What do you think of this argument against raising the minimum wage?

[MurrayBannerman]

The argument goes like this:

A business employs some people at $10 an hour (which is the minimum wage in this scenario) and other workers at $12 an hour. These are the two lowest pay levels at said business.

Now, the minimum wage gets raised from $10/hour to $12/hour; what happens to the employees who were paid $12/hour before the minimum wage is increased? Their wages won't be increased (or so the argument goes) any time soon, and wage increases for them will actually be delayed, yet they have seniority and experience over the minimum wage employees.

Is this a valid argument?

No, it's not.

That person receiving $12/hour will, when the minimum wage gets boosted, immediately become underpaid. This means the employer will face increased pressured to maintain the company's labor structure. The employer can continue to pay the minimum, but as the market adjusts, the employee will be sorely tempted to leave their current job in favor of one that, once again, pays higher than the minimum.

Or, in a more likely scenario, they will be laid off and their position, in the long run, will be phased out by a cost saving measure.

[MurrayBannerman]

The argument goes like this:

A business employs some people at $10 an hour (which is the minimum wage in this scenario) and other workers at $12 an hour. These are the two lowest pay levels at said business.

Now, the minimum wage gets raised from $10/hour to $12/hour; what happens to the employees who were paid $12/hour before the minimum wage is increased? Their wages won't be increased (or so the argument goes) any time soon, and wage increases for them will actually be delayed, yet they have seniority and experience over the minimum wage employees.

Is this a valid argument?

No, it's not.

That person receiving $12/hour will, when the minimum wage gets boosted, immediately become underpaid. This means the employer will face increased pressured to maintain the company's labor structure. The employer can continue to pay the minimum, but as the market adjusts, the employee will be sorely tempted to leave their current job in favor of one that, once again, pays higher than the minimum.

Or, in a more likely scenario, they will be laid off and their position, in the long run, will be phased out by a cost saving measure.

People will be phased out by cost-saving measures regardless of what happens with the minimum wage. For the most part, though, minimum wage workers are service employees who can't be outsourced or replaced by machines. No one wants to order from McDonaldsbot 3000, and you can't outsource the Burger King drive through to India.

If your local Walmart thinks it can get by with only 50 employees, then it's only going to hire 50 employees. Cost seems to have no bearing, so long as the cost is "as low as possible."

I'll just put this right here.

http://www.neowin.net/news/mcdonalds-orders-7000-touchscreen-kiosks-to-replace-cashiers

[MurrayBannerman]

McDonalds made that move in Europe, a very different place with very different customs and very different ways of doing things. It's notable that McDonalds has not made the switch in the U.S. aside from limited tests, and based on my knowledge of its order-by-iPad experiment, it's far from a QSR slam dunk.

Touchscreen ordering is not quicker than ordering in person, and it's not necessarily that more accurate — most fast food mistakes seem to happen in the kitchen, not at the kiosk. Most of the things can't take cash, only credit. Americans also like, I think, the feeling of superiority they feel when dealing someone in a customer service station. When else are we "always right?"

In any case, no one ever seems to be using them at the fast food establishments I've seen them at. Unless the line is 15 deep at the regular registers, there's no perceived benefit to most consumers.

It's a slow process, but pricing labor out of the market will quickly accelerate it and add the additional functions needed to make it viable as a main order taking option.

[MurrayBannerman]

It's a slow process, but pricing labor out of the market will quickly accelerate it and add the additional functions needed to make it viable as a main order taking option.

Again, touchscreen ordering's lack of adoption is not a function of its price. It is really inexpensive today for a QSR to set up a remote ordering station option (especially if its just a $500 iPad).

Kiosk-based ordering is, by its nature, a supplement to human cashiers. It's not a replacement.

And again, if labor prices itself out of the market, kiosk-based ordering and other non-employee based ordering will be developed to replace labor. It's an opportunity cost issue and currently, the perceived loss in revenue from both the lack of interest in using the system and the underdeveloped technology do not justify a full change.

It's happened in many other places. To think that Americans are somehow immune to this change is defying rationality.