Trade-offs of a higher minimum wage include automation

By: Emily Makings
12:00 am
October 22, 2014

McDonald’s had a “dreadful” earnings report this week, according to a Wall Street Journal editorial.

So even one of the world’s most ubiquitous consumer brands cannot print money at its pleasure. This may be news to liberal pressure groups that have lately been demanding that government order the chain known for cheap food to somehow pay higher wages.

Further,

The McDonald’s earnings report on Tuesday gave a hint at how the fast-food chain really plans to respond to its wage and profit pressure—automate. As many contributors to these pages have warned, forcing businesses to pay people out of proportion to the profits they generate will provide those businesses with a greater incentive to replace employees with machines.

By the third quarter of next year, McDonald’s plans to introduce new technology in some markets “to make it easier for customers to order and pay for food digitally and to give people the ability to customize their orders,” reports the Journal.

Meanwhile, economist Adam Ozimek writes,

Policymakers may find it tempting to try and mandate good jobs through extensive regulation, but the workplace is a complex and constantly changing environment, and the risk of unintended consequences—such as increased unemployment—is high. As with most regulation, there are trade-offs. Demanding that jobs be “good” along some dimension may end up making them worse in other ways.

Categories: Categories , Economy , Employment Policy.
Tags: minimum wage