Another Effect Of Rising Wages

When McDonald’s, Walmart or Amazon talk about “substantial benefits to customers and employees”, they’re of course actually saying…

by John Rubino of Dollar Collapse

After decades of stagnation, wages are finally rising. McDonald’s, believe it or not, has made the whole $15 minimum wage movement obsolete by starting its burger flippers at $21 an hour.

This is a good thing, but also a complicated one. In Remember Strikes? we covered some of the ways rising wages will change the world going forward. But we left out a big one, which is accelerated automation. Here again, McDonald’s is part of the story:

McDonald’s enters strategic partnership with IBM to automate drive-thru lanes

McDonald’s said Wednesday it has entered a strategic partnership with IBM to develop artificial intelligence technology that will help the fast-food chain automate its drive-thru lanes.

As part of the deal, IBM will acquire McD Tech Labs, which was formerly known as Apprente before McDonald’s bought the tech company in 2019. McDonald’s didn’t disclose financial terms for either transaction.

“In my mind, IBM is the ideal partner for McDonald’s given their expertise in building AI-powered customer care solutions and voice recognition,” McDonald’s CEO Chris Kempczinski said on the earnings call with analysts Wednesday.

The Apprente technology uses AI to understand drive-thru orders. This summer, McDonald’s tested the tech in a handful of Chicago restaurants. Kempczinski said that the test showed “substantial benefits” to customers and employees.

When McDonald’s – or Walmart or Amazon – talk about “substantial benefits to customers and employees” they’re of course actually saying “fewer human employees.” So the near-term gains in wages might produce a longer-term decrease in entry-level jobs.

This was always going to happen, as AI-driven robots become increasingly able to do repetitive work. But labor shortages and rising wages (and more frequent strikes) are turbo-charging the process.

No real point here, just noting how multifaceted and complex big societal trends can be.