INCREASED MINIMUM WAGES VS UNEMPLOYMENT RATE

INCREASED MINIMUM WAGES VS UNEMPLOYMENT RATE

It’s like a decade down the line when nobody would think that customer service in the restaurant would be automated so that one would order food online without having to speak to the waiters. But now the reality is dawning on many employers like chevys Fresh Mex, California Pizza kitchen and chilli’s who have automated their services making their customers to order their food online. (Tritch,2014)

Though all these changes are the result of improvement in technology the motivation behind it is the state increase of minimum wages for employees making employees to rely on technology for cost minimization because the minimum is aimed to increase from $7.25 to $10.10. (Medina,2015)

Bill Gates, Microsoft co founder when interviewed  and asked whether he is supporting increase in minimum wage, he was for it in that this will create more market for restaurant automation machines. Though Bill Gates was right it is clear that automation of restaurant services began long ago in 1970s with coffee carafes and self serving soda machines. It is therefore evident that reduced technology cost coupled by customer preferences with policies stipulated by the government to increase minimum wages are the driving force behind automation of services in restaurants. This has led to gas station employees, telephone operators and bank tellers to loose their jobs. Restaurants like Applebee’s, chilli’s, Buffalo wild wings, Olive Gardens and Panera Bread have embrace this technology by installing tableside tablets for customers to order and pay their bills online. (Stilwell,2014)

With all these developments the negative part is that employment rate has fallen by 6% as reported in 2012 by the Bureau of labor statistics. Online ordering of food in many restaurants has replaced the work of many waiters and restaurant human cashiers like in the Macdonald that is planning to replace human cashiers with automated touch screen cashiers. Though automation of services is convenient to customers, many young people who used to provide those services end up remaining without jobs. When labor cost increases, employees choose to either increase service prices or look for means of reducing cost which is the result of automation for them to increase their profits. Cities like Santa Fe, San Francisco and eleven others had choose to increase minimum wage to almost $9 per hour posing cost challenges to employers leading them to look for alternatives like automation of services without reducing the quality of customer service. (Bolton,2014)The negative part of minimum wage increases is causing unemployment as evidenced when Wal-Mart that employs most people announced closing at least 150 stores in U.S. This was mainly done due to poor financial performance in restaurants due to increase labour cost of $9 per hour that led to reduced earnings per share and therefore minimum wage increases poses a challenge of closure of many companies in locations that are not profitable in order to remain competitive for example oarkland Calif stores which had a minimum wage of $12.55. Noel Gallo, a councilman gave a suggestion that lowering minimum wages will give a good start for creating businesses and reduction of closure of businesses or the worst cancellation of plans of opening more business stores like cancellation of opening stores in Washington DC by Wal-Mart because of minimum wage of $10.50.

Despite the many benefits automating customer service in restaurants poses the following challenges; it is confusing and impersonal, difficulty in building company culture, maintenance cost of information technology equipments, those with technical skills get jobs while those without technical skills end up having no jobs and malfunction of technology sometimes.(Wagner, 2014)(Lobosco,2015)

REFERENCES

1. Medina, Jennifer; Scheiber, Noam (May 19, 2015) “Los Angeles Lifts its Minimum Wage to $15 per hour” New Times
2. Tritch, Teresa (March 7, 2014) “F.D.R Makes the case for the minimum wage” New York Times
3. Bolton, Alexander (8 April 2014) “Reid punts on minimum wages hike” The Hill
4. Stilwell, Victoria (March 8,2014) “Highest Minimum-wage state Washington Beats U.S in Job creation”
5. Lobosco, Katie (2 December 2015) “Chicago hikes minimum wage to $13” CNN money
6. Wagner, John (February 11 2014) “ Maryland governor urges minimum-wage rise to $10.10 to help state’ s lowest-paid workers” The Washington Post.