minimum wage

This is what happens when you artificially increase labour costs

Minimum wages are designed to protect low paid workers, and governments periodically recalibrate the minimum wage.

Even then there are advocates for the so-called “living wage” which is even higher than the legal minimum wage.

All of these efforts though are distorting the market price for labour. And if the minimum wage rises past point at which the job is no longer viable then it ceases to exist, especially as technology allows for a cheaper alternative.

Hamburgers are a multi-billion dollar business, and while fast food chains have got the process down to an efficient production line process, making them is still labor intensive with armies of burger flippers and sandwich assemblers. In a move that could put millions of teenagers around the world out of their first job, Momentum Machines is creating a hamburger-making machine that churns out made-to-order burgers at industrial speeds and aims to use it in its own chain of restaurants.

According to Momentum Machines, making burgers costs US$9 billion a year in wages in the United States alone. The company points out that a machine that could make burgers with minimum human intervention would not only provide huge savings in labor costs, but would also reduce preparation space with a burger kitchen replaced by a much smaller and cheaper stainless-steel box.

This self-contained, automatic device sees raw ingredients go in one end and the completed custom-made burgers come out the other at the rate of up to 400 per hour. The machine stamps out the patties, uses what the company says are “gourmet cooking techniques never before used in a fast food restaurant,” applies the toppings (which are cut only after ordering to ensure freshness), and even bags the burgers.

The company plans to open its first restaurant in the near future and to market the machines to third parties, arguing that one can pay for itself inside of a year. The company is targeting restaurants, convenience stores, food trucks and vending machine applications.

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The unintended consequences that do-gooders never think of

A living wage? Increase the minimum wage?

Good ideas right?

Perhaps not…on the surface it’s all motherhood and apple pie until the rubber hits the road.

In Seattle the minimum wage has been jacked up to $15 by the local authorities. It is the highest minimum wage in the United States.

And it has had an effect…just not a positive one.

In a few weeks, Seattle’s new, highest in the country, $15 per hour minimum wage will go into effect. Like many liberal policies, it was passed by City Hall with the best of intentions. The only problem is, in the end, it may do more harm than good for many.

Private businesses, unlike government entities (which, in theory, can always raise taxes or borrow), must make more than they spend in order to pay the rent, make payroll, keep the lights on, pay their business taxes, and, heaven forbid, have some left over for the owners and investors who are taking the risk and putting in the long hours.

Earlier this month, Seattle Magazine asked, Why Are So Many Seattle Restaurants Closing Lately?:

Last month—and particularly last week— Seattle foodies were downcast as the blows kept coming: Queen Anne’s Grub closed February 15. Pioneer Square’s Little Uncle shut down February 25. Shanik’s Meeru Dhalwala announced that it will close March 21. Renée Erickson’s Boat Street Café will shutter May 30 after 17 years with her at the helm…What the #*%&$* is going on? A variety of things, probably—and a good chance there is more change to come.

The magazine went on to report that one “major factor affecting restaurant futures in our city is the impending minimum wage hike.” Anthony Anton, president and CEO of Washington Restaurant Association, told the magazine, “It’s not a political problem; it’s a math problem.” He estimates that restaurants usually have a budget breakdown of about 36 percent for labor, 30 percent for food costs, and 30 percent to cover other operational costs. That leaves 4 percent for a profit margin. When labor costs shoot up to say 42 percent, something has to give.

Restaurants can take actions to adjust, such as raise their prices, acquire cheaper ingredients, and cut their operating hours and labor force. However, all those actions generate reactions from the public which can still lead to lower revenues for the restaurant and, for some, the decision to close their doors.

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I hate scumbag employers that let the side down

Andrew Little and his union mates use cases like this to justify rules, actions and new laws against 99.9% of the business world because of scumbags like this.

A Christchurch construction company breached labour laws by failing to pay the minimum wage and keep employment records for workers, the Employment Relations Authority found.

The Ministry of Business, Innovation and Employment’s Labour Inspectorate investigated Verney Construction Limited last year after receiving a complaint from two employees involved in the Christchurch rebuild.

The investigation found that the workers had been treated as contractors, when in fact they were employees.

They had not received the minimum wage or their final holiday pay and were not provided with employment agreements. Read more »

Something for the Nats to consider: a benefit ceiling

Who would have guessed?   You pay people less free money, and some are finally motivated to go get a job.

The new cap on benefits payments for the unemployed has forced thousands of people to find work instead of living off the state, new research will reveal this week.

Four detailed studies from the Department for Work and Pensions (DWP) will deliver the most comprehensive evidence so far that the benefits cap is encouraging people to move off welfare and into jobs.

