Who will win the Minimum Wage Fight for 15?

18 | The Fight for 15 is an American political movement advocating for the federal minimum wage to be raised to $15 per hour. The federal minimum wage was set at $7.25 per hour in 2009, and as of 2019 it has not been increased since. The movement has involved strikes by workers in child care, home healthcare, airport, gas station, convenience stores but most notably with fast food workers. What will happen if or when $15 is the minimum wage for all of the United States?  I speculate the national and global consequences in this episode of The Jim Stroud podcast.

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About the host:

Over the past decade, Jim Stroud has built an expertise in sourcing and recruiting strategy, public speaking, lead generation, video production, podcasting, online research, competitive intelligence, online community management and training. He has consulted for such companies as Microsoft, Google, MCI, Siemens, Bernard Hodes Group and a host of startup companies. During his tenure with Randstad Sourceright, he alleviated the recruitment headaches of their clients worldwide as their Global Head of Sourcing and Recruiting Strategy.  He now serves ClickIQ as its VP, Product Evangelist.

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PODCAST TRANSCRIPT

Hi, I’m Jim Stroud and this is my podcast.

The Fight for 15 is an American political movement advocating for the federal minimum wage to be raised to $15 per hour. The federal minimum wage was set at $7.25 per hour in 2009, and as of 2019 it has not been increased since. The movement has involved strikes by workers in child care, home healthcare, airport, gas station, convenience stores but most notably with fast food workers.

The movement has seen some success on the state and local level. California, Massachusetts, and New York are currently in the process of raising their state minimum wage to $15 per hour and major cities such as San Francisco, New York City and Seattle, where the cost of living is significantly higher, have already raised their municipal minimum wage to $15 per hour with some exceptions.

What will happen if or when $15 is the minimum wage for all of the United States?  I speculate the national and global consequences after this special message.

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The fight for a $15 minimum wage has been argued over and over and over by people who support and oppose the idea. These are the points I tend to hear, both pro and con.

If you are for a $15 minimum wage then, you are likely thinking that minimum wage workers will have more spending power which means increased sales for businesses resulting in more workers being needed. There would be less stress on social programs because people will be able to better take care of themselves. And since people would be earning more money, there would be less employee turnover thus, saving companies money from lost productivity due to vacant openings.

If you are against the $15 minimum wage, its likely because you, as a business owner, believe you cannot afford the raise in salary and must layoff workers to compensate. Plus, the increased salaries will have to be compensated for in some way, likely you will have to raise your prices and outsource some of your jobs to countries where people are willing to accept a lower pay rate. I also imagine that competition for jobs will intensify exponentially as overly qualified individuals pursue jobs that younger workers typically pursue. And when that happens, younger workers won’t have the experience needed to build their resumes.

The minimum wage debate is only going to increase in light of the fast approaching 2020 presidential election. Presidential hopeful Bernie Sanders has been pressuring McDonald’s to raise their minimum wage to $15 via an open letter to the CEO of McDonalds – Steve Easterbrook and a tweet which (in part), says this, “If Amazon and Disney can pay $15 an hour, so can McDonald’s, which made $5.1 billion in profits last year.”  Some people agree with Bernie Sanders. I speculate, many businesses do not.

I was in London recently and I saw something I had never seen before, inside McDonalds was a kiosk that allowed you to place your order and pay for your food. I looked at the counter where I presumed the cashier would be. There were several workers handing out food and such and some were taking orders but, I had to wonder. How many less workers were needed once these kisoks were introduced?  I did a bit of research after witnessing this and found out that McDonalds was adding these self-order and pay kiosks to 1,000 stores per quarter; not to mention their  mobile app that let you place orders with your cell phone. Very, very clever.

Now, I don’t speak for McDonalds, so I can only guess that these kiosks are McDonalds rebuttal to the “Fight for 15” movement. In other words, McDonald’s says sure, we will pay a $15 minimum wage if required but thanks to automation negating cashier jobs, that $15 an hour salary will go out to fewer workers.

