Minimum Wage and the rise of Automation

Minimum wage changing the game

“Hi, Can I help you?” asks a crew wearing a red uniform behind the counter. After 60 seconds of receiving the customer’s order. A Big mac meal and a corn pie is out. Once the order is served, the crew smiles and caters to the next customer.

For McDonalds, where the serving area is usually occupied and staffs are usually busy. Efficiency and speed in management is a necessary method to keep them profitable. That’s the McDonald way of doing business. But gone are the days of cashiers asking if you want to order your “fries without salt”. In today’s businesses, as you all can see. The sight of labors in many traditional tasks are significantly diminishing.

Companies are now facing an increasing average labor costs. With states and cities across the United States racing to increase the minimum wage towards a $15 dollar mark. Even unemployment is hitting an 18-year low in May in the United States. With these 2 combinations in mind. Companies are now struggling to hire and retain workers, thereby turning away into machines and automation.

According to a study by Grace Lordan and David Neumark “Increasing the minimum wage decreases significantly the share of automatable employment held by low-skilled workers, and increases the likelihood that low-skilled workers in automatable jobs become nonemployed.” For some, the increase in minimum wage would help low wage workers with a higher pay in the short term. But as enterprises turned into automation. Many critics have spoken out on the possibility of retrenchment on the long turn.

More businesses turning into Automation

Let’s take a look at MCDonald for example. In 2015, MCDonald’s first ordering kiosk is launched and by 2020, almost its 14,000 locations in the United States will have ordering kiosks installed. For MCDonalds, this decision is a no brainer. For F&B industries like restaurants are generally well known to profit on a low margin. MCDonalds are therefore looking for ways to continually cut costs.

This trend of automation is becoming a common sight that is taking place all over the world. From big retailers like Amazon with its Kiva robots, International airports like Singapore’s Changi Airport to UPS launching its Drone Services for package delivery.

Automation

Well is it true? Does the fight for the increase of minimum wage hurt the worker it intended to help?

It is true that automation, mobile ordering and machine based kiosks are taking jobs away from low-wage laborers and cashiers. But the new automated business models coupled with an increase in minimum wages are bringing a win-win for both corporates and qualified candidates. As a matter of fact, rather than eliminating jobs, it is redefining jobs. Take an example of check-in kiosks at Airports for example. The kiosks help simplify the check in process and thus reduce the waiting time for customers. Workers that are previously working in jobs which involves repetition like data entry or laborious housekeeping. They now can be retrained to take on jobs which are of higher value.

Overall the increase in minimum wage that leads to more automation of work processes is beneficial to both employers and employees. In the independent workforce sector for example, automation are expected to increase demand for flexible workers who have skills and agility that machines are not able to provide. Let’s take a look on how this win-win solution would be beneficial to everyone.

  1. Help recruit and retain talent

The 2015 Jobvite Job Seeker Nation Survey revealed that 60% of job seekers choose to take a new job because of the amount it pays. Benefits, vacation days and insurance are indeed good perks. But if the salary doesn’t help them make ends meet. You would always find it hard to find someone fill up a position. The Increase in Minimum wage will increase labor’s satisfaction. This investment will eventually pays off in lower turnover and higher worker productivity, generating good service to customers and a solid bottom line.

2. It would reduce the need for public assistance from the government

When employers paid low level wages, they are unconsciously shifting the cost of maintaining their labor force to the society. If labor workers earned a sufficient living wage, they would not have to rely on food stamps, Medical aid nor other poverty alleviation programs. Data from 3 states; Missouri, Massachusetts, and Wisconsin show that fast food companies like McDonalds, Pizza Hut, Wendy’s, Subway, and Taco Bell are some of the largest recipients of these public subsidies as they push their labor costs on to tax payers.

3. It would reaffirm the fundamental American value that “Work pays”.

The American Dream is the opportunity that one can achieve a better life if one works hard and plays by the rules. Without automation, low minimum wage labor workers would have few chances at career advancements. As their tasks are repetitive and redundant. Low minimum wage would also means low savings, and this means less opportunities for Americans to invest and purchase. Through the raise of minimum wage. This is a chance for workers that have been left out to finally stand and dream again.

Have you automate your HR system?

The upcoming holiday peak season means more recruitment of employees. How would you manage your new recruits? Are you having trouble in managing too many staffs at once? Why focus on administrative processes when you can focus your time on recruiting strategies for your staffing needs. Not only will you save money, but you will also be able to prevent an other wise lost productivity in human resources. We understand your burden, and that’s why we are here to help you!

We at Albam provides an Enterprise service for your company. Our enterprise service includes tailored services from Time Attendance, Automatic Payroll to Open API services for your company. Our ultimate goal is not to only help you decrease your expenditures, but to create efficiency for your labour management.

What is Albam?

Albam is an all in one Human Resource solution system that allows you to manage and centralize every aspect of your staffing needs. From attendance to automated payroll. Backed by cutting-edge cloud computing system, clock in anywhere and anytime to access, personalize and download your data.

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