A recent article at the Huffington Post makes the claim that if McDonald’s doubled its employees salaries it would only cause the price of a Big Mac to go up by 68 cents. The implication here is that 68 cents isn’t much money, so they should do it. There’s a few things missing from this. One is that the article itself alleges that doubling wages would lead to a 17% increase in costs. And I guess this is obviously supposed to seem like a small amount? It doesn’t look that way to me. What do people expect will happen when prices go up 17%? If McDonald’s could raise it’s prices by that much without lowering demand they would. No, what would happen is people would shop at those stores less, there would be less profit and less McDonald’s stores to hire workers.
We’re hearing more and more about machines replacing workers and there are some obvious contenders for replacement within a McDonald’s. Have you ever been to a Sheetz or WaWa? They have ordering screens that allow you to place orders without speaking to anyone. It’s not hard to imagine McDonald’s switching to a system like this for credit card orders.