But I saw McDonald's in the news twice today and thought it might make an interesting blog post.
First, the Big Mac is almost as old as I am. And its creator has died:
Michael Delligatti, the man who brought you the Big Mac, has died. He was 98.That was the creative, entrepreneurial part of the story. Now comes the economics segment:
Delligatti, more affectionately known as “Jim,” was one of McDonald’s first franchisees. He first created the Big Mac in 1967 at his Uniontown, Penn. restaurant, Business Insider reports.
Almost 50 years later, it’s the same recipe served in chains today: two all-beef patties, special sauce, lettuce, cheese, pickles, onions—on a sesame seed bun (for those of you old enough to remember the jingle).
As the labor union-backed Fight for $15 begins yet another nationwide strike on November 29, I have a simple message for the protest organizers and the reporters covering them: I told you so.Idiot $15/hr protesters are protesting people right out of their jobs. You can't rewrite the laws of economics.
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.
Let’s start with automation. In 2013, when the Fight for $15 was still in its growth stage, I and others warned that union demands for a much higher minimum wage would force businesses with small profit margins to replace full-service employees with costly investments in self-service alternatives. At the time, labor groups accused business owners of crying wolf. It turns out the wolf was real.
Earlier this month, McDonald’s announced the nationwide roll-out of touchscreen self-service kiosks. In a video the company released to showcase the new customer experience, it’s striking to see employees who once would have managed a cash register now reduced to monitoring a customer’s choices at an iPad-style kiosk...
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, Texas, citing California’s rising minimum as the “deciding factor.” (Dozens of additional stories can be found at the website FacesOf15.com.)