Days of Change

President Trump’s Policies Will Eliminate More Jobs Than McDonalds’ Kiosks | June 6, 2018

What makes Economics a field of study is the way unexpected (or unintended) consequences can come from seemingly positive actions. Two stories this week are good examples. One is the news that the unemployment rate is at historic lows and that job openings exceed the number of job seekers. The other is that McDonalds is going to roll out self-serve kiosks in all of its stores.

First, the kiosks. Conservative bloggers jumped to their keyboards touting the idea that because a couple of liberal cities are raising wages to $15 per hour, McDonalds flipped the switch on replacing counter jockeys with autonomous kiosks. This leaves out a couple of important facts.

  • 70% of McDonalds business is in the drive thru lanes
  • If you watch the front of a McDonalds, none of the registers are manned at all times.
  • McDonalds are putting in more kiosk screens than the current number of counter registers.
  • McDonalds makes money off franchise owners paying them fees. The corporation could care less about the minimum wage at a store.

If you go to a fast food restaurant like McDonalds, it is difficult to just look at the menu. First of all, not every item (or customization) is listed. If you stand around the front, one of those people who isn’t at the register will come up and ask if you’re ready to order. You can put them off to look, but eventually you feel a little guilty from messing up the flow.

However, if you can stand at your own menu board, you can choose what you want, make changes, not worry about entry errors on the cashier’s side and maybe order something you never saw on a menu before. McDonalds found that people order more from a kiosk, partly because they don’t take cash, partly because you can look up what you want and partly because you don’t have to worry about holding up the line. Plus, you can sit down and someone will bring your order to you. Maybe it’s the person who was supposed to be fired.

On the other hand, more openings than applicants in the job market is one of those “good problem to have” situations. It’s good for the applicants because they can demand better wages and don’t have to have quite as many qualification. In my experience, however, job postings are not the same as future jobs.

Here’s a case in point. A company down the road from me has postings to increase their employee population by 8%. These listings have been in place for months. Some jobs have been re-posted from the beginning of the year. If they desperately needed these positions filled, logic would dictate that they would either have to take less “perfect” candidates or raise the pay scale to get their perfect match.

When there are more candidates than jobs, employers are more likely to assume they have highly qualified and motivated applicants and hire the best of the bunch. When pickings are slim, they fear hiring people who seem high risk. Instead, they make due with more overtime (wanted or not) and automation. It’s more likely you buy a robot to keep from hiring someone than to specifically fire someone.

Am I right? It doesn’t matter because economics is about the perception of decision makers and their reaction to a situation. It’s not easy to predict.


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    June 2018
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