Wage laws spur stores to offer customers more self-serve
More than 1 million more Americans have shopped online than have shopped in-store so far this holiday season, according to a survey from the National Retail Federation. Who can blame them?
It takes far less work to touch your iPad screen than it does to drive to the nearest shopping mall. It's also a more enjoyable experience: Instead of waiting for an employee to answer your question or waiting in line at a register, your shopping needs are handled with the click of a button.
These might be conveniences, but they're conveniences that used to be part of someone's job description.
Consider: Over the last decade, Bureau of Labor Statistics data show that there's been a nearly 28 percent increase in the number of department stores in the U.S. (More than half of brick-and-mortar holiday shoppers this year have visited one, according to the National Retail Federation.) At the same time, the number of people employed by department stores has dropped by 15 percent.
To put this is context, department stores employed an average of 137 employees per store in 2005; today, that average is 91 employees. From Macy's to Target to Walmart, some of the country's most recognizable retailers are embracing self-checkout lanes or digital kiosks where the customer can find, price-check or pay for their item without human interaction. Holiday shoppers that stopped in at a restaurant like Panera or McDonalds for a mid-morning meal may have encountered a similar dynamic, as iPad-style computers take the place of cash registers (and the cashiers who work them.)
It's easy to write these changes off to the inevitability of technological progress, but steep increases in the cost to hire and train entry-level employees also play a role. The federal minimum wage rose by 40 percent between 2007 and 2009; states have subsequently raised their minimum wages, and a handful of cities have embraced entry-level compensation packages of up to $30,000 per year full-time.
Retail and service-industry businesses faced with these cost increases can't simply raise their prices: Restaurant customers can always opt to stay home, and brick-and-mortar retailers have online-only competitors who don't face the same labor cost dynamic. Instead, they've embraced automation, letting computers (or customers themselves) handle a job that was once the province of a young adult or other entry-level employee.
These jobseekers are having a tough enough time as it is. Despite improvements in the broader labor market in recent years, the youth unemployment rate in Michigan still averages 17 percent. Nationwide, there are still about 25 percent fewer young employees working than there were before the Great Recession.
The current upward trend in minimum wage demands suggests this problem will get worse before it gets better. Democratic presidential candidate front runner Hillary Clinton supports a $12 wage floor. Replicating Congressional Budget Office methodology, economists from Trinity University and Miami University recently found that 30,266 jobs would be lost in Michigan if the federal minimum wage were increased to $12.
These job loss figures would only be compounded at the $15 minimum wage ($30,000 per year full-time) currently demanded by labor unions. For a sneak peek at our future, take a look at the West Coast cities that have already embraced dramatic wage mandates. A number of popular restaurants and other small businesses have either gone out of business or scaled back on employee opportunities in cities such as Seattle, San Francisco, and Oakland, Calif., with owners citing current or planned municipal minimum wage increases as the driving reason. (Specific stories can be found at Facesof15.com.)
Just like most children one day discover that their holiday presents weren't delivered by a jolly man in a red suit, it's time for policymakers to wake up and realize that they're partially to blame for our computerized Christmas.
Michael Saltsman is research director at the Employment Policies Institute, which receives support from restaurants, foundations and individuals.