35% of Workforce Unemployed in 20 Years

It seems like almost everyday, there are new concerns and warnings about the coming reality of replacing workers with Artificial Intelligence (AI) coupled with robotics.

Now, the latest news comes in a joint report from the consulting firm Deloitte and experts at Oxford University that suggests that 35% of the workforce will be replaced in just 20 years. This is a less aggressive prediction than last year's estimate of a 30% replacement  -- including white collar jobs -- by 2025.

But, supporting those predictions are real life stories that prove we are -- right now -- on the path of high unemployment due to robotics.  In China, the electronics contractor Foxconn Technology Group just announced the replacement of 60,000 factory workers with robots.  At the same time, the former CEO of McDonald's, Ed Rensi, pointed to this year's National Restaurant Show and the number of working robots on display as a forewarning of the future of the restaurant industry; especially fast food.  As he noted, it is cheaper to buy a $35,000 robotic arm to bag fries than to pay someone $15/hour to do the same.  By the way, the annualized salary at $15/hour is $31,000; meaning a ROI (Return on Investment) in just a little over a year.  Even less, if the cost of providing health insurance is added in.

This is just further proof that those pushing a $15 minimum wage are, in fact, pushing the minimum wage worker right off a cliff.  And, once again, the unions are the ones doing the pushing.  In fact, unions have done more to decrease their own membership in the last 50 years; down from 35% of the workforce in 1964 to just 10% today.  Fast food workers should make note of that fact when union workers are picketing outside their workplace for a $15 minimum wage.

References:

Foxconn replaces '60,000 factory workers with robots': http://www.bbc.com/news/technology-36376966

Building robot McDonald's staff 'cheaper' than hiring workers on minimum wage: http://www.mirror.co.uk/news/weird-news/building-robot-mcdonalds-staff-cheaper-8044106

Experts predict robots will take over 30% of our jobs by 2025 — and white-collar jobs aren't immune: http://www.businessinsider.com/experts-predict-that-one-third-of-jobs-will-be-replaced-by-robots-2015-5

Union, not workers, behind push for $15 wage: http://www.heraldnet.com/article/20160417/OPINION03/160419427

The incredible decline of American unions, in one animated map: https://www.washingtonpost.com/news/wonk/wp/2015/02/24/the-incredible-decline-of-american-unions-in-one-animated-map/

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Is New York Trying To Kill Fast Food Businesses?

It's no secret that many in the U.S. -- especially those in the liberal political class -- blame fast food restaurants for America's obesity problem.

It's no wonder then, that New York State's proposed minimum wage increase to $15 will only be applied to fast food operations throughout the State. The primary argument for doing so won't be about obesity (wink...wink!), but instead, because McDonald's and Burger King underpay their employees. New York must pay out millions of dollars each year in various forms of welfare for these workers.  Of course, the State doesn't mind that other minimum wage workers like busboys, dishwashers, hotel workers, etc. will continue to be supported with welfare payouts. 

So what's the impact on, let's say, McDonald's food prices once the wage hits $15:

• A $15 minimum wage is a 71% increase from New York's current  $8.75.

• That $15 wage is higher than every current McDonald's worker's pay except for Shift Manager and Store Manager; both salaried.  Thus, every worker, including the salaried, will also have to see a proportionally-based 71% increase. Therefore, we can assume that whatever a McDonald's store's total cost of labor is today, it will be 71% higher once the $15 kicks in.

• According to the website MinimumWage.com, the average cost of labor for every dollar you spend at McDonald's is 32%.  So, if you spend $10 today at a New York McD's, $3.20 will go to cover the cost of labor.  When the 71% increase is finally applied, the cost of labor will be $2.27 higher.  Or, in other words, that formerly $10 meal will then cost you $12.27 or 22.7% more.  That's before any other inflation that may also affect pricing.

So, the question is:  How many people are going to be able to afford a Big Mac, fries, and a Coke when the price goes from the current $7.85 to $9.63?  Probably, well over $10 with inflation. Especially since real wages (those adjusted for inflation) have only been going up three-tenths of a percent per year.

Simply, going to McDonald's or any other fast food store may still be fast but no longer cheap.  For some people, the cost to eat there may just be too steep; especially since traditional sit-down restaurants won't be hit by the minimum wage increase. Thus, expect business declines and business closures as people relegate eating fast food to being a luxury.  Make no mistake, this imposed wage is like any tax on liquor and cigarettes that is used as a means to deter the buying of those products.  To me, that looks like the real intent here.

