Free Markets, Free People

The age of job automation

It’s closer than you think.  Last Friday I put a bit up in Stray Voltage about Dominos testing a robot delivery service in New Zealand.  And I intimated that that sort of automation would be something that would displace labor if labor got too expensive – like $15 for the minimum wage.

Over the weekend I happened across a couple of more articles.  One featured the CEO of Hardee’s and Carl Jr.’s talking about an automated restaurant he’d seen in San Francisco.  And, sure enough, his focus was on labor savings ($15 minimum wages specifically):

The CEO of Carl’s Jr. and Hardee’s has visited the 100%-automated restaurant Eatsa — and it’s given him some ideas on how to deal with rising minimum wages.

“I want to try it,” CEO Andy Puzder told Business Insider of his automated restaurant plans. “We could have a restaurant that’s focused on all-natural products and is much like an Eatsa, where you order on a kiosk, you pay with a credit or debit card, your order pops up, and you never see a person.”

Pudzer’s interest in an employee-free restaurant, which he says would only be possible if the company found time as Hardee’s works on its northeastern expansion, has been driven by rising minimum wages across the US.

“With government driving up the cost of labour, it’s driving down the number of jobs,” he says. “You’re going to see automation not just in airports and grocery stores, but in restaurants.”

Good old government.  Helping out again, aren’t they (another way to make you more dependent on them)?  As Pudzer says:

“This is the problem with Bernie Sanders, and Hillary Clinton, and progressives who push very hard to raise the minimum wage,” says Pudzer. “Does it really help if Sally makes $3 more an hour if Suzie has no job?”

Well no, it doesn’t. And then there’s this:

“If you’re making labour more expensive, and automation less expensive — this is not rocket science,” says Pudzer.

Well no, it’s not – er, except to Bernie supporters.  But then it isn’t necessarily easy to automate everyone’s jobs either.  But it is getting easier as technology develops.

Take the restaurant that Pudzer was talking about:

“I would call it different than a restaurant,” said David Friedberg, a software entrepreneur who founded Eatsa. “It’s more like a food delivery system.”

Last week, I was in a fast-moving line and browsed on a flat-screen monitor the menu of eight quinoa bowls, each costing $6.95 (burrito bowl, bento bowl, balsamic beet). Then I approached an iPad, where I tapped in my order, customized it and paid. My name, taken from my credit card, appeared on another screen, and when my food was ready, a number showed up next to it.

It corresponded to a cubby where my food would soon appear. The cubbies are behind transparent LCD screens that go black when the food is deposited, so no signs of human involvement are visible. With two taps of my finger, my cubby opened and my food was waiting.

The quinoa — stir-fried, with arugula, parsnips and red curry — tasted quite good.

And he saw no one other than other customers.  Says the author of the article:

Whether a restaurant that employs few people is good for the economy is another question. Restaurants, especially fast-food restaurants, have traditionally been a place where low-skilled workers can find employment. Most of the workers are not paid much, though in San Francisco employers of a certain size must pay health benefits and in 2018 a minimum wage of $15.

Ironic, isn’t it?  That the prototype “food delivery system” is established in a city in which government has decided it will set the wages.  The laws of economics, or “rocket science” for the Bernie supporters, begs to differ.  There’s no real advantage in terms of labor savings, if the market sets the minimum wage, but mandated wages?  Well, then it comes down to viable alternatives – and cost-wise, this is suddenly viable.  The lower wage job holders of America say – thanks government.

And beyond the obvious, there are advantages to automating:

By not hiring people to work in the front of the restaurant, he said, they save money on payroll and real estate. (There will always be at least one person available to help people navigate the iPads and to clean up.) The kitchen is also automated, though he declined to reveal how, and the company is experimenting with how to further automate food preparation and delivery.

And, fewer to call in sick, give benefits, sick days and paid vacations too.  Make an employer’s job easier, more efficient and more enjoyable and the employer will take that route every time.

“We can sit and debate all day what the implications are for low-wage workers at restaurants, but I don’t think that’s fair. If increased productivity means cost savings get passed to consumers, consumers are going to have a lot more to spend on lots of things.”

Consumers have a choice – spend more for the same thing to help someone else have more money or spend less for the same thing and have more to spend on other things they want or need.  Wal-Mart says they will choose the latter.  So do those pesky laws of economics.

The food industry isn’t the only industry that’s going to see this though:

Automation is transforming every industry. Business owners look to substitute machines for human labor. It happened to blue-collar workers in factories and white-collar workers in banks and even law firms. With self-driving vehicles, it may happen in the taxi and trucking industries. Robots and artificial intelligence machines are expected to transform health care.

Coming sooner rather than later … possibly sooner than we think.

Nowhere is the potential for job automation so obvious as it is in the on-demand economy, where many startups have grown fat with venture capital despite poor unit-economics. Uber is spending heavily to hasten the development of driverless cars. Instacart, Postmates, and other delivery-heavy startups are unlikely to stick with humans once machines—which don’t take sick days, need bathroom breaks, or threaten to unionize—can do the same jobs.

But even if you don’t work in the on-demand economy, chances are high that you or someone you know will eventually be in the same position as Fox-Hartin. Machines already exist that can flip burgers and prepare saladslearn and perform warehouse tasks, and check guests into hotels. Companies like WorkFusion offer software that observes and eventually automates repetitive tasks done by human workers. And automation has also crept into knowledge-based professions like law and reporting. When in 2013 researchers at Oxford assessed whether 702 different occupations could be computerized, they concluded that 47% of U.S. employment was at risk of being lost to machines.

~McQ

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9 Responses to The age of job automation

  • Last time we lost jobs to modernization en masse, it was farm workers to mechanized farm vehicles and equipment. Fortunately those same innovations lead to other opportunities that created jobs. Largely in making those and similar machines for a variety of purposes. There was a bit of a time gap between those occurred.

    This time, its unlikely mass production of these machines will happen in the US workplace. So some of the new work they create will be elsewhere. This is why its not the time to create incentive to accelerate it.

  • Then coming sooner, rather than later will be this generation’s ‘saboteurs’ finding ways to destroy the automation.
    The well placed electronic sabot in the electronic gears no doubt.

    The cycle goes round again, the luddites will find ways to smash up this generation’s version of (the) Spinning Jenny and the progressives will blame the conservