You bet: McDonald’s just added 7,000 touch-screen kiosks to handle ordering and cashier duties in its European stores.
The move is designed to boost efficiency and make ordering more convenient for customers. In an interview with the Financial Times, McDonald’s Europe President Steve Easterbrook notes that the new system will also open up a goldmine of data.
As technology advances, more and more tasks can be mechanized and automated. Think of ATMs, automated gas pumps, and kiosks at airports and movie theaters. Is it inevitable that machines will replaced human labor, simply because it is possible? Not necessarily. The switch only happens when businesses decide that machines are a more cost-effective way to do a specific job than labor. (Think of using a food-processor instead of chopping vegetables by hand.)
When the cost of labor goes up, the tradeoff between labor and capital changes. This can happen for a number of reasons, but one way to make machines more attractive is to raise the minimum wage. When you raise the price of something, people buy less of it–this is as true for labor as it is for hamburgers. When you force up the cost of low-skilled labor, employers will use less of it, either by hiring more experienced workers or by investing more in machines.
The minimum wage isn’t the only policy that can discourage hiring young and unskilled workers. In Europe, where McDonald’s is introducing their automated cashiers on a large scale, labor regulations often make it difficult to layoff employees once they are hired. This makes hiring inexperienced workers risky, creating a lot of youth unemployment, but also making labor more expensive by restricting the supply to more educated and skilled workers. The cost of labor undoubtedly played a role in McDonald’s decision to automate so many jobs.
Don’t misunderstand this argument for neo-Luddite fretting about mechanization–machines are not inherently evil job-destroyers. We’re all better off when we can replace difficult, boring, and dangerous work with robots, software, and other innovations. But we’re all worse off when government regulations distort the free market to change businesses’ cost-benefit calculations. The case of McDonald’s kiosks (and all the other common tasks that are now automated) merely shows that such jobs don’t have to be done by people. Businesses are not sitting targets, and they will respond to incentives.
Worst of all, the people most hurt by policies like the minimum wage the very people they are designed to help: the less educated, the less skilled, and the less experienced. By removing a rung on the job ladder, minimum wage laws take away job opportunities from the young, poor, and uneducated. They reward those who already have jobs and protect experienced workers from competition. This is something to keep in mind as President Obama continues his grandstanding about hiking the minimum wage from $7.25 to $9 an hour. There is no such thing as a free lunch, and the people who will pay for this one are the most vulnerable and disadvantaged in our society.
See also: The Case Against the Minimum Wage
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