The households that have lost the most in benefits payments since the cap was introduced in April 2013 are the most likely to have begun working for a living, the research concludes.

Claimants who saw their benefits cut by ÂŁ200 a week or more were three times as likely to have found work after a year as households whose benefits were not affected, the findings suggest.

Iain Duncan Smith, the Work and Pensions Secretary, said the evidence showed the Conservatives were right to plan to cut the benefits cap further.

I think there is a kind of symmetry to increasing the minimum wage at the same time as decreasing (or capping) the unemployment benefit, don’t you?   It just seems… fair.

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Not too long ago, the left promoted the pointlessness of minimum wage

This is a must-watch

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Unions destroy jobs with their minimum wage demands

I warned people this would be the result.  Why can’t unions ever see beyond the next wage round?

mcdonalds-automation

If there’s a silver lining for McDonald’s in Tuesday’s dreadful earnings report, it is that perhaps union activists will begin to understand that the fast-food chain cannot solve the problems of the Obama economy. The world’s largest restaurant company reported a 30% decline in quarterly profits on a 5% drop in revenues. Problems under the golden arches were global—sales were weak in China, Europe and the United States. Read more »

Bob Jones on the living wage

Yesterday Bob Jones gave his considered opinion on the living wage.

He has spent some considerable time talking to retailers about costs in their businesses, which led him to a discussion on wages and staffing:

My inquiry as to the best employees brought an unsurprising answer – new immigrants by a country mile. What particularly interested me was the salaries for what’s essentially menial work. In most cases they’re on the minimum wage. Any more and they’re out of business, he said, and I believe him.

I mention all of this in the context of the absurdly titled living wage clamour, the noise invariably coming from leftish critics not employing anyone, nor ever likely to. There are exceptions. Two leftie Wellington city councillors, respective owners of small city retail food businesses, led the charge recently for menial task council employees to be paid the so-called living wage. Inquiry however, revealed their own employees were on the minimum wage.

“We’d go broke,” they wailed when their hypocrisy was exposed. It was classic left do as I say, not as I do, double standards. Everyone benefits from a high wage economy as it increases spending power and thus the economy. But it also necessarily increases prices which no one wants to meet, thus shop assistants are the lowest paid sector in the work force, despite being one of the largest.   Read more »

Minimum/Living wage outrage

minwage

A reader emails

Have just been reading the article on Stuff about Aroha Ireland. [ and the Herald, and TV3 – running leftie sob stories for Labour and the unions in unison as we see time and time again ]

It became fairly obvious reading the piece that it was politically slanted and large parts likely not true (‘fleeing’ the country, and $38 per hour to work in a warehouse?!) However this is not what annoyed me the most. Read more »

Friday morning Mailbag – What do we look like to people overseas?

First, the obligatory “thank but no thanks” Herald letter

Dear Editor

I have now reached the point where I can no longer subscribe to a
newspaper that has sunk to such a low point in journalistic bias as
yours has over the last weeks.

Not content with publicising a left wing orchestrated media campaign
and actually setting aside a full page interview with Mr Hager, a
self-confessed user of stolen material, you have today allowed a
political campaign by the New Zealand Council of Christian Churches to
appear as an editorial item in the on-line issue under the spurious
headline of a survey on “How Well Off are You”.

Where is the balanced reporting that shows other statistics
demonstrating there has been no increase in the income gap since the
mid-nineties if this was indeed editorial? No, it is a political
advertorial that you have allowed on your “front page”.

Regards.
Graham [redacted]

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Want robots at McDonald’s? Hike the minimum wage

A reader in the US writes:

It’s been an interesting debate here with the usual rough and tumble of different layers of government, it’s a struggle to get the minimum wage to $10.25 an hour which is outraging groups on both sides.

Unlike back home the media provide both sides and then leave it to the viewer to decide. They will have the hard working fast food worker putting across their reasoned position then the small business owner who will have to let a staff member go if the wages are hiked. There is no screaming from a Helen Kelly and neither would the business community have someone as hopeless as the guy from BuisinessNZ either backing their argument.

It’s a compelling argument that if the minimum wage is too high someone won’t get the opportunity of that entry level job which allows them to gain skills and experience that allows them to move ahead. You get a real life view of what would happen if you pass that tipping point of pricing young people out of the labour market and it’s called 50% unemployment and a lost generation in Europe, compare that to the USA where young people in service industry jobs are generally happy to help and happy in life.

If you find yourself at 40 still on the same wage as your 25 year old boss it shouldn’t be up to the government to give you that pay rise…in fact that very same caring leftie government is a threat to you as they will price you out of a job which could end up being a terminal situation.

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