Franchise Update Magazine Issue III, 2016 | Page 22

MINIMUM WAGE, continued
profit per worker. These are companies
primarily in the banking, telecommunications, oil and gas, and technology industries and don’t generally recruit a lot
of unskilled, entry-level minimum wage
workers. The average profit per worker
for the 14 franchisors included in the Fortune 500 is only $5,625. These companies
are primarily in the restaurant and hotel
industries and are the major employers
of minimum wage workers. Even if you
transferred 100 percent of their profit per
worker directly to the low-wage employee,
it still would not be sufficient to achieve
a solution, nor would it be sustainable.
Without a doubt many low-wage workers are part of the problem that is causing
their lack of marketability at higher pay
scales because of their lack of education,
training, skills, job history, and other factors. An increase in the minimum wage
is not going to fix these foundational
problems. Raising the minimum wage is
not economically viable unless you offset the increased labor cost with a dramatic increase in prices, and that does
not work unless you discount the losses
in consumer transactions. What will be
achieved is fewer new jobs created, fewer
existing jobs and hours available, and acceleration of technology to further reduce
the need for labor. At best we will be left
with higher wages for some and a higher
level of permanent unemployment and
underemployment for others, resulting
in generational poverty.
Personal service type labor will not
be immune. The TSA will soon be using
biometrics to shorten lines at airports,
improve security, and reduce staff. We
already have fewer airline staff checking
us in for flights, and biometrics will soon
be used to speed onboarding with fewer
staff required. Quick service and fast casual restaurants are already adopting tablets for ordering and payment to reduce
counter and wait staff. Nurses and home
health care workers are being replaced by
telemedicine practices. Hotels are offering
discounts if you do not need your rooms
serviced daily, and sin