McDonalds provided a positive social externality -- it gave young people their first experience of work, of showing up on time, in a uniform, of learning to be pleasant to customers, to work within a heirarchical organization, and so on. Young people who work at McDonalds don't get internships at NPR, the New York Times, or Goldman Sachs to to develop work experience. As McDonalds goes, so will that process. All that will be left is cleaning.That transition is likely, because Professor Cochrane's experience the last time he ate at a McDonalds demonstrated the limitations of computer technology that allows orders to be taken by sub-literates. Newer bun-'n-run companies are likely to set up smart-phone applications that allow the diner to avoid any human interaction with less-than-competent help.
A sturdy hike in the minimum wage, in today's economy, is basically an industrial policy subsidizing the transition to low-skill service industry automation.
RELATIVE PRICES MATTER.
John Cochrane reflects on the consequences of raising the minimum wage.