Capital-Labour Substitution in Fast Foods
What happens when the minimum wage goes up? Employers have an incentive to use more capital and less low-wage, typically unskilled, labour.
But how do they do that in the fast food industry? How do you replace burger-flipping socionomology graduates with machines? You don't, necessarily, but you can replace order-taking socionomology graduates with cheaper labour and some capital:
Thanks for the pointer to JC, who wonders, "And what is an hour call to North Dakota costing?"
The McDonald's restaurant in Hermiston, Oregon appears to be
"outsaucing" customers [sic] drive-thru meals.
The restaurant on Highway 395 has outsourced one of the most important jobs at the drive-through window -- order taking.
When a customer drives through, they'll be patched through to Grand Forks, North Dakota to place the order. Why? Because the minimum wage in North Dakota is $5.15, compared to Oregon's $7.25.
My guess is that with satellite telecommunications, long-distance calls from Oregon to North Dakota can be sufficiently low-priced to make this arrangement profitable. But why Grand Forks? Why not Bangladesh?
So much for the studies claiming that increases in the minimum wage have no effect on employment in fast-food enterprises.
UPDATE: Phil Miller of Market Power has another example; this one is about four outlets in Missouri using a centralized call centre in Colorado. But in this case it is done to lower costs (presumably through economies of scale, specialization, and improved quality).