Minimum Wage Hikes: Here's A List Of States Where A Lot Of Fast Food Workers Will Be Fired In 2017

Tyler Durden's picture

Minimum wages will increase in 20 states at the start of 2017, a move that, as we've argued many times in the past, will simply speed up the rate at which minimum wage workers are replaced through new capital investments in automation projects.  Just another example of misinformed politicians passing legislation that will ultimately crushed the very people they're trying to help.

According to a study conducted by the Economic Policy Institute, roughly 4.4 million low-wage workers across the country are slated to receive a raise  in 2017 given that they currently earn less than the new minimum in their respective states.  That said, the real question is how many of those workers will subsequently lose their jobs to automation and/or business failures by company's that simply can't survive the incremental costs.

Per the Wall Street Journal, here is a list of states where minimum wages are expected to rise in the new year:

Min Wage

 

For our political friends that focus more on the narrative of providing a "fair living wage" and not so much on the math, please see below for a very simplified example of why minimum wage hikes ultimately just lead to the permanent unemployment of the people you're trying to help.  In our simple example we assume that a $1mm capital investment, on the purchase of a couple of robots for example, can replace the work of 5 people.  Using California's 50% increase in minimum wage, as an example, (the "Fair Wage Act of 2016"...don't you just love the branding) would drive the payback period of such an investment down from a "marginally attractive" 10 years to a "no-brainer" 6 years. 

And thus, 5 people find themselves out of a job.  But that's ok, just more people to be dependent on the Nanny State who can easily be brainwashed into believing their plight is the direct result of "rich people" not "paying their fair share" rather than the misinformed policies of our math-challenged political elite.

Payback Example

 

Of course, the Holy Grail for Washington's liberal elite is a $15 federal minimum wage which Bernie Sanders supported during his 2016 campaign...you know because the cost of living in New York City is fairly similar to that of rural Iowa so why not.  While Trump noted in July 2016 that he would be supportive of a $10 federal minimum wage, such legislation has little support from other Republicans in Congress.

The federal minimum wage has remained $7.25 an hour since 2009.

 

Most Republicans in Congress have resisted a federal minimum-wage increase and have blocked Democrats’ efforts to raise the rate. Republican governors in Oklahoma, Alabama and elsewhere also have acted to prevent pay floors from rising in their states.

 

The GOP lawmakers and governors argue that making labor more expensive will encourage businesses to invest in automation that eliminates jobs, send work to lower-cost countries and dissuade firms from expanding because higher payroll costs trim profit margins.

 

“The minimum wage is not a great tool for helping those at the bottom,” said Ben Gitis, director of labor market policy at the American Action Forum, a right-leaning think tank. “The people who end up losing their jobs are the most vulnerable in the labor market.”

But while a $15 federal minimum wage may not garner much support from the incoming administration, we suspect that consumers around the country should go ahead and start getting used to ordering their Big Mac's on their own.

McDonalds Kiosk

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Lumberjack's picture

While Obama is trying to hamstring Donald, lets look at how Obamanomics twerked out...

http://www.zerohedge.com/news/2015-09-16/obamas-recovery-just-9-charts

Lumberjack's picture

And think of his 100 million dollar vacation spree. Quite a fucking bonus for destroying this country.

flaminratzazz's picture

it was a smoldering car wreck before crackhead jr and Darth attacked us

Lumberjack's picture

It had lots of bubblegum and duct tape but still ran. Even had a sticker on it. Then the fucker JUST HAD to kick the fender.

JRobby's picture

Bring on the robots. Prices will go up!

Come and get your cold, downer cow burger on a sugar, preservative, food colored bun obese, sick and soon to be in ICU sheeps!

"In 2008, an undercover investigation by the Humane Society of the United States at a similar California facility, this one called Hallmark/Westland, showed workers using violence, including ramming with the blades of a forklift, to compel severely impaired cows through the kill line—again, despite the presence of USDA inspectors. The intention seemed to be to force the cows to walk, to avoid having to declare them "downers" and thus be forced to dispose of them and not sell them as meat."

YUM!!!!

tripletail's picture

Not quite. There exist machines ( not robots ) that can produce the perfect hamburger 24/7. Needless to say, the cost advantages are huge.

I don't see robots in the near future of restaurants. However, I do see machines and kiosks --- with a dwindling number of humans.

JRobby's picture

Do you need glasses?

When was your last vision exam?

