Fast-food industry veterans are coming out against raising the minimum wage.
“It’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who’s inefficient making $15 an hour bagging french fries,” former McDonald’s USA CEO Ed Rensi said in an interview on Tuesday on the Fox Business Network’s “Mornings with Maria.” “It’s nonsense and it’s very destructive and it’s inflationary and it’s going to cause a job loss across this country like you’re not going to believe.”
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According to Rensi, rising labor costs are forcing chains to cut entry-level jobs and replace workers with machines. Currently, Wendy’s, McDonald’s, and Panera are rolling out kiosks across the US, in part because of the rising cost of labor.
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This isn’t the first time Rensi, who served as McDonald’s USA’s president and chief executive from 1991 to 1997, has spoken out against increasing the minimum wage.
“I can assure you that a $15 minimum wage won’t spell the end of the brand,” Rensi wrote of McDonald’s in Forbes in April. “However it will mean wiping out thousands of entry-level opportunities for people without many other options.”
Rensi isn’t alone in this belief.
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“With government driving up the cost of labor, it’s driving down the number of jobs,” Andy Puzder, CEO of Carl’s Jr. and Hardee’s, told Business Insider. “You’re going to see automation not just in airports and grocery stores, but in restaurants.”
But there is some evidence that concern regarding rising wages may be overblown.
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In the past year, McDonald’s investment in employee wages and benefits has already had a significant impact on customer service — one of the most problematic parts of McDonald’s business. According to CEO Steve Easterbrook, customer satisfaction scores were up 6% in the first quarter, compared to the same period last year.
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Even if Rensi is convinced that increased pay could doom entry-level employees, it seems as though Easterbrook is seeing returns on McDonald’s investment in workers. Rising costs may convince some chains to invest in machines, but they’re also helping make business more efficient and improving the customer experience.