>Imagine the minimum wage were doubled, do you think McDonald's would respond by laying off half their staff?

No, but a person will definitely think twice before starting a new McDonald's franchise. A small restaurant owner who had been eyeing a second location will think twice about opening up another restaurant.

The incentives will also shift towards higher automation (not necessarily a good or bad thing in and of itself) of tasks as much as possible instead of hiring humans.

Companies don't work like this: "We have X amount of work to do, no matter what it costs". It's more along the lines of whether a project is a net positive (say through a net present value analysis) and if it isn't, then the whole project is scrapped.