Higher minimum wage causes Wendy's to have self-service ordering kiosks at its 6,000-plus restaurants, McDonald’s close behind

From Investor's Business Daily:

Wendy’s (WEN) said that self-service ordering kiosks will be made available across its 6,000-plus restaurants in the second half of the year as minimum wage hikes and a tight labor market push up wages. 

It will be up to franchisees whether to deploy the labor-saving technology, but Wendy’s President Todd Penegor did note that some franchise locations have been raising prices to offset wage hikes. 

McDonald’s (MCD) has been testing self-service kiosks. But Wendy’s, which has been vocal about embracing labor-saving technology, is launching the biggest potential expansion. 

Wendy’s Penegor said company-operated stores, only about 10% of the total, are seeing wage inflation of 5% to 6%, driven both by the minimum wage and some by the need to offer a competitive wage “to access good labor.” 

It’s not surprising that some franchisees might face more of a labor-cost squeeze than company restaurants. All 258 Wendy’s restaurants in California, where the minimum wage rose to $10 an hour this year and will gradually rise to $15, are franchise-operated. Likewise, about 75% of 200-plus restaurants in New York are run by franchisees. New York’s fast-food industry wage rose to $10.50 in New York City and $9.75 in the rest of the state at the start of 2016, also on the way to $15. . . .

Just a couple of months ago in March, Carl's Jr and Hardee's were talking about automating their restaurants.

Overregulation: Carl’s Jr. and Hardee’s CEO Andy Puzder has people all in a huff over his idea to automate restaurants. But why be upset with Puzder? This is an inevitable consequence of massive minimum wage hikes by the government. 

“I want to try it,” CEO Puzder told Business Insider. He’s looking at something “where you order on a kiosk, you pay with a credit or debit card, your order pops up, and you never see a person.” 

Is he being heartless? No. Just responding to the government’s foolish plans to jack up the minimum wage and put restaurants, hotels, bars and other service industries out of business. “With government driving up the cost of labor, it’s driving down the number of jobs,” said Puzder. “You’re going to see automation not just in airports and grocery stores, but in restaurants.” 

$15-an-hour minimum wages aren't so great if you no longer have a job: Pizza shop worker upset no one mentioned he could lose his job when they were discussing the increase

From Fox 13 in Seattle:

. . . Devin Jeran was happy to get a raise, when Seattle’s minimum wage went up to $11 an hour at the beginning of the month. “I definitely recognize that having more money is important,” he says, “especially in a city as expensive as this one.” Unfortunately, he’ll only enjoy that bigger paycheck for a few more months. In August, his boss is shutting down Z Pizza and putting him and his 11 co-workers out of work. “Fortunately she keeps us in the loop, she didn’t just tell us last minute.” Ritu Shah Burnham doesn’t want to go out of business, but says she can’t afford the city’s mandated wage hikes. . . .

More on the jobs being lost in San Francisco is available here.

Although all of us at Borderlands support the concept of a living wage in princip[le] and we believe that it's possible that the new law will be good for San Francisco -- Borderlands Books as it exists is not a financially viable business if subject to that minimum wage.  Consequently we will be closing our doors no later than March 31st. 

The racist history of minimum wage jobs

From an op-ed piece by Tom Sowell:

In 1925, a minimum-wage law was passed in the Canadian province of British Columbia, with the intent and effect of pricing Japanese immigrants out of jobs in the lumbering industry. 

A Harvard professor of that era referred approvingly to Australia’s minimum wage law as a means to “protect the white Australian’s standard of living from the invidious competition of the colored races, particularly of the Chinese” who were willing to work for less. 

In South Africa during the era of apartheid, white labor unions urged that a minimum-wage law be applied to all races, to keep black workers from taking jobs away from white unionized workers by working for less than the union pay scale. . . .

Democrats will be pushing higher minimum wages to help with 2014 elections

UPDATE: Fox News discussion on "Will minimum wage be hot topic in 2014 midterm elections?"

ORIGINAL POST: Economists have long understood that minimum wages hurt the very lowest skilled individuals the most.  The people who are just trying to get a leg up the later of success are stopped from getting on the first step.  You raise the wages of employees so that there is an excess supply, and the ones who are the least productive (e.g., those that require the most training) are less likely to make the cut.  Yet, Democrats claim that they are pushing higher minimum wages to help the poor.  From the Associated Press:

Republican governors running for re-election next year are looking to capitalize on distaste for Washington gridlock and President Barack Obama's dropping public approval amid the bumpy rollout of his signature health care law — and Democratic challengers may need to respond with a popular cause. 

