What’s the Relationship Between Human Capital and McDonald’s Kiosks?

Mary Claire Bracken

McDonald’s restaurants all across the nation are being replaced by self-serving kiosks, allowing customers to order and pay for their meals electronically, rather than by communicating with a cashier. While those in favor of this new touch-screen technology believe that the kiosks speed up the ordering process, others suspect that the purpose of the kiosks is to replace McDonald’s staff members to save the company from rising labor wages.[1]

It’s unclear whether the motive behind the McDonald’s technology is efficiency or frugality with the potentially rising minimum wage. What is clear, however, is that many workers’ jobs are being replaced by machines—a perfect example of creative destruction where human capital is slim.

According to Charles Wheelan’s Naked Economics (chapter 6), “the labor market is no different from the market for anything else; some kinds of talent are in greater demand than others.” Human capital, Wheelan explains, “is the sum total of skills embodied within an individual: education, intelligence, charisma, creativity, work experience, entrepreneurial vigor…”[2] How exactly do Wheelan’s teachings relate to the situation at McDonald’s? Well, they allow us to look into just how the cashiers ended up jobless. What level of education, intelligence, work experience, and entrepreneurial vigor are cashiers at McDonald’s required to have? Chances are, the cashiers haven’t “acquired their skills through specialized training and education,” or in other words, “they have[n’t] made significant investments in human capital,” making their jobs easy to replace with technology.[3]

On the other hand, Bill Gates’ job couldn’t have been preformed by a machine. This is because Gates simply has much greater human capital than a McDonald’s cashier. “The underlying problem is a lack of skills, or human capital,” making it that much easier for your job to be replaced by a machine when you work at Mickey D’s.[4]

Although the cycle is rather unfortunate if you’re on the cashier side of the spectrum, the destruction of one job doesn’t simply end at unemployment. “Jobs are created anytime an individual provides a new good or service, or finds a better (or cheaper) way of providing an old one,” as seen in the McDonald’s incident. This creative destruction puts the McDonald’s cashiers out of business, “eliminate[ing] one job in the short run. In the long run, though, the town is still better off.”[5]

So, what would Charles Wheelan say about the kiosk situation? He’d most likely agree that the technological replacement is better for the long run of the well-known fast food franchise: “technology displaces workers in the short run but does not lead to mass unemployment in the long run.” He’d probably also advise the now-unemployed cashiers to invest in human capital by acquiring skills and education. “Human capital will yield a return in the future,” and maybe even promise a job that won’t be replaced by a kiosk quite so fast.[6]

[1] Peterson, Hayley. “McDonald’s Shoots down Fears It Is Planning to Replace Cashiers with Kiosks.” Business Insider. Web. 04

[2] Charles Wheelan, Naked Economics: Undressing the Dismal Science (New York: W.W. Norton & Company, 2010), 126-134

[3] ibdb.

[4] ibdb.

[5] ibdb.

[6] ibdb.

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