by James Manning
I find it interesting when people post stories about the kiosk at McDonalds and relate that to the $15 minimum wage debate. They say that in reaction to workers requesting a minimum of $15 per hour, McDonald’s is now looking to replace those workers with kiosks. They say this despite McDonald’s claim that kiosks are not intended to replace workers and the fact that McDonalds was testing this technology long before the minimum debate hit critical mass.
Missing from the discussion in the role of innovation in our society and an understanding of how technology and innovation shape the workforce. There are essentially four types of innovation:
3. New Market
Breakthrough Innovation can be best described as a synergic relationship between products. Mobile payment is the next breakthrough innovation on the horizon. The combining of mobile and banking will change the way people conduct business in the near future.
Sustaining Innovation is the updating and creation of products for an established market. Adobe is a company that is great at listening to is customers and creating new products and updating its products based on customer feedback. They also took advantage of cloud technology and subscription-based pricing to increase their market share and a competitive advantage.
New Market Innovation is taking a known product and using it in a new way. Play-Doh was originally used to remove coal residue from wallpaper. It was discovered that children were using the substance to make Christmas ornaments and a new market was created.
Disruptive Innovation is the one that most people understand and how most people perceive technology. It can destroy industries and alter the landscape of society forever. The car, refrigerators, desktop computers, home video are all examples of disruptive technology. Today, Netflix and Google Apps are changing the way people get their entertainment and work, respectively; and this is the way people are viewing McDonald’s kiosks.
There is nothing new about kiosks. The airports have them; car rental companies have them; the grocery stores have them. And in all of those cases, the goal was to make the process more efficient and faster for customers, not replace employee headcount. Studies have shown that self-service technology has not led to job destruction.
The closest example to a kiosk is the ATM machine. In 1990, there were about 100,000 ATMs in the country. That total is now around 400,000. There are several reasons for this as explained by James Bessen in the article Toils and Technology, but his findings match those found by countless experts and they conclude that technology in and of itself does not lead to job loss.
The minimum wage debate is one that will go on and at some point I believe Congress should solve this problem by automatically raise the rate every few years to in some way keep pace with inflation. Those who try to conflate the two are overstating the case. We live in a self-service society but in most cases the self-service technology has a greater impact on productivity and efficiency than it does on the number of jobs.
There aren’t fewer people working at Home Depot after the installment of self-checkout lines. Most gas stations offer more than just gas which has resulted in more jobs even with them having self-serve pump stations (all except New Jersey). A kiosk at McDonalds may speed up the process of ordering a number 5 and could possibly reduce the number of employees assigned to the cash register on a particular shift. But a mass reduction of jobs will not happen and it certainly won’t end the minimum wage debate for fast food workers.