It shouldn’t be any surprise to anyone with a slim understanding of economics that driving up costs for businesses means bad news for customers and employees alike. In terms of driving up wages by force, there were only two results that could follow. Either that business was going to have to lay off employees in order to afford their work force, or find a way to circumvent having employees in the first place.
In the case of the major fast food chain McDonald’s, they took the latter path and rolled out a shiny new line of self-service machines that allow you to order your food without the need for employees at a register. This happened after many cities forced the businesses in their cities to raise the minimum wage to $15 as a result of a nationwide protest called “Fight for $15.”
Many had predicted this coming, including former CEO of McDonald’s USA Ed Rensi. Rensi wrote a guest post at Forbes on Tuesday that essentially had one message.
“I told you so.”
It brings me no joy to write these words. The push for a $15 starter wage has negatively impacted the career prospects of employees who were just getting started in the workforce while extinguishing the businesses that employed them. I wish it were not so. But it’s important to document these consequences, lest policymakers elsewhere decide that the $15 movement is worth embracing.
While McDonald’s certainly had trouble in cities featuring the raised wage, it was a minor bump in the road that they could afford to spend their way out of. Sadly, not every business has the capital this massive chain does, and businesses and workers will both suffer for it.
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, citing the state’s rising minimum as the “deciding factor.” (Dozens of additional stories can be found at the website FacesOf15.com.)
These machines have been looming on the horizon since 2013, but now with the success of the protests, we’re beginning to see the fruits of their non-labor. Hopefully, people will abandon their quest through forced higher wages via the government as their community suffers under the financial burden.