So, on one hand, it looks like McDonald’s wins by employing fewer people while at the same time reaping higher profits. Right? Well, not necessarily. What happens when your customers don’t agree with your policy and protest it or, worse yet, show their discontent by shopping elsewhere? Consider this… Quite recently, Walmart announced that it was getting rid of greeters (many of whom are disabled) and would replace them with “Customer Hosts.” The plan was to go in effect at 1,000 of their stores. Shortly thereafter, there was a BIG backlash from its customers. So much so, Walmart backpedaled on their policy. Listen to this report from CBS Pittsburgh.

And here is something else to consider… Amazon. Robert Charette, a risk consultant to financial organizations made a very astute observation. Here’s a quote from 2017 that is still ringing true today…

Amazon is a leading indicator of what may come for service industries. In 2012, Amazon purchased Kiva Systems, a maker of warehouse robots, for US $775 million. The company began deploying the 320-pound, 16-inch-tall robots to its warehouses in early 2014, with some 10,000 of them operational by the end of 2014. Analysts estimatedthen that each robot replaces 1.5 full-time-equivalent human beings. Over the past two years, Amazon has added another 30,000 Kiva robots to its warehouses, as well as increased the productivity of its warehouse activities through additional automation initiatives, which allowed it to ship over 1 billion items between 1 November and 19 December 2016. While it may still be some years away, nearly completely automated Amazon (and other companies’) warehouses are seen as inevitable.

Clearly, Amazon’s automated warehouse efficiency has other consequences. It has enabled Amazon, through its online sales channel and ability to discount prices, to become the world’s eighth largest retailer(and largest online retailer). Amazon increasingly is taking market share away from traditional department stores, helping place companies like Sears, Kmart, and Macy’s, among many others, at risk. All three announced significant store closures and layoffs this past week, with Macy’s alone eliminating 10,000 jobs after disappointing holiday sales attributed to increased online sales competition. Macy’s management says it will take the savings from the layoffs and invest it into its online presence.

How many of those employees that Macy’s and other retail companies laid off will be able to find comparable work at the same salary is unknown. However, it is unlikely for very many, as few retailers that are under threat by Amazon and other online retailers are hiring permanent staff. Instead, like Macy’s, they are looking for ways to shed staff while they increase their online presence to combat Amazon and other e-commerce discounters. [END QUOTE]

And now, 3 predictions…

  1. Technology will persevere, and progress will be made, as it always has, since at least the 19th century when people protested the cotton gin and the steam engine as a threat to their way of life. But I think the transitional period will be bumpy, to say the least. As automation encroaches and younger, under-educated workers from the services sector become more and more frustrated, I think it is entirely possible to see another type of… Arab Spring but this time, on a much larger scale. Why? People losing jobs in America due to automation is one thing multiply that number by the countries we no longer need to outsource jobs too due to that same automation; and you have young angry displaced workers all over the globe, and roughly around the same time.
  2. Companies will begin to experience consumer rebellion. What do I mean by that? People will begin to make a more conscious effort to forgo automation whenever possible: for example, skipping right past the robot operator and demanding to speak to an actual human being when calling a company; not using the automated checkout lines in supermarkets and reducing reliance on ATM machines.
  3. There is a Made in America movement to support American businesses and the families that rely on them. I imagine that in the next decade, there will be a “Made by Human Hands” movement to support those businesses who refuse to fully automate their processes so they can put a human being to work.

But that’s just what I think will happen. I’m more interested in what you have to say.  Share your thoughts?

If you love what you heard, hate what you heard or, don’t know what you just heard, I want to know about it. You can reach me at my website – www.JimStroud.com. In addition to finding source material and related information for this podcast episode, you’ll find other goodies that I hope will make you smile. Oh, before I go, please financially support this podcast with a little somethin’-somethin’ in my virtual tip jar. (There’s a link in the podcast description.) Your generosity encourages me to keep this podcast train chugging down the track. Whoot-whoot, whoot-whoot, whoot-whoot…

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