Employment typically lags policy, and stores will prefer to raise prices than potentially reduce their ability to service customer needs. However, the higher the minimum wage goes, the more attractive replacements for workers become, meaning there will be more investment into kiosks and other ways to reduce headcount.
I think we’ll really see how things will work in the next economic correction when stores cut costs to retain customers. So I’m less interested in data from a couple months after the policy change (basically the Berkeley study) and more interested in data 2-5 years after the change. Will fast food companies increase the pace of developing digital replacements for workers?
I don’t have a link handy, but there was a study that showed that fast food businesses didn’t reduce staffing when they replaced cashier’s with kiosks. Rather, they shifted employment to areas that couldn’t be replaced with a kiosk, enabling the staff to meet the increased demand and increased sales that were a result of the kiosks.
Which is just “reduced staffing” in different words. If the kiosks weren’t there, they would have hired more workers, built more restaurants, etc. But they opted for the kiosks because they were cheaper than expanding hiring.
That’s not necessarily a bad thing, but I think it’s something that a lot of studies downplay. They instead focus on job loss instead of lack of job growth (i.e. we expect more employment every year as population increases).
And there absolutely is a breaking point where we’ll see job loss, as in the risk of reduced business from crappy customer experience is worth the cut in jobs, and it’s unclear where exactly that breaking point is. Maybe we’ve hit it, idk, I expect these types of things to lag policy changes by a few years because it takes time for innovation to happen. But once a company can successfully reduce headcount w/o reducing revenues significantly, we’ll see other companies jump on board, and that will happen sooner the higher we push minimum wages.
Which is just “reduced staffing” in different words. If the kiosks weren’t there, they would have hired more workers, built more restaurants, etc.
Except the study specified that the increased sales were related to the presence of the kiosks. They could do point of sale promotions that just weren’t reliably done if a person was in between the customer and the computer.
Research has found that increasing minimum wage does not reduce jobs.
https://www.epi.org/blog/most-minimum-wage-studies-have-found-little-or-no-job-loss/#:~:text=Most minimum wage studies have,job loss | Economic Policy Institute
https://sp2.upenn.edu/study-increasing-minimum-wage-has-positive-effects-on-employment-in-fast-food-sector-and-other-highly-concentrated-labor-markets/
https://www.forbes.com/sites/adigaskell/2023/05/20/does-raising-the-minimum-wage-result-in-job-losses-in-small-firms/
https://www.americanprogress.org/article/higher-minimum-wages-support-job-growth-economy-recovers-covid-19/
https://irle.berkeley.edu/publications/press-release/new-study-analyzes-impact-of-californias-20-minimum-wage-for-fast-food-workers/
Employment typically lags policy, and stores will prefer to raise prices than potentially reduce their ability to service customer needs. However, the higher the minimum wage goes, the more attractive replacements for workers become, meaning there will be more investment into kiosks and other ways to reduce headcount.
I think we’ll really see how things will work in the next economic correction when stores cut costs to retain customers. So I’m less interested in data from a couple months after the policy change (basically the Berkeley study) and more interested in data 2-5 years after the change. Will fast food companies increase the pace of developing digital replacements for workers?
I don’t have a link handy, but there was a study that showed that fast food businesses didn’t reduce staffing when they replaced cashier’s with kiosks. Rather, they shifted employment to areas that couldn’t be replaced with a kiosk, enabling the staff to meet the increased demand and increased sales that were a result of the kiosks.
Which is just “reduced staffing” in different words. If the kiosks weren’t there, they would have hired more workers, built more restaurants, etc. But they opted for the kiosks because they were cheaper than expanding hiring.
That’s not necessarily a bad thing, but I think it’s something that a lot of studies downplay. They instead focus on job loss instead of lack of job growth (i.e. we expect more employment every year as population increases).
And there absolutely is a breaking point where we’ll see job loss, as in the risk of reduced business from crappy customer experience is worth the cut in jobs, and it’s unclear where exactly that breaking point is. Maybe we’ve hit it, idk, I expect these types of things to lag policy changes by a few years because it takes time for innovation to happen. But once a company can successfully reduce headcount w/o reducing revenues significantly, we’ll see other companies jump on board, and that will happen sooner the higher we push minimum wages.
Except the study specified that the increased sales were related to the presence of the kiosks. They could do point of sale promotions that just weren’t reliably done if a person was in between the customer and the computer.