A minimum wage increase could be the answer. 

Democrats vying to challenge a slew of Republican governors, particularly those seeking re-election in states that Obama won last year, are talking up an increase as their campaigns get off the ground 11 months before the election. . . .  

Thus far, the Republicans whom Democrats view as most vulnerable aren't changing their minds and supporting it. 

In addition to Corbett, the Democrats' list of most vulnerable includes Maine's Paul LePage, Michigan's Rick Snyder and Wisconsin's Scott Walker. Florida's Rick Scott and Ohio's John Kasich might be insulated because their states' laws boost minimum wage with inflation and Iowa's Terry Branstad, New Mexico's Susanna Martinez and Nevada's Brian Sandoval aren't viewed as sufficiently endangered. . . .

The push is likely to be the center piece of Obama's 2014 domestic agenda.  From Politico:

Podesta, who had just announced plans to spin off from CAP a new project focusing on economic inequality, will be part of the big minimum wage hike push likely to be the centerpiece of Obama’s pared-down 2014 domestic agenda. “It will fuel our politics for years to come,” says Neera Tanden, who replaced Podesta as CAP’s CEO. . . .

Elizabeth Warren stuns "Why Isn't Minimum Wage $22?"

The expert that she is questioning starts talking about a minimum wage of $36 an hour.  Does Warren really think that the productivity of minimum wage workers has been as large as it has been for the average worker?  How does she think that wages are set in the market?  Does she understand that the rents that these price controls create are competed away?  It is called rent-seeking by economists.

Thank minimum wages: "More than seven in 10 US teens jobless in summer"

Government is making it very hard for younger people to get jobs.  The lack of training will impact them long into the future.  From Fox News:

Fewer than three in 10 American teenagers now hold jobs such as running cash registers, mowing lawns or busing restaurant tables from June to August. The decline has been particularly sharp since 2000, with employment for 16-to-19-year olds falling to the lowest level since World War II.
And teen employment may never return to pre-recession levels, suggests a projection by the U.S. Bureau of Labor Statistics.
The drop in teen employment, steeper than for other age groups, is partly a cultural shift. More youths are spending summer months in school, at music or learning camps or in other activities geared for college. . . .

Do you want evidence of the impact of minimum wage laws?

But the decline is especially troubling for teens for whom college may be out of reach, leaving them increasingly idle and with few options to earn wages and job experience. Older workers, immigrants and debt-laden college graduates are taking away lower-skill work as they struggle to find their own jobs in the weak economy. Upper-income white teens are three times as likely to have summer jobs as poor black teens, sometimes capitalizing on their parents' social networks for help.
Overall, more than 44 percent of teens who want summer jobs don't get them or work fewer hours than they prefer. . . .

Is Romney really in favor of raising the minimum wage?

I had to read this piece in the WSJ twice to convince myself that it was true. Romney is a disaster if he really believes that this is good policy. Raising the minimum wage puts the poorest least trained people out of work. The rents created for even those that get the minimum wage jobs are also competed away. From the WSJ:

Presidential candidate Mitt Romney on Wednesday reiterated his position that the minimum wage should rise automatically with inflation. His top rival, Newt Gingrich, later criticized the idea.

Mr. Romney has said in past appearances that, dating to his time as Massachusetts governor, he believed in indexing the minimum wage to inflation, though his stance hasn’t drawn much attention. “I haven’t changed my thoughts on that,’’ he said Wednesday when asked by reporters aboard his chartered campaign plane, according to the Associated Press. He did not say whether, as president, he would urge Congress to make such a change, the news service noted.

Later on Wednesday, Mr. Gingrich took issue with the automated increase proposal, pointing to past periods of rapid price rises.

“Figure out what the Romney plan would have cost and how radically it would have raised the minimum wage in the late 1970s,” Mr. Gingrich said during an appearance in Reno, Nev. “Historically, that would be a dangerous idea.” . . .

