McDonald’s counters Fight for $15 with automation nationwide

November 30, 2016
By Joe Kaiser

Calls for a minimum-wage hike nationwide and in Illinois are increasingly met with businesses’ use of technology to cut costs.

As the Fight for $15 campaign, led by the Service Employees International Union, or SEIU, protested for higher wages again Nov. 29, McDonald’s continued to unveil self-service kiosks throughout the country to counteract costly wage mandates.

McDonald’s announced Nov. 17 it was expanding its digital self-serve ordering stations to all of its 14,000 restaurants nationwide. This new automation is something a McDonald’s location in Chicago’s Loop has been testing for months.

Chicago was one of hundreds of cities worldwide where the Fight for $15 campaign held strikes and protests Nov. 29, as well as April 14. If protestors stopped by the McDonald’s at Adams and Wells in Chicago, though, they would have met their replacement – an automated McCafé kiosk.

That store, which is anticipating Chicago’s minimum-wage increase to $13 an hour by 2019, has been testing out coffee kiosks in the restaurant instead of having employees serve it. The kiosk features a touch-pad for ordering and paying. The screen also prompts customers to answer questions about their kiosk experience, giving the impression this is something that could be adopted as an alternative to hiring – and something McDonald’s is now taking seriously with the nationwide rollout of them. This kind of automation, which replaces a human employee with technology, is one of the unintended consequences of Chicago’s minimum-wage increase – which the Cook County Board recently extended to suburban neighborhoods, too.

It may not just be a coffee machine either. Cary, Ill. features the nation’s first drive-thru-only Burger King, which saves on labor costs. Other McDonald’s locations have used self-service kiosks with touch-screens for paying. And while self-serve kiosks don’t seem too unusual, San Francisco-based Momentum Machines has created a robotic hamburger-making machine the company claims can produce 400 high-quality burgers in an hour with minimal human supervision.

A robot making a hamburger sounds a bit absurd, but the desire to circumvent artificially set wages certainly isn’t.

California and New York are the next two states that could see a loss in low-wage jobs, with both states recently passing statewide minimum-wage laws. California’s minimum wage will increase to $15 over the next six years, while New York’s will increase to $15 by 2018. While this will mean that some workers will see an increase in their wages, many will lose their jobs altogether. California Gov. Jerry Brown, who signed his state’s minimum-wage hike into law April 4, admitted, “Economically, minimum wages may not make sense.” Yet Brown still caved to those pushing a policy that will cut young and inexperienced workers from his state’s workforce.

Young, inexperienced workers who rely on finding minimum-wage jobs are already having a hard time. In Chicago, approximately 1 in 10 black teenagers ages 16 to 19 are employed, according to data from the U.S. Census Bureau, reported in new research from the University of Illinois at Chicago’s Great Cities Institute. And the employment rate for Chicago Latinos ages 16 to 19 has plummeted by 42 percent since 2005 – with only 15 percent employed in 2014.

The trend carries over nationwide. In 2015, 16.9 percent of those ages 16 to 19 nationally were unemployed, compared with just 5.3 percent of all ages. This particularly hurts minority communities, with 28.4 percent of blacks ages 16 to 19 unemployed, versus 9.6 percent of black workers overall. And those numbers would get worse with a national increase in the minimum wage. A 2014 report from the Congressional Budget Office estimated that, if implemented then, between 500,000 and 1,000,000 workers would lose their jobs by 2016 as a direct result of a federal minimum-wage increase to $10.10.

Illinois nearly faced the same fate just a few years ago, when former Gov. Pat Quinn sought to increase the state’s minimum wage to $10 per hour. Illinois, which already had a sluggish economy under Quinn, would have been further damaged, with poor, minority and inexperienced workers hit hardest.

Fast-food workers who have protested in Chicago and elsewhere for a higher wage might have justified frustrations about lackluster wage growth, but an increased state-mandated wage would only increase unemployment. It would also further harm low-income and minority communities that have already been disproportionately hurt by Chicago’s and Illinois’ decades of bad economic policies.

A $15-per-hour wage won’t seem like much if there aren’t many jobs left – and technology is enabling more businesses to take that route.

TAGS: Fight for 15, jobs, minimum wage