McDonald's will install self-serve kiosks at locations nationwide
In light of several cities passing $15-an-hour minimum wage laws, McDonald's will install self-serve kiosks at many locations around the country. Wendy's has already gone the automated ordering route, and the fast food outlets are seriously considering it.
Supporters of the $15 hourly wage claim that few jobs will be lost as result of automation. They say the self-serve kiosks will make workers more efficient in dealing with the ordering process. That may be true (as explained here). But the near doubling of the minimum wage in most cities will be done incrementally, ostensibly to soften the blow to businesses. But that kind of thinking ignores the flash point where labor costs cannot be compensated for by raising prices. Eventually, something is going to have to give.
It’s not just McDonald’s that has embraced job-replacing technology. Numerous restaurant chains (both quick service and full service) have looked to computer tablets as a solution for rising labor costs that won’t adversely impact the customer’s experience. Eatsa, a fully-automated restaurant concept, now has five locations—all in cities or states that have embraced a $15 minimum wage. And in a scene stolen from The Jetsons, the Starship delivery robot is now navigating the streets of San Francisco with groceries and other consumer goods. The company’s founder pointed to a rising minimum wage as a key factor driving the growth of his automated delivery business.
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.
Tragically, these stories—in California in particular–are too numerous to cite in detail here. They include a bookstore in Roseville, a pub in Fresno, restaurants and bakeries in San Francisco, a coffee shop in Berkeley, grocery stores in Oakland, a grill in Santa Clara, and apparel manufacturers through the state. In September of this year, nearly one-quarter of restaurant closures in the Bay Area cited labor costs as one of the reasons for shutting down operations. And just this past week, a California-based communications firm announced it was moving 75 call center jobs from San Diego to El Paso, Texas, citing California’s rising minimum as the “deciding factor.” (Dozens of additional stories can be found at the website FacesOf15.com.)
Other states are also learning the same basic economic lesson: Customers have a limit to what they will pay for service. Voters in Washington, Colorado, Maine and Arizona voted to raise minimum wages on Election Day, convinced of the policy’s merits after millions of dollars were spent by union advocates. In the immediate aftermath, family-owned restaurants, coffee shops and even childcare providers have struggled to absorb the coming cost increase—with parents paying the cost through steeper childcare bills, and employees paying the cost through reduced shift hours or none at all.
Automating the order process is only the beginning. Any repetitive task will eventually be done by robots. Most orders at future fast food restaurants will be filled by machines that place the burgers on the grill, flip them, place them on a condiment-laden bun, automatically fill the drink order, and send the finished product to a worker who will either bag it for carryout or put it on a tray for in-strore consumption. This is the future. And while it will take a sizable capital investment to buy the machines, they will pay for themselves in a couple of years.
People who support the "Fight for Fifteen" wage believe in magic. At the very least, they are ignorant of basic economics. Will they turn on organized labor when it becomes clear that unions had lied to them? No doubt they will blame "greedy franchise owners" for their predicament instead.