Rise of the machines
We’ve been blogging about the push to raise the minimum wage to $15 and the correlation with the rise of automated kiosks since 2014. Fast forward two years and the machines have won.
I blogged in 2014:
This is all basic economics, really. As costs of labor increase, the added cost must be offset. In order to satisfy operating costs, produce a product consumers want to purchase, and still turn a profit, it’s perfectly reasonable for a company like McDonald’s to look for cost-cutting alternatives. As Forbes pointed out, the added pressure to increase wages only serves to expedite technological solutions.
The pursuit of a “living wage” comes at a high price — countless jobs have been lost to newfangled technological overlords and businesses with small profit margins have shuttered nationwide. Neither were giants in the fast food industry immune to the $15 minimum wage disease.
Ed Rensi, the Former President and CEO of McDonald’s explained:
Let’s start with automation. In 2013, when the Fight for $15 was still in its growth stage, I and others warned that union demands for a much higher minimum wage would force businesses with small profit margins to replace full-service employees with costly investments in self-service alternatives. At the time, labor groups accused business owners of crying wolf. It turns out the wolf was real.
Earlier this month, McDonald’s announced the nationwide roll-out of touchscreen self-service kiosks. In a video the company released to showcase the new customer experience, it’s striking to see employees who once would have managed a cash register now reduced to monitoring a customer’s choices at an iPad-style kiosk.
Of course, not all businesses have the capital necessary to shift from full-service to self-service. And that brings me to my next correct prediction–that a $15 minimum wage would force many small businesses to lay off staff, seek less-costly locations, or close altogether.
Most McDonald’s stores are franchised and only rake in (on average) a profit of about $150,000 per year, so it’s easy to see how a huge wage hike rapidly eats away at a meager profit margin.
Perhaps the biggest issue with the counter-argument is that it contends entry-level jobs like that of a McDonald’s cashier is meant to provide for an entire family long-term. Maybe this is a generational difference, but we always understood that those types of jobs were great beginner gigs or extra income opportunities, but certainly not a career.
McDonald’s echoed this “first job” sentiment in one of their latest commercials.
Wendy’s too is embracing the digital cashier for the same reasons. Sadly, “would you like fries with that?” may soon be swept into the dustbin of cultural memory.
For more on how the $15 wage hike impacts business, see here:
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