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Why a $15 minimum wage is exactly what small businesses need

Why a $15 minimum wage is exactly what small businesses need
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Back before the pandemic, many small business owners I know were inundated with requests from their employees to work from home. And many of them resisted.

Well, the pandemic changed that. Business owners, forced by government shutdowns and fear of the virus, sent their employees home to work. And guess what? They did. "I admit I was wrong," one client recently told me. "If there's anything positive that's come out of this ordeal, it is that I've realized that working from home is a viable option for my employees, and a good benefit to provide." This development wasn't ground-breaking. The technology already existed. The pandemic merely accelerated a trend that was already taking place.

Something similar will happen if Congress raises the federal minimum wage to $15 per hour. I say, please do it and do it as fast as possible. Why? Because a higher minimum wage is the medicine that small businesses need. Like working from home, this legislation will force us all to do what we should have been doing in the first place: Get rid of our unskilled hourly employees and replace them with technology.

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Because that is what will happen. A higher minimum wage will cause a significant bump in our overall compensation costs. It won’t just be entry level. When you raise the minimum, all wages will eventually need to be increased correspondingly to keep levels on par.

So how do you think small business owners will respond? Will they run their businesses at a lower income level? Will they shut down? Perhaps, some will. But most will respond as entrepreneurs have responded for thousands of years. They will pivot. They will innovate. They will find a way to get their products and services out the door less expensively and more profitably. And they will do this with technology. Technology that already exists and will come down in price as the demand for it skyrockets.

Grocery stores will reduce their staff and automate like Amazon Go, allowing shoppers to pick a product off the shelf, scan with their phone and leave, with inventory levels monitored by sensors and automatically re-ordered. 

Retail stores will add more self-service kiosks and bring in robots with cute names like “Marty” (Giant Food Stores) and “Pepper” (Softbank Solutions) to answer questions, give directions, clean up messes and check on products. They will also install automatic biometric scanners and facial recognition devices like these to provide security and reduce shoplifting. Customers will be enticed to make more use of their mobile apps to get questions answered and get recommendations instead of asking a bored sales clerk making $15 an hour. Sellers of cars and real estate will send augmented reality headsets like Microsoft’s HoloLens 2 to prospective customers where they can get the full experience and make buying decisions without a salesperson. 

Restaurants will install robotic chefs like Miso Robotic’s Flippy that can flip burgers and operate a deep fryer; or use Autec Inc.’s Maki Maker ASM865A, which "produces rice sheets of various thickness and sizes for sushi rolls, sushi burrito, sushi pizza, sushi taco and more”; or a fully functioning "robotic restaurant" like the one opening in Illinois that will essentially embody 10 restaurants by providing pizza, burgers, chicken wings, Italian, Portuguese, Mediterranean, Indian, Chinese, Thai and Mexican food, all cooked up using “Chef Nala,” an AI-driven robot. They will use cleaning robots, which will probably do a better job than their employees. They will certainly continue to leverage self-ordering and self-paying apps to minimize wait staff involvement and, therefore, minimize wait staff.

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Manufacturers will terminate their line workers and replace them with robotic arms like the ones made by Universal Robots. Warehouse managers like those at logistics company DSV will use drones to check on inventories while others will deploy driverless, autonomous forklifts like the ones made by Mitsubishi Logisnext  to find, retrieve and deliver items.

More small businesses will leverage artificial intelligence solutions already available by many software companies to automatically and without human involvement answer customer questions, follow up on sales calls, send sample products and check on the status of orders in process. Publishers will lay off staff in lieu of automatic story-generators.

The firms that make all of these technologies are very careful to say that these things won’t “replace” workers. They’ll just “enhance productivity” or “work alongside” existing staff.  That’s baloney. This stuff will absolutely replace workers. And what a delight this will be for many of us. 

Why? Because we won't have to pay as much for health insurance or put away as much money for someone else's retirement. We will no longer be frustrated as frequently when someone doesn't show up to work as promised. We will happily deal with less drug problems and fights on our premises. Work scheduling, union organization, safety issues and payroll forms will be much less of a concern. We will be able to spend more time serving our customers and less time worrying about discrimination, harassment or other misbehaviors. 

With a $15 an hour minimum wage, tomorrow's small businesses will have fewer employees, more technology, higher profits, fewer headaches and less stress. Like working from home, we've resisted doing this so far because many of us are too lazy or risk-averse. We've managed to eke out our profits and continue to do things the old way despite these rising costs. We’ve been reluctant to invest in new technologies. But that won't be the case going forward. We will do what we have to do in order to continue to make money and provide for our families. 

Gene Marks is founder of The Marks Group, a small-business consulting firm. He frequently appears on CNBC, Fox Business and MSNBC.