As fast food employees push to increase the minimum wage, the former CEO of one chain warns that could be counterproductive.
That is because the robots are not only coming, they're already here. Big corporations in key industries have begun replacing humans with automation in a way that negates the need to pay bigger salaries, or even improve work conditions.
"Automation is coming, but there's no reason to rush it," Andy Puzder, the former chief of CKE Restaurants, told CNBC's "On the Money" in an interview.
"The problem at the retail level is when you increase the cost of labor it accelerates the implementation of automation," said Puzder, who in the past has said automation is part of the future of low-skilled labor, even as he backed human-based customer service in a Wall Street Journal editorial last year.
Recently, the retail sector has been hammered by job losses. The man who was President Donald Trump's first choice for Labor Secretary explained to CNBC that "you've got two pressures coming in to retail businesses. One is business is down because people are doing things online. Two, the cost of staying in business, the cost of labor, is going up."
Until last month, Puzder was CEO of CKE Restaurants, the parent company of burger chains Hardee's and Carl's Jr. The bulk of jobs at fast food restaurants are lower paid, often minimum wage positions.
Last December, Trump nominated Puzder for Labor Secretary, yet Puzder withdrew from consideration under pressure on February 15th.
"You can only be confirmed if you have 51 votes," Puzder explained to CNBC when he lost support of 4 Republicans, those defections put him under the threshold for confirmation. "I didn't want to tilt at windmills if I wasn't going to win there was no need to stay in the process. And so I dropped out."
Puzder, who in the past has taken heat for his seemingly eager embrace of automation, said that "you need to keep the cost of entry level jobs low, so businesses aren't incentivized to replace those jobs with automation."
Meanwhile, restaurant chains are re-thinking their approach to labor. McDonalds, Wendy's and Panera Bread have all introduced tablets, or self-serve kiosks used for customer orders.
"People need these entry level jobs while we train the labor force for a twentieth century economy," Puzder said. "The Department of Labor could be a big part of that, and it's something I would have pushed had I been confirmed."
The former CEO, however, added a word of caution about how enthusiastically businesses should embrace automation. "We need to be very careful what we're doing here. We're taking a whole generation of kids and not allowing them to get on that ladder of opportunity," he said. "They're not making that first step and that's going to be a very big problem as we go forward."
Puzder, whose first job was at a Baskin-Robbins ice cream store, said that "those entry level jobs mean a lot."
Amid a raging debate about hiking the minimum wage, Puzder said that "a job can only pay what it produces in economic benefit. It's not that people should or shouldn't get a living wage. We'd love to pay everybody a living wage," he added. "But certain jobs only pay a certain amount of money."
With that being said, "if your job is replaced by a machine or by some form of automation, the minimum wage is zero. You don't have a job."
On the Money airs on CNBC Saturday at 5:30 am ET, or check listings for air times in local markets.
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