Sylvain Charlebois is the dean of the Faculty of Management and professor in food distribution and policy at Dalhousie University.
The minimum wage is rising in many parts of North America. Ontario announced that it would raise its minimum wage to $15 an hour, to match Alberta. In the United States, the push for a higher minimum wage began in 2013, when brave fast-food workers in New York walked off their jobs. This movement, known as Fast Food Forward, was directed at fast-food chains, but has garnered political attention across the United States.
To date, several cities and the entire state of New York have adopted minimum wages for various workers. In fact, San Francisco will become the first city in the United States to have a $15-hour minimum wage, in 2018. Vermont, Hawaii and a few other states are also gearing up to pass a $15 minimum wage next year.
Implications of this change for the agriculture, food processing, retailing and even food-service sectors will be momentous. Alleviating poverty and wealth redistribution are certainly key drivers, but beyond the politics, there is much more to it than just wanting to improve conditions for the working class.
Let's start with farming. Agriculture is becoming more digitized. Drones are used to spread the proper amounts of fertilizers. Cows are milked by machines throughout the day. Many industrialized farms in poultry and eggs have one worker – who likely makes more than $15 an hour – to ensure that the information systems remain in working order. For Canadian agriculture to maintain competitiveness, change is inevitable. In fact, to keep workers in rural Canada, higher wages are necessary.
In food processing, where working conditions are at times much less enviable, most workers earn more than $15 hourly already. Such a threshold won't make much of a difference. Automation and business analytics are making inroads in this sector. Required skill sets are changing and employees need to be trained for optimal usage of state-of-the art technologies. Companies will capitalize their operations only if they have the right people to use newly acquired assets, and that tends to cost more money, and translates into higher wages. A $15-an-hour minimum wage will likely not put more pressure on operational costs for the near future. In fact, it may entice these sectors to adopt new technologies sooner.
Retailing, however, is different. It's estimated that about 26 per cent of workers in food retailing and hospitality in Canada earn wages much lower than $15 an hour. Many small and medium-size enterprises and specialty stores rely on a lower minimum wage to keep a decent level of service. Small enterprises and startups, often credited for being the job-creation engine in our economy, will struggle with this new constraint.
Larger outfits and some restaurant chains have anticipated this wage increase for some time. But for most consumer-interfacing food businesses, a $15 minimum wage will become an impediment to growth.
For the workers themselves, a higher minimum wage is a double-edged sword. Several studies suggest that higher minimum wages will discourage small enterprises from creating jobs. Students, along with many retired boomers who need extra cash, are working in these jobs. Moving too quickly on the minimum wage could very well penalize those who governments are trying to help.
But what needs to be underscored is the seismic shift currently affecting the food industry. The $15-an-hour fight is a provisional solution to a complex issue. The effects of artificial intelligence and the rise of the digital world will force us to rethink how we produce, process and distribute food. And humans may have very little to do with it. At least, much less than today. Some estimates suggest that more than half of the work force involved in food businesses could disappear within the next 30 years because of AI.
AI will change the food-industry landscape to farms without farmers, processing plants using robotics, distribution centres operating barely without anyone in them and restaurants becoming more automated. Given its capital-intensive nature and its risk-mitigating infatuation, the food industry is likely to embrace the consistency provided by AI.
We might be better off to put minimum-wage politics aside and envision what the landscape will look like a few decades from now. What is really at stake is the human face of food retailing and service, and how we provide a decent living to those affected by the next technological revolution.