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Raising Minimum Wage May Lead To Robots Taking Over Jobs: McDonalds Ex-CEO

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Unemployment looms large as robots can potentially take over jobs that require a higher minimum wage, a former McDonald’s chief executive warned.

In an appearance on Fox Business Network on May 24, Edward Rensi said it’s cheaper to purchase a $35,000 robotic arm than to hire an employee who is “inefficient” at processing French fry orders while making $15 per hour.

“I guarantee you if a $15 minimum wage goes across the country you’re going to see a job loss like you can’t believe,” he said during the interview.

Talks of raising the minimum wage are taking the country by storm, with some states and companies deciding to up theirs to $15 per hour in the coming years. California will increase its minimum wage to the said amount by 2022, while New York will make the move in three years.

This movement that has spurred across the U.S. harps on the improved company and pay increases at firms that range from WalMart Stores to McDonald’s company-owned and operated restaurants.

The suburban Chicago headquarters of McDonald’s Corp was shut for the third year in a row as hundreds of protesters marched through the rain on May 25 and called for higher wages and union rights. The shutdown came a day before the company's annual shareholder meeting on May 26.

“If we don’t get it, shut it down,” chanted the protesters as part of their “Fight for $15 campaign,” backed by the Service Employees International Union (SEIU) and prompting McDonald’s to encourage its employees in its HQ to work from home on Wednesday and Thursday.

In July 2015, the fast food chain raised its average hourly pay and started to offer paid vacations and other benefits for the estimated 90,000 workers at company-owned U.S. stores. However, it said it cannot dictate pay structures and adjustments to its franchisees, which operate nearly 90 percent of its 14,000 U.S. restaurants.

For Rensi, raising the minimum wage would be “nonsense” and a step toward destroying the American middle class. According to him, he saw first-hand at the National Restaurant Show an array of robotic tools that are fast entering the restaurant industry.

“It’s nonsense, these are entry-level jobs,” argued Rensi, who was McDonald’s CEO from 1991 to 1997, but most recently sat as CEO of restaurant firm Famous Dave’s.

It’s not only McDonald’s that could possibly face the dilemma of human labor vs. technology. Wendy’s is also already testing self-service kiosks that explore high-tech devices in order to mitigate rising labor costs.

There are those, though, who disagree with Rensi, including SEIU President Mary Kay Henry.

“This robot thing is a way to distract taxpayers who are underwriting the low wages of these multinational corporations,” she said, explaining that governments have to shell out more on social services such as welfare because corporations aren’t required to pay living wages.

In 2015, McDonald’s continued to tweak its operation globally in the name of simplicity, consistent with CEO Steve Easterbrook’s vision of a “modern, progressive burger company.”

The chain broached plans of selling more stores to franchisees, slashing costs by $300 million annually, and closing hundreds of underperforming stores worldwide.

Photo: Mike Mozart | Flickr

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