It’s Economics 101: a raise in the price of labor lowers the supply of jobs.
The fast-food chain Wendy’s is announcing that, as a result of minimum wage hikes in multiple states, it will be replacing order-taking employees with computers.
Wendy?s (WEN) said that self-service ordering kiosks will be made available across its 6,000-plus restaurants in the second half of the year as minimum wage hikes and a tight labor market push up wages.
It will be up to franchisees whether to deploy the labor-saving technology, but Wendy?s President Todd Penegor did note that some franchise locations have been raising prices to offset wage hikes.
McDonald?s (MCD) has been testing self-service kiosks. But Wendy?s, which has been vocal about embracing labor-saving technology, is launching the biggest potential expansion.
Wendy?s Penegor said company-operated stores, only about 10% of the total, are seeing wage inflation of 5% to 6%, driven both by the minimum wage and some by the need to offer a competitive wage ?to access good labor.?
Don’t get me wrong, Fight for $15 protesters have good intentions in mind when they demand pay hikes. But the laws of economics do not get suspended because of good intentions. The cold, hard consequence of making labor more expensive is less labor.