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What I've Been Reading This Week: Minimum Wage Edition


Given the start of the year and several minimum wage hikes in cities, counties, and states across the country, I think it is fitting to dedicate this post to the topic.  I point readers in particular to the potential ramifications that are starting to come about from the minimum wage hikes, as employers are starting to look for new ways to cut back on rising labor costs.

As always, below are a couple articles that caught my eye this week.


An Overview of the Minimum Wage Hike in California

Raul Zermeno wrote a comprehensive overview earlier this week that breaks down the minimum wage hike in California.  While the first increase to the hourly wage went into effect on January 1st of this year, some might not be aware that there will be additional increases to the hourly wage rate every January 1st until 2022.  As Raul notes, to make things even more complicated, the statewide hourly wage rate does not impact higher local minimum wage rates...thus some local ordinances will have higher wage rates than elsewhere in the state.  Confused?  Not sure what rage rate applies for a given area of California?  Refer to Raul's article for more information.



Recently, Red Robin (a popular restaurant chain), announced that it was getting rid of bus boys in its restaurants in an effort to cut back on rising labor costs.  The estimated savings by eliminating this position?  Approximately $8 million this year alone.  This comes on the heals of the chain eliminating expediters (employees that plate food in the kitchen) last year and realizing a savings of nearly $10 million.  I think this sort of job cutting was inevitable as employers struggle to pay rising labor costs.  While some employers have passed these costs along to customers (in the form of higher meals, service charges, etc.), others, such as Red Robin, are simply cutting positions.  Something tells me Red Robin will not be the last company that chooses to go this route...



This article dovetails nicely with the above note on Red Robin cutting positions in an effort to combat rising labor costs.  Dan Walters at The Sacramento Bee wrote an article this past Sunday that posited that with states (namely California) raising minimum wage rates, employers might be starting to turn to automation of positions in an effort to keep labor costs down.  To further the point, Dan points to a McDonalds restaurant that has utilized a robotic kiosk to take orders from customers, Amazon starting to implement automation at its warehouses, and labor intensive positions in the agriculture industry using automation to try to keep labor costs low.  Something tells me that as labor costs continue to rise, employers will continue trying to find more ways to keep these costs low, whether it be through automation or some other cost cutting venture.

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