An excellent article about the consequences of a $15 wage. In essence, McDonald franchises run on slim margins and a $15 dollar wage will wipe out the profits, leading franchisees to replace the labor with machines or simply use less. This will really hurt the young and unskilled workers. I agree with the assessment. McDonalds in Europe, which has high labor cost, already use kiosks to save on labor.
So will the $15 wage doom all restaurants? Not really. If the restaurant can pass on the cost to the customers and save costs in other stuff (e.g. trash may be), they would be fine. In fact, it may attract more qualified applicants and raise the quality of the restaurant overall. However, for those firms that compete on the very low end (many fast food chains), those will automate because they do not have much room to maneuver in terms of price.
So will the customers who mainly subsist on low fast food be hurt? Yes, temporarily. However, most low fast food is not good for you so the health benefits may be greater for not eating that burger. Also, I believe that other entrepreneurs will come in and serve the low fast food customer segment, hopefully with healthier dishes.
Overall, $15 wage will hurt the restaurants that do not have much pricing power and the customers who mainly rely on cheap fast foods.
Update
Wendy‘s is increasing automation with higher labor costs.
I agree. The higher the price of minimum wage labor, the more likely companies will invest in labor saving technology. If a business can’t make a profit, it will go out of business.
I wrote a short post (450 words) called “Why a Higher Minimum Wage Can Result in a Lower Unemployment Rate.” If you would like to read it, I am open to any feedback: https://christopherjohnlindsay.wordpress.com/2016/05/11/minimum-wage-unemployment/
LikeLiked by 1 person
Thank you for the comment and your post. I plan to do a more in-depth post about minimum wages when I have time. If you are interested check out econtalk.org. It has a good archive about minimum wages.
LikeLiked by 1 person