If you were in the U.S. yesterday, and craved fast food from the Golden Arches, and failed to note the mega-protest by McDonald’s workers, you must have been concentrating really hard on something else. The traditionally-low-paid workers were demanding what they call a ‘living wage’…
McDonald’s workers march in L.A. for higher wages – specificially
$15 per hour, which they call a ‘living wage’. ‘We’re not
just kids working for pocket money any more’…
We in Canada have it good compared to folks in the U.S. on a number of counts, not the least of which is our minimum wage laws. Set individually by each province (equivalent to a U.S. state), the minimum wage in my country varies from a low of (C)$12.50 in Newfoundland and Labrador to a high of (C)$C15.00 in Alberta. And that applies to everyone in most cases, though there are a few exceptions for workers who receive tips, and workers, like security guards, who take bigger chances on the job. It definitely applies to Fast Food workers.
Not so below the border…
In the U.S., though, the federal minimum wage is $7.25 per hour and state minimum wages vary from a high of $13.59 (in Washington DC) to a low of $5.15 in Georgia and Wyoming. The inequity looks stunning to an outsider.
A ‘living wage’
Now, U.S. McDonald’s workers are demanding what they call a ‘living wage’: $15.00 per hour. They have ,mots of reasons justifying tyat, not the least of which is illustrated by this compelling info-graphic:
But what will $15 mean to the economy?
First of all, of course, it will mean sharply higher Fast Food prices. Prices for other goods and services now being provided by low-paid workers will also jump. Consumers may be expected to buy less Fast Food, and thereby affect operators’ profits. Lower Fast Food sales – and shrinking sales of other goods and services whose prices soar will also mean reduced tax revenues for governments.
What will $15 mean to menu prices?
Will some McDonald’s franchisees (particularly those in low income areas where higher prices won’t fly) have to try to sell their business or just close and walk away from a loss of a few million dollars they have invested in the McStore? Quite probably. Because a $15 minimum wage would mean an increase in operating costs for the franchisee for wages of two to three times what they’re paying now. And staff wages already account for a major proportion of the price of your Big Mac.
A Big Mac in the U.S now costs an average of $5.66. How would you feel about a $9.66 or $11.66 Big Mac?
The robot menace
One thing McDonald’s workers are up in arms about is the trend toward robotic and digital systems in Fast Food stores. Automated systems for making and delivering orders to customers are already being developed, and their evolution took a massive leap under the pressure of the COVID19 lock down when resto operators were looking for ways to provide better sanitation and contactless service.
No coincidence, either, that robotic and digital systems are plumped to play a major role in the ‘Fast Food Outlets Of The Future’. Heck, McDonald’s has already phased in new touch-screen ordering systems at many of its restos, part and parcel of a massive decor and production systems overhaul by the Golden Arches over the past couple of years. McWorkers are particularly upset about those.
I can’t see any alternative for franchise operators but to speed up the replacement of human staff with robotic and digital systems to avoid the damage a $15 minimum wage will do to their profit margins – which are already very slim.
My take
So will McDonald’s workers get their $15? Not right away, not likely. And, by the time they do, there may be a lot fewer of them working there. But McDonald’s Head Office and its franchisees will speed up their move to the ‘resto of the future’ business model as long as they can to avoid having to ride the price increase escalator up too many floors.
~ Maggie J.