Terminator-2-Judgement-Day-posterI oppose implementing Skynet and increasing minimum wage laws for the same reason: to forestall the robots.

It’s probably inevitable that a T-1000 will return from the future to terminate John Connor. But there is still something we can do to prevent a TIOS from eliminating the cashier at your local McDonalds.

In Europe, McDonalds has ordered 7,000 TIOSs (Touch Interface Ordering Systems) to take food orders and payment. In America, Panera Bread will replace all of their cashiers with wage-free robots in all of their 1,800 nationwide locations by 2016. There is even a burger-making robot that can churn out 360 gourmet hamburgers per hour.

I, for one, welcome our new fast-food robot overlords. I’m just not ready for them yet.

As I noted earlier this week, we are all much better off because of 19th century workers who lost their farm jobs. In the long-turn, we’ll also be better off because a HAL 9000 is flipping our burgers and freeing up the Hals and Hallies of the world for more productive work. But in the short-run, the use of robot replacements for low wage employees will hurt the poorest, most low-skilled workers.

The main advantage such workers have now is that they are cost efficient. Fast-food businesses are currently willing hire low-skilled workers and serve as remedial-training vocational schools because it’s in their economic self-interest to do so. But raising the minimum wage takes away that incentive and will motivate businesses to replace those workers with automated machines.

It’s certainly the rational choice. If you were the owner of a fast-food restaurant, would you rather be staffed by efficient, reliable robots or low-skilled workers (e.g., teenagers, ESL-adults) who tend to have higher than normal human problems? If it suddenly becomes cheaper to buy robots than pay a premium for human labor, what do you think businesses will choose?

We already have the answer—you can find it at your local gas station. If you are younger than 40 you aren’t likely to remember full-service filling stations (unless you live in Oregon or New Jersey where self-service if forbidden by law). Yet they were once the norm.

In 1950, there were over 81,000 gas stations and only about 200 self-service stations (almost all in California). It wasn’t until the two gas shortages in the 1970s (1973 and 1979) caused higher fuel prices which led consumers to look for pricing relief. Almost overnight, full-service stations became all but extinct—taking an entire sector of low-skilled jobs with it.

Proposals to rapidly increase the minimum wage would have the same effect. A small group of employees would see their pay increase while many more would find their jobs disappearing completely, never to come back. Keeping the minimum wage at it’s current rate (or, better yet, eliminating wage floors completely) would allow for a smoother transition and give low-skilled workers time to adjust.

Sometimes what initially appears to be a noble and humane idea has unforeseen and dramatic consequences. Proponents of minimum wage increases have good intentions. But so did the engineers at Cyberdyne Systems. And we know how that turned out.

Economics in Christian Perspective: Theory, Policy and Life Choices

Economics in Christian Perspective: Theory, Policy and Life Choices

There is considerable debate in the public square these days about a number of issues that have significant economic components. Globalization, environmental protection, and aiding the poor are just a few. Decisions we make in our personal lives are influenced by our assumptions about economic realities as well. So how might mainstream economics connect with Christian values and principles?

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  • JohnF63

    “Proponents of minimum wage increases have good intentions.”

    Some do I’m sure, but not all. A little unknown fact; Many unions tie their wage levels to the Minimum Wage. So raising the minimum wage automatically gives them a raise, and not just by the amount the MW goes up but a multiple of that.

    • David Horace

      Yes, you are correct. The minimum wage also helps put a level of security (or “lock”) on trade unions. They are able to control who gets in to learn the trade.

  • AllSeasonRadial

    Right. Automation won’t occur because it’s cheaper to keep human workers. What a line. Based on that sterling example of regressive thought, we should reduce wages as a sop to employers. After all, as automation becomes more affordable (either through improvements in technology or through increased profits or through increasing wages), employers, through the goodness of their hiring hearts, will keep workers as long as they consent to work for less and less and less.

    The line of thought propounded in this article is so FULL of sophistry and logical fallacies it’s hard to know where to begin. But I think the first place is to commend it for being such an exemplary specimen of discredit to the Acton Institute. Thanks for letting me know what the Institute really is. I’ll make sure to let others know.

    • http://Culture11.com Joe Carter

      The line of thought propounded in this article is so FULL of sophistry and logical fallacies it’s hard to know where to begin.

      Feel free to begin anywhere. If it’s FULL of logical fallacies then it should be easy to point out, say, three of them, right? Take a shot at it.

    • http://www.robertwilliamsjr.com Robert Williams Jr

      What is your rejoinder? You make the claim that the article is “FULL of sophistry and logical fallacies”, yet you point to none that were presented by the writer? Next, you provide no proper rejoinder to the writer’s premise. You sir, are guilty of sophistry.

      Sober Micro Econ analysis supports the writer’s claim. Business owners will make the rational trade off between Capital or Labor– if the cost of one of these factors rise. Business owners are seeking to get a return on the initial capital invested in the enterprise. If they are charging “market prices” for their goods, they simply can not raise prices to accommodate the increased wages that min wage increases offer. Why? The price is already at equilibrium. Raising the price of the good would be totally dependent on the elasticity of the product, and if there are many competitors, the likelihood of simply raising prices to accommodate this min wage increase is not possible. Subsequently, the owner must either provide a trade off into a capital investment to replace that worker, or lay off workers, or raise the price of some goods, while off setting the price increase by lower prices for another good. In all cases, the business owner takes the brunt of this min wage increase, and it lowers his/her return on the initial capital investment.

  • crossdotcurve

    “I do not hesitate to state, as did my predecessors, that equitable economic and social progress can only be attained by joining scientific and technical abilities with an unfailing commitment to solidarity accompanied by a generous and disinterested spirit of gratuitousness at every level. A contribution to this equitable development will also be made both by international activity aimed at the integral human development of all the world’s peoples and by the legitimate redistribution of economic benefits by the state, as well as indispensable cooperation between the private sector and civil society.”

    - Pope Francis

  • jtprime

    According to a worker in the US last week to support the fast food
    strikes, workers In Denmark’s McDonald’s are unionized and receive
    $21/hour. I don’t know the cost of McDouble or Big Mac equivalents in
    that country. My first question would be are the TIOS aimed at reducing
    or eliminating the costs associated with negotiated worker pay? My
    second question is what is the perceived issue with deploying these
    devices? Here in the US, it might go a long way to making the
    experience more enjoyable and more efficient. When I patronized
    McDonald’s and other fast food places, sometimes the order would be
    wrong, often at the point of order at the register. If the human behind
    the register is removed from the loop would it not make the process
    better? Tech like TIOS places the onus of correct ordering on the
    consumer. Of course the software of the system must play its proper
    role, that being easy to use, accurate, flexible, and presumably
    economical for the business. Also Joe are you suggesting a correlation
    between low wage job loss and automation? Does a similar correlation
    exist between higher wage job loss and automation? For example, what
    about the advent of automation in manufacturing and the loss of high
    wage factory workers – auto workers in particular. Finally, it is
    frequently argued that with automation comes new jobs to create,
    maintain, operate, and repair such systems. Until the machines can do
    it themselves, this will require humans somewhere in the cycle. Will
    these new job be low wage/MW jobs?