Friday, September 13, 2013

How Mobile Payments, Minimum Wage Demands are Correlated

McDonald's is testing Isis-based mobile payments, for logical reasons. “At this time we are testing mobile payment in Salt Lake City, Utah, and Austin, Texas,” said Ofelia Casillas, media relations manager at McDonald’s, Oak Brook, Ill.

Obviously, the point is to get McDonald’s consumers to get in and out of the stores as quickly as possible.

But there is another angle, sometimes missed. Mobile payments could well become part of an intensified automation strategy for McDonald's, if wage pressures become a big new issue. 

One basic principle of economics is that prices and quantity sold are inversely related. When prices for any product get raised, demand decreases. Labor is a product like any other. So one reaction to a major increase in wage bills will be employment of less labor. Mobile payments and ordering kiosks are parts of that future strategy. 

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