Lastly, as far as the obesity issue goes, it's not true.  Seven years ago the City of Los Angeles banned any new fast food restaurants in South Los Angeles as a way of curbing the growing obesity problem in that part of the city.  Obesity wasn't abated.  Instead, it got worse; going from 63% to 75%. Also, regarding fast food, poverty, and welfare;  this country has 45.3 million people in poverty and on welfare.  The fact that there are only 3.7 million fast food workers hardly proves that the industry is placing some massive burden on the country and the State of New York; especially, since 61% of all fast food workers are part-timers working before and after school or as a means to earn some extra money.

References:

New York Plans $15-an-Hour Minimum Wage for Fast Food Workers: http://www.nytimes.com/2015/07/23/nyregion/new-york-minimum-wage-fast-food-workers.html

McDonald's Menu Pricing for New York: http://www.fastfoodmenuprices.com/mcdonalds-prices/

McDonalds Salaries in New York, City: https://www.google.com/search?q=McDonald%27s+Salaries+in+New+York+City%2C+NY+|+Glassdoor&ie=utf-8&oe=utf-8 

Real Earnings: http://www.bls.gov/news.release/pdf/realer.pdf

Cost of McDonald's Labor: https://www.minimumwage.com/2013/07/about-that-68-cent-big-mac-price-increase/

Ban on fast-food eateries in South L.A. hasn't cut obesity: http://www.latimes.com/local/california/la-me-food-study-20150319-story.html

In 2013, the official poverty rate was 14.5 percent, down from 15.0 percent in 2012. This was the first decrease in the poverty rate since 2006. In 2013, there were 45.3 million people in poverty: http://www.census.gov/hhes/www/poverty/about/overview/

http://www.statista.com/statistics/196630/number-of-employees-in-us-fast-food-restaurants-since-2002/Employees in the U.S. fast food restaurant industry:

Characteristics of Minimum Wage Workers, 2014:http://www.bls.gov/opub/reports/cps/characteristics-of-minimum-wage-workers-2014.pdf

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Domino's Pizza Says ObamaCare's Fast Food Calorie Display 'Unworkable'

Beginning next year, ObamaCare mandates that every fast food chain must clearly display the calorie counts for every item on their menus.  While compliance is possible for a hamburger joint with limited menu selection, it is extremely difficult for a pizza chain, like Domino's.  There literally offer 34 million possible pizza combinations. From different sizes, to different amounts of cheese and other ingredients.  But, if Domino's doesn't comply there could be substantial fines and up to a year in prison (I assume for each store manager in violation).

My problem with the calorie count rule is that we've been down this road before with no measurable success.  In 1990, the Democrats in Congress handed President George H.W. Bush a piece of legislation called the Nutrition Labeling and Education Act which he signed into law.  Under it,  manufacturers of any packaged food items would have to provide the kind of nutrition data that we see  today.  At the time, the obesity rate in this country was 20.5% of the adult population.  Today, despite calorie labeling from the1990 law, obesity has grown to be in excess of 36%.  A 76% increase in just 24 years.

For years, providing nutrition information has been a hefty expense for the food industry.  Because the  FDA requires accurate nutrition data on labels, companies, and now fast food restaurants, are forced to hire expert analysts to provide the nutritional breakdown of every item they sell. In addition, each fast food chain will spend millions to replace all existing menu boards to comply with this new 391-page regulation.  And, of course, we will pay for it all with higher prices.

Simply, I don't think this law will slow or reduce the obesity rates in this country one iota.  Just as the 1990 rule never did. People in the mood for a Big Mac or a cheese and sausage pizza are not usually in the mood to count calories. Once again we have another fool's errand by the Democrats; and I'm sure, Michele Obama.

References:

Domino’s to Obama Admin: Calorie Rule is ‘Unworkable’: http://freebeacon.com/issues/dominos-to-obama-admin-calorie-rule-is-unworkable/

Nutrition Labeling and Education Act of 1990:  http://en.wikipedia.org/wiki/Nutrition_Labeling_and_Education_Act_of_1990

Calorie counts: Coming to a restaurant, movie theater, vending machine near you: http://www.washingtonpost.com/national/health-science/calorie-counts-coming-to-a-restaurant-movie-theater-vending-machine-near-you/2014/11/24/e5bd25ae-7415-11e4-a5b2-e1217af6b33d_story.html