Beating minimum wages by outsourcing the jobs

 

Yesterday we spoke about how California's very high minimum wage for restaurant and fast-food workers was driving some of those establishments out of business.  It seems a New York restaurant chain has found an alternative - and much cheaper - solution.

A new restaurant chain in New York City is outsourcing staff to the Philippines, using screens with hostesses on Zoom calls instead of in-person employees to greet customers and help with check-out.

The shops — which specialize in fried chicken and ramen — are taking advantage of the massive wealth gap between New York City, where the minimum wage is $16 per hour and a Southeast Asian nation where hourly pay is closer to $3.75.

But when customers check out at Sansan Chicken, Sansan Ramen, or Yaso Kitchen — with locations in Manhattan, Queens, and Jersey City — they’re still prompted to add a tip of up to 18% on top of their bill.

. . .

The dynamics of the operation seem to be cloaked in secrecy. It’s not clear if the hostesses work for the restaurant or a third-party company that hires them out.

It’s also not clear who owns the restaurants, and how much the hostesses are getting paid.

The Post could not reach the businesses’ owner, and employees would not divulge information about their bosses when a reporter asked.

There's more at the link.

That's certainly a win, cost-wise, for the restaurant chain;  even accounting for the cost of trans-Pacific Internet links and computer hardware, they must be saving well over 50% on staff costs.  It's probably also a win for the staff in the Philippines, who at least have steady employment at a local wage that can support them - although I'm sure they'd prefer to earn closer to the New York City mandated wage and salary scale.  As for the customers?  I'm not sure I'd like to deal solely with a screen for a sit-down meal, as opposed to a live human being.  However, others may think differently about that.

What is certain is that this is yet another nail in the coffin of entry-level jobs, which have traditionally offered first employment to young people starting out to earn a living.  Mandating a minimum wage too high for businesses to afford means they're going to switch to something they can afford, and in this case that means removing several dozen jobs from the local market.  Other restaurants and fast food chains are moving towards robots to prepare the food and take orders for it, with only minimal human staffing to keep the robots supplied with ingredients and periodically clean up the place.  Again, those jobs are lost to the local market, and I don't see them coming back.

One wonders what the millions of illegal migrants streaming across our borders are going to do when they can't find employment, due in part to such jobs no longer being available.  One also wonders what our government - federal, state and local - is going to do to contain the resulting unrest and social upheaval.  Are they blithely going to pay all those migrants enough money to live on, while ignoring the plight of American poor?  At the moment, it certainly looks that way.

There's a thought . . . send your teenagers to Mexico when they graduate high school, and tell them to cross back into the USA on their own two feet, having destroyed their identity documents.  They'll be given a smartphone, a ticket to the destination of their choice, and a pretty significant amount of money, plus free health care and low-cost education.  It may not be fair to those who prefer to do things the old-fashioned way, but your family budget will look a whole lot healthier!

Peter