Government "do good" will eliminate a lot of internships

No one is forcing these young people to do internships. They get training and experience in jobs that they very frequently love. My kids have done internships that they wouldn't have had a chance at otherwise. Raise the price to the companies that provide these internships, and you reduce the demand for interns. When a young person works in an internship for just a few months, there is usually not a lot that a company gets out of these young people. The government warns: "Growth of Unpaid Internships May Be Illegal."

With job openings scarce for young people, the number of unpaid internships has climbed in recent years, leading federal and state regulators to worry that more employers are illegally using such internships for free labor.

Convinced that many unpaid internships violate minimum wage laws, officials in Oregon, California and other states have begun investigations and fined employers. Last year, M. Patricia Smith, then New York’s labor commissioner, ordered investigations into several firms’ internships. Now, as the federal Labor Department’s top law enforcement official, she and the wage and hour division are stepping up enforcement nationwide.

Many regulators say that violations are widespread, but that it is unusually hard to mount a major enforcement effort because interns are often afraid to file complaints. Many fear they will become known as troublemakers in their chosen field, endangering their chances with a potential future employer.

The Labor Department says it is cracking down on firms that fail to pay interns properly and expanding efforts to educate companies, colleges and students on the law regarding internships. . . .

Chicago Decides to Keep Jobs: Minimum Wage Increase Defeated

Democrats split over battle on minimum wage increase. I may disagree with Daley on many things and dislike him for other reasons, but Chicago can be thankful that he fought on this issue.

A divided City Council today sustained Mayor Daley’s first-ever veto by a 31 to 18 vote: Wal-Mart and 42 other big box retailers in Chicago will not have to pay their employees at least $13 an hour in wages and benefits by 2010.

One day after framing the debate in racial terms, Daley got his way with three votes to spare.

Thirty-four votes were needed to override the mayor’s veto. The attempt fell three votes short. As expected, three aldermen who supported the minimum wage ordinance on July 26 crossed over to support the mayor: Aldermen George Cardenas (12th), Shirley Coleman (16th) and Danny Solis (25th). As expected, they were joined by Ald. Helen Shiller (46th), the only alderman who did not cast a vote on July 26.

The vote came after two hours and 15 minutes of debate following a recess to accommodate chief big-box supporter Ald. Joe Moore (49th), who attended the funeral of six children who died in a Rogers Park fire.

Coleman agreed to change sides after Wal-Mart promised to build an Englewood store at 63rd and Halsted, down the street from the soon-to-be built Kennedy-King College.

Solis has been angling for Daley to appoint him to the job of city clerk vacant since the resignation of convicted City Clerk Jim Laski. But, he said today, “Even if he [Daley] offered it now, I wouldn’t take it. It’s too late. The opportunity was three or four months back when an incumbent could have made something out of it.” . . .

Here is a discussion on the possible implications for Daley:

The Chicago mayor flexed his muscle with his veto of the controversial measure, but his fight with the city council showed that he may actually be vulnerable in next year's election . . .

Thomas Sowell Explains Some Basic Economics

Thomas Sowell asks whether discrimination can explain the high unemployment rate among French Muslims. Hint: labor market price regulations.

Let us go back a few generations in the United States. We need not speculate about racial discrimination because it was openly spelled out in laws in the Southern states, where most blacks lived, and was not unknown in the North.

Yet in the late 1940s, the unemployment rate among young black men was not only far lower than it is today but was not very different from unemployment rates among young whites the same ages. Every census from 1890 through 1930 showed labor force participation rates for blacks to be as high as, or higher than, labor force participation rates among whites. . . .

People who are less in demand -- whether because of inexperience, lower skills, or race -- are just as employable at lower pay rates as people who are in high demand are at higher pay rates. That is why blacks were just as able to find jobs as whites were, prior to the decade of the 1930s and why a serious gap in unemployment between black teenagers and white teenagers opened up only after 1950. . . .

The first federal minimum wage law, the Davis-Bacon Act of 1931, was passed in part explicitly to prevent black construction workers from "taking jobs" from white construction workers by working for lower wages. It was not meant to protect black workers from "exploitation" but to protect white workers from competition. . . .

The net economic effect of minimum wage laws is to make less skilled, less experienced, or otherwise less desired workers more expensive -- thereby pricing many of them out of jobs. Large disparities in unemployment rates between the young and the mature, the skilled and the unskilled, and between different racial groups have been common consequences of minimum wage laws. . . .