Large Businesses Are Using Technology To Dodge Minimum Wage Hikes
DES PLAINES, IL - FEBRUARY 15: French fries sit on a table at a McDonald's restaurant February 15, 2006 in Des Plaines, Illinois. McDonald's announced February 13 that their french fries contain potential allergens from both wheat and dairy ingredients used to add flavor. (Photo Illustration by Scott Olson/Getty Images)
Scott Olson via Getty Images

Since the inauguration of President Biden, lawmakers — both Democratic and Republican — have introduced a swath of proposals to increase the minimum wage.

Beyond Democrats’ attempts to include a provision in the American Rescue Plan to boost the minimum wage, Senate Budget Committee Chairman Bernie Sanders (I-VT) introduced “an amendment to take tax deductions away from large, profitable corporations that don’t pay workers at least $15 an hour.”

In February, Sen. Josh Hawley (R-MO) proposed a minimum wage hike for companies that make over $1 billion in revenue: “Mega-corporations can afford to pay their workers $15 an hour, and it’s long past time they do so, but this should not come at the expense of small businesses already struggling to make it.” Meanwhile, Sen. Mitt Romney (R-UT) and Sen. Tom Cotton (R-AR) suggested raising the minimum wage to $10 per hour by 2025.

Amid pressure from lawmakers and activists, many large companies are promising to boost wages for their employees.

For one, Amazon announced in April that it would increase wages by “at least 50 cents and $3 an hour” for more than half a million employees. The e-commerce giant touted the move as an addition to its “already industry-leading starting wage of at least $15 an hour and the more than $2.5 billion that we invested last year in additional bonuses and incentives for front-line teams.”

For another, McDonald’s revealed in May that it will boost “hourly wages for more than 36,500 hardworking employees at McDonald’s-owned restaurants by an average of 10 percent.” The entry-level rate for crew members will rise to “at least $11 – $17 an hour” — an action that furthers the chain’s commitment to “offering one of the leading pay and benefits packages in the industry.”

Even as they posture a willingness to benefit their employees through competitive wages, both firms are simultaneously testing technologies that would replace low-skilled staff.

Two months after its wage hike, Amazon opened a store featuring “cashierless checkout technology” in Washington state. As customers who visit the Amazon Fresh store “Just Walk Out” with their items, the building’s technology will automatically track the products and charge the user’s Amazon account. The store will also feature Alexa kiosks and Amazon package pickup.

McDonald’s likewise began pioneering voice-automated drive-thrus in the Chicago area. Executives expect that the technology will appear across the United States within the next five years.

Both firms’ seemingly contradictory actions — raising wages while preparing the technology that will soon enable mass layoffs — perfectly reflect federal analysts’ warnings about the labor market distortions caused by minimum wage hikes.

For instance, a recent study from the Congressional Budget Office proved that although President Biden’s $15 minimum wage plan would increase salaries for 900,000 Americans, it would leave 1.4 million unemployed.

In keeping with the decades-long trend of technological unemployment, the embrace of low-cost technology — accelerated by legislative pressure to raise wages — will continue to displace American workers.

Ben Shapiro said as much in a recent episode of Debunked: “Because low wage jobs are still cheaper than implementing that technology, people still have jobs. But at a certain point, when you artificially raise the price of labor, the machinery becomes cheaper than the jobs. And at that point, you’re going to see workers replaced entirely across wide swaths of the American economy.”

Or, in the words of Thomas Sowell, “the real minimum wage is always zero.”

The views expressed in this opinion piece are the author’s own and do not necessarily represent those of The Daily Wire.

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