Jack in the Box CEO Leonard Comma told a room full of attendees at a Tuesday conference that the company is considering replacing cashiers with robots as the minimum wage in California rises.
“As we see the rising costs of labor, it just makes sense,” said Comma.
The San Diego based fast-food chain says that with California’s minimum wage rising to $15 by 2022, automated kiosks and other previously tested technology which was previously failed to pencil out are now economically feasible.
18 states are raising minimum wage in 2018, including California, with the Golden State scheduled to be the first to hit $15.
Meanwhile, McDonald’s and Wendy’s have been testing automation to reduce labor costs. McDonald’s is adding 2,500 kiosks to its stores, while Wendy’s unveiled plans last February to install self-ordering kiosks at 1,000 restaurants – 16% of its locations nationwide.
“Last year was tough 5 percent wage inflation,” said Bob Wright, Wendy’s chief operating officer, during his presentation to investors and analysts.
Wright noted that over the past two years, Wendy’s has figured out how to eliminate 31 hours of labor per week from its restaurants and is now working to use technology, such as kiosks, to increase efficiency.
Wendy’s chief information officer, David Trimm, said the kiosks are intended to appeal to younger customers and reduce labor costs. Kiosks also allow customers of the fast food giant to circumvent long lines during peak dining hours while increasing kitchen production.
“With government driving up the cost of labor, it’s driving down the number of jobs,” then Carl’s Jr. and Hardee’s CEO Andy Puzder told Business Insider in 2016. “You’re going to see automation not just in airports and grocery stores, but in restaurants.”
And yesterday at CES, Pizza Hut announced a driverless delivery concept vehicle straight out of Demolition Man (the non-US version of the movie).
— Pizza Hut (@pizzahut) January 8, 2018
Who could have seen that coming? As we have noted in the past, minimum wage laws – while advertised under the banner of social justice – do not live up to the claims made by those who tout them. They do not lift low wage earners to a so-called social minimum. Indeed, minimum wage laws imposed at the levels employed in Europe push a considerable number of people into unemployment. And, unless those newly unemployed qualify for government assistance (read: welfare), they will sink below, or further below, the social minimum.
As Nobelist Milton Friedman correctly quipped, A minimum wage law is, in reality, a law that makes it illegal for an employer to hire a person with limited skills.
Despite the piling up mountain of evidence on the harmful “unintended consequences” of artificially high minimum wages, we suspect we already know how this story ends.