I was just messing around (obvious). People that eat fast food burgers don't care where the food comes from or what is in it. They have no regard for themselves or their families. They just trudge slowly forward and then accept (with relief often) the fact that they have developed a terminal disease.

erkme73's picture

We all have a terminal disease.  Hint: Read the ZH logo/mantra.

chubbar's picture

Payback is even quicker than noted. You get accelerated depreciation on new capex for this year at least. After that is factored in you are talking about a payback of at least 5 years, maybe a little less depending upon their specific tax situation. That implies a ROI of 14% or better. Definitely a no-brainer.

refill6times's picture

That perfect machine produces Soylent Green.

..."dwindiling number of humans"...

techpriest's picture

But, but, we have regulations! Don't regulations magically make us all safer and make all companies do the right thing all the time? Do you mean I have to actually think about what I am buying?!

JRobby's picture

I know that banking and brokerage are heavily regulated................................

New_Meat's picture

I know that I feel safer through all of the regulation here in the Commonwealth ;-)

fattail's picture

The pink slime is sterile.  That's why the sheeple die of diabetes instead of salmonella.  Corporations understand you can't kill your host before you have drained every last aspect of value from them.  Much like the Nazi work camps that were effecient and productive with workers subsisting on a 500 calorie diet.

Arbiet Macht FREI!!

Zarbo's picture

Talked to local fast-food manager.  He said they were outsourcing the drive-thru ordering to Guatemala to save money.   Hmmm.  No accent problems, and never mind that backhoe over there could put you out of business ...

overbet's picture

I dont eat fast food often maybe once a year, but everytime I do they fucking put onions on it after I tell them no onions. The machines will be an improvement to the consumer. Fuck them. Action meet consequence.

JRobby's picture

They find that their gross profit margins are consistently higher if they hire deaf people to work the counters and drive through.

Hal n back's picture

payback calculation does not include basic benefits , eg the 7.65% payroll tax. add another 12k to annual savings.

unemployment and workers compensation tax-add a few thousand more.

Holidays and vacation already figured in at the total hours line

 

now, how about consistent quality and elimination of waste--hard to figure.

 

how about you as employer do not need to worry about people not showing up.

if the people are indeed full time you have health care in all likeihood-whats that5k a year for a single?

Retirement match--3%?

what else is a basic benefit now a days?

ya get the payback down to 3-4 years. Thats a true no brainer

 

 

 

flaminratzazz's picture

the answer to all problems = throw more money at it.

1980XLS's picture

Fuck the McPeasants.

I don't even go since they pretty much killed the Dollar Menu.

Kinda like a self-regulating mechanism.

Lake of demand because lack of value will mean no wages  (layoffs)

 

If I'm gunna eat that shit, it better be cheap. Otherwise no sale.

TheGardener's picture

SME`s I consult and work with just had the hours worked adjusted downward for emergency measure. No way low wage helpers got more productive and employers can afford to give the government a raise at this level with zero net for the employees. Progressive taxation actually amounting to a pay cut for the employees but greatly higher wage costs for the
employers.This ain`t no good, the online shop projects I`m
contracted to fulfill used to add jobs on both the lower fulfillment end and the upper programmers realm.

Good growth times are being marked over with this silly
move and continuing my work depending on eliminating "excess" staff is a given.

Many a service will no longer be rendered at this employee cost structure, going the way of the corner grocery store
where entrepreneurial folks kept exploiting themselves until the bitter end.

The way things are going, only banksters and mercenaries are going to get paid.

HopefulCynical's picture

The way things are going, only banksters and mercenaries are going to get paid.

Well no shit, that's the whole point, after all...

flaminratzazz's picture

Wife and I stopped at Jimmy Johns, 2 sandwiches and 2 drinks= 20 bux, not all that either.. first time there..never again

rockstone's picture

Different chain, same thing. WTF? For this? Used to be I was too proud to brown bag. Now I'm too proud to be their rube.

Cadfael's picture

True minimum wage is $zero dollars per hour - sadly, some of these folks will find this to be true in 2017

New_Meat's picture

Ya really gotta' wonder who the two assholes who downvoted your comment might be.  Prolly snowflake veterans of Common Core.

Cadfael's picture

I take no pleasure from the stated fact. Unfortunately, our economy is rife with folks proclaiming higher wages, with much fanfare, only to reduce work force a few months later - with no fanfare at all. I managed units of between 7 and 94 people throughout most of my career, and in all instances I had to justify everyone's position, including my own, every review period. It's a harsh reality.

I think there ARE better ways to do things, but societal inertia is difficult to overcome. I fear there are trying times ahead...

 

Montani Semper Liberi's picture

 The song that turned me against Styx back in the day. Couldn't turn the radio off fast enough when that tune would come on.

Cman5000's picture

McMachines awaits. We need Terminators as Cashier's anyone causes a ruckus he,she or non gender is Terminated. 

TalkToLind's picture

Minimum wage, making your work illegal, one occupation a time.

Hubbs's picture

"hurting the very people they're trying trying to help."?

 

Since when did politicians ever want to help their constituents? They may want to help them to the voting booth, but that is about it. 

yourlifeisamyth's picture

The only power the average citizen has is in their wallet. If they wake up from their medicated and distracted stupor and refuse to pay inflated prices, then the monster would be down on its knees. $5 ice cream scoops down the street and the line out the door... in 42 degree weather. It's raining drones... Halleluija!

Tennessee Patriot's picture

Gonna have a hard time when the real Unions figure this one out.  For example, a Maintenance man has to be proficient at MANY specific, complex, difficult & detailed tasks.  He makes $20 per hour.  Now you have your basic "You want fries with that" moron making $15 an hour.  Ok, Mr. Union Shop Steward, please explain to me how making a hamburger is almost equal to me rebuilding a gearbox for a piece of manufacturing equipment?  What, no answer?  Bullshit.  Now I want $35 an hour because my job is 3 times more difficult than his.  They'll figure it out pretty soon. 

TheGardener's picture

Hate to break the bad news to you, but fixing gear boxes might soon be at a discount to flipping burgers.
Fixing nature by way of gender studies already has you beat.

refill6times's picture

Correct. replacing is easier and cheaper, and I have have torn down quite a few gear drives.

 

But your second sentence is chilling, Monty Burns chilling.

stacking12321's picture

doesn't matter who thinks their job is more difficult. your whining about how hard your job is, isn't going to be why you get paid more.

in the end, it will depend on supply and demand.
tons more unskilled workers in this country, an overabundance of supply, is what will ensure their rate is a lot lower than yours.

Uzda Farce's picture
Uzda Farce (not verified) stacking12321 Dec 30, 2016 5:44 PM

The large supply of low-skill voters, including the millions already on EBT, will ensure that socialist politicians continue to appease them. Economic rationality and "market forces" have little to do with it, until the whole system finally implodes.

refill6times's picture

Keep flippin burgers

 

3 times harder equals $35 ?

 

Maff presents stubborn facts

 

 

tripletail's picture

There's something poetic about economically ignorant politicians helping economically ignorant voters looking for work. For I have no doubt both parties will get what they deserve.

gatorengineer's picture

The travesity in this country is that the minimum wage may be $10, the living wage where the minimum wage is 10 is alot closer to $25.  The problem is that you dont make $25 with most college degrees.  Electricians plumbers and welding are the way to go.... Sadly not glamorous.

If the labor market were as tight as reported (we are at full employement by the numbers), the minimum wage would adjust itself.  So perhaps the numbers are a bit ""fudged""

stacking12321's picture

there's no such thing as "living wage", its a made up bullshit term, and a number pulled out of thin air.

how well you live depends on a lot of things, like how intelligent you are with money, where in the country you live, the network of people you have around you, etc.

crazybob369's picture

Saw an article yesterday on how to live on $500/month. Not very realistic. However, I think if push came to shove I could manage on about $1,000/month (about $5.75 an hour). Not glamorous, but doable. So, living wage should be about $6/hr.

didthatreallyhappen's picture

nothing sad about the welders/electricians/plumbers/skilled labor earning up to 6 figures.  hard work is hard work, the glamour is taking care of our families.

benlomand's picture

I made good money for many years as a power plant instrument electrician. Glamourous indeed.

For the nimrod's you work for are generally clueless as to how things work. 

Parity with the boss-man is easy when you have the knowledge to keep his $250+ million dollar investment

purcolating. Or monkey-wrench it if necessary.

 

flaminratzazz's picture

I know of no Union man anywhere making 20 an hour except MAYBE the janitor but I doubt even that .

In my industry i make from 42 to 56 depending on location/equipment used.

gatorengineer's picture

Union apprentices make less than $2O on my sites, thats just wage no fringes.......

yarpos's picture

Seems like the US is one of the few first world countries where paying low skilled employees a wage they could actually live on is somehow the road to financial ruin and unemployment.   Does nobody wonder why all these disasters havent happened already elsewhere,  where wages are higher?

Note the automated order taking points in the picture,  all unused.    Re the simplistic cost benefit analysis,  if your automation costs you a million dollars it wont be cost free "going forward",  factor in service, upgrades and replacement cost at end of life.

 

Uzda Farce's picture
Uzda Farce (not verified) yarpos Dec 30, 2016 6:18 PM

Low-skill jobs like order taking and checkout are easily automated, with more to follow. The futile "fight for $15" street action will only accelerate the implementation.

https://www.ecrs.com/products/point-of-sale-pos/self-checkout/

http://www.tech-logic.com/products/self-checkout-kiosk