The “Fight for $15” movement to increase the hourly pay of fast food workers to $15 per hour has gained a lot of momentum in the past year. Led by unions, who seek to expand into the fast food industry, and progressive activist groups, there have been protests nationwide demanding fast food chains raise the starting pay of employees to more than double the minimum wage. That fight may be on the verge of backfiring.
Conservatives have long warned that raising the minimum wage would harm businesses, cost low-skilled workers jobs and lead to automation to replace many of them. Unions and progressives, on the other hand, swore fast food chains could easily afford the inflated labor cost without much of a price increase.
Now comes word that McDonalds’, the largest player in the fast food industry, revenues are down significantly. A 5 percent decline in quarterly revenues led to a 30 percent decline in profits. A doubling of labor costs would only exacerbate this and lead to massive layoffs.
In addition to demands from labor for a higher starting wage, the National Labor Relations Board in July ruled fast food companies are responsible for the labor practices of their franchisees. That ruling makes the prospect of unionization of the industry a larger possibility and places additional pressure on the future of the industry.
As such, McDonald’s is looking to the future, a future with fewer employees.
The Wall Street Journal reports, “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.”
Further, the Journals says:
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. Mr. Thompson, the CEO, said Tuesday that customers “want to personalize their meals” and “to enjoy eating in a contemporary, inviting atmosphere. And they want choices in how they order, choices in what they order and how they’re served.”
Customization and choices are what consumers want, but humans already do offer that. What the machines offer is the additional stability of a known and stable cost.
As the “Fight for $15” gears up for future fights and the NLRB helps it gain steam, economic realities and market forces may be letting the air out of their tires.