ObamaCare, The Minimum Wage, and Automation

In 2011, Obama blamed people-replacing machines like ATMs and airport check-in kiosks for causing the slow economic recovery.  What he fails to realize is that increased automation is a direct result of  his own policies.  Higher costs for labor -- such as increasing the minimum wage by 41% from 2007 to 2009 or mandated employee benefits such as health insurance coverage under ObamaCare -- only forces businesses to find alternatives to increasingly costly humans.  That is one of the primary reasons why, today, many companies have off-shore call and customer service centers or, why so many retailers have incorporated self-checkout lanes in their stores.

According to the Bureau of Labor Statistics, three-fifths of all minimum wage earners are in the fast food industry; an industry that employs 4 million.  But, another round of raising the minimum wage by a proposed 25% just might be the tipping point at which fast food companies like McDonald's start automating their stores.  After all, they are already facing hefty penalties or insurance costs under ObamaCare in 2015, and its not much of a stretch to think these people could easily be replaced with the current technology.

That drive-up order taker/cashier could simply be replaced by a touch-screen and an integrated credit card reader.  This would be especially true if customers are given a discount for paying by credit card and, thus, avoiding costly human interaction in accepting cash payments.  The same is true for cashiers inside the store. In fact, that is exactly what McDonald's did in France by installing 7000 touch-screen order and credit card acceptance machines.  Those machines also had the additional benefit of instantly displaying calorie information; another requirement of ObamaCare in this country.

Further,  there is no reason why any of the rest of the jobs at a fast food restaurant couldn't be replaced.  In fact, a company by the name of Momentum Machines has already built a hands-free unit that can crank out and dispense 360 gourmet burgers per hour.  The company already claims that, by replacing humans, their machine will pay for itself in a year.   Of course, the payback would be slashed to 9 months if the minimum wage is raised by another 25%.

Lastly and more importantly, if one fast food company, like McDonald's, starts rolling out automation, eventually, they will all follow suit.  When that happens, a source of 60% of all minimum wage jobs will disappear, and, the damage may well be higher than 60% if businesses outside the fast food industry also find ways to replace the costly humans.


References:

Obama, ATMs And Rage Against The Rise Of Machines: http://www.forbes.com/sites/mattkibbe/2011/06/21/obama-atms-and-rage-against-the-rise-of-machines/

Characteristics of Minimum Wage Workers: 2012: http://www.bls.gov/cps/minwage2012.htm

C/Net:  McDonald's hires 7,000 touch-screen cashiers: http://news.cnet.com/mcdonalds-hires-7000-touch-screen-cashiers/8301-17938_105-20063732-1.html

Robot Serves Up 360 Hamburgers Per Hour: http://singularityhub.com/2013/01/22/robot-serves-up-340-hamburgers-per-hour/