With even GOP Governor Arnold Schwarzenegger of California calling for a $1 an hour increase in his state’s minimum wage, political momentum has clearly shifted in favor of the unions pushing similar hikes in other states. About half of Americans live in 17 states where mandatory hourly wages exceed the federal government’s minimum of $5.15 an hour. Proposals to add Ohio and Nevada to that list will be on the ballot this year.
Economists have long known that only a few people try to support a family on a minimum-wage salary, and that hikes in the minimum wage reduce opportunities for entry-level and unskilled workers. That’s why California State Senator Tom McClintock calls the minimum wage the worst tax ever on the "disadvantaged teens of California."
Indeed, fast-food outlets and other businesses may have come up with a way of outflanking state efforts with automation. Some McDonald’s franchisees are discovering they can provide better service and shorter waiting times at a lower cost by having call centers in another state take a customer’s order through a speaker phone equipped with a digital camera. Thanks to specialization, call center workers are more accurate and faster in filling customer requests such as holding the pickle or the lettuce. They also are skilled at convincing customers to "order up" and spend more, thus making them cheaper overall than on-site teenage workers.
Restaurant analysts expect call center use to spread in California if the minimum wage goes up there. In neighboring Oregon, the minimum wage is $7.25 an hour and automatically indexed for inflation. Not surprisingly, the McDonald’s in Hermiston, Oregon, near where my sister lives, outsources its drive-through orders to a call center in North Dakota. Those workers are paid about the same but have much higher productivity.
Customers aren’t the only winners from the change in work venues. Call center workers also like the outsourcing. "I don’t have to make the hamburgers, I don’t have to smell like it," Mindy Mazerall, who works in a call center in Colorado that handles orders from McDonald’s restaurants in Minnesota, told Voice of America. "I can dress casual and sit on my butt. I don’t have to work as hard."
The only clear losers are the would-be teenage burger-flippers. "Why is it better for a teen not to have a job at $7.00 an hour than to have one at $6.00 an hour?" asks Senator McClintock. Now there’s a question Governor Schwarzenegger, who professes to be a devotee of Milton Friedman, should be asked.
— John Fund