McDonalds is able to sell massive amounts of cheap food partial because labor is cheap. Forcing them to provide higher wages will result in higher prices, which will reduce their market viability and result in closure of some locations. This results in a net decrease in overall employment even though those employees are better compensated.
We see this play out at large scale in an economy like France, where even pre-pandemic the youth unemployment rate approached 20% (and now is more like 35%).
This applies equally to gig work: gig work is able to employ so many people because the services they provide are cheap enough to appeal to broad stretches of the population. Triple the prices of food delivery or uber, and the market will dramatically shrink.
> Forcing them to provide higher wages will result in higher prices, which will reduce their market viability and result in closure of some locations.
And it's done just that every single time it's happened. But it also has a more permanent effect: labour is usually the biggest cost to a business, and it's often necessary -- or at least, any investment in technologies to eliminate labor come with so much risk that they are often slow to materialize without a solid catalyst. Raise the cost of labor, substantially, and you get self-checkout. Raise it more and the self-checkout aisles start working more easily[0], or are eliminated entirely in favor of electronic tracking and facial recognition.
It's all got a breaking point -- it's ~$9.00-~$12.00/hr (locally based on the marquis in front of the local McDonald's) times every required front-end employee vs. a multi-million dollar investment that might eliminate the 90% that labour cost, but might also be completely rejected by customers or otherwise fail horribly. Time is always going to bring that "multi-million" side down, but another way to accelerate it is to raise the cost of labour (either artificially by increasing the minimum wage or naturally as a result of full employment/good economic conditions).
[0] Because they kill the "scale" that checks that you've set the item you bought on the "purchased" side in favor of putting an extra person behind some screens and opening up 8 more check-out aisles. Additional shrink from the less strict systems is offset by lower labour costs. Of course, lost sales from people like my great aunt/uncle who are pissed off that they need a manual to operate a Walmart end up creating new opportunities for companies to offer an option to pay someone else to handle that hassle for you. So now you just pay the damn cashier, directly, through DoorDash or whomever.
It's depressing to me that the reason we don't have decent automation systems in place is that humans are still much cheaper than kiosks. It's an insult to our species IMO that humans are still used for tasks that could be done by relatively simple machines.
I heard a story once about how construction sites in India don't often use tools like bulldozers, because it's so much cheaper to just hire 400 dudes with shovels. I'm sure we'll all look back at retail and the food industry in 20 years and view it as barbaric that humans were used to do such menial labor.
We see this play out at large scale in an economy like France, where even pre-pandemic the youth unemployment rate approached 20% (and now is more like 35%).
Except the minimum wage in the UK is very close to that of France but we don't have the same youth unemployment rate.
There is much more going on than just the effects of a minimum wage.
We see this play out at large scale in an economy like France, where even pre-pandemic the youth unemployment rate approached 20% (and now is more like 35%).
This applies equally to gig work: gig work is able to employ so many people because the services they provide are cheap enough to appeal to broad stretches of the population. Triple the prices of food delivery or uber, and the market will dramatically shrink.