.

But economists say even when jobs are replaced by technology, overall employment may not suffer.

Machines are already doing what humans had done for decades in supermarkets and some restaurants; shoppers can pay using self-checkout kiosks, and diners at Chili’s can order baby back ribs on a tabletop tablet.

The California Restaurant Association says self-ordering could become more common if the minimum wage is increased to $15 statewide, a scenario proposed in competing initiatives currently trying to qualify for the 2016 November ballot.

“When you’re talking about a 60 percent increase in the minimum wage over a short period of time, that absolutely is a game changer,” said Jot Condie, chief executive and president of the restaurant association. “They’re all planning” on ways to cut costs, including buying pre-chopped ingredients, sourcing food from international sources instead of local farmers, or hiring more discriminately.

“If they haven’t adopted technology, they are absolutely looking at technology as an option, a way to cut costs,” Condie said.

Kiosks and tablets are most likely to be seen in fast-food restaurants — but that’s not just because of labor costs, Condie said. Technology helps deliver food more quickly.

Jot Condie, President of the California Restaurant Association, picks up his lunch at an automated restaurant in San Francisco. Beatrice Katcher for CALmatters

Farmers may grow what can be mechanized

When it comes to agriculture, the California Farm Bureau Federation says it’s like any other industry that employs large numbers of low-skilled workers; growers look for “every opportunity” to cut labor costs, and technology is part of that.

Bryan Little, director of employment policy at the farm bureau, said for the past 25 years, more and more agricultural products -– including tomatoes, raisins and nuts -– are being harvested by machine. As labor costs go up, Little said, farmers decide what to grow partly on how easily production can be mechanized.

“There’s a lot more interest in growing almonds, walnuts, pistachios, other types of tree nuts that can be harvested with a crew of four or five people,” said Little, explaining that machines can shake nuts from a tree, without harming color or texture. Not so for a strawberry or melons.

He said if there were a statewide $15 minimum wage, farming would likely become more mechanized.

“You’d see more interest in developing commodities that can be machine harvested, or (growers) changing to commodities that lend themselves to machine harvesting,” Little said.

 

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.

Comments

  1. when these people protest screaming for higher minimum wage, they forget that this can and will drive them to the unemployment line.. more and more businesses will automate what they can to cut employees out of their jobs… the ones remaining will find with the rising costs of products that their increase is spent on the higher prices they will have to pay. And how about the high school kids, the unskilled, looking for a job.. with a $15 min wage, employers are going to want skilled people. the lower wage jobs were a place for the unskilled and high school and college students could work and get experience in the working world.. a lot of the newly graduated high school students today can’t even make change when working the counter/cash register.. is an employer going to want to pay this person $15 an hour.. probably not.. he will want someone with little more experience ….
    we will probably find more and more people unemployed with the rising minimum wage…

  2. Adrian Vance says

    The first automated McDonalds is now open in Los Angeles. It is supposed to be much more profitable that one employing 30 people, the usual compliment. Even government will respond to such economics.

    Google “Two Minute Conservative” for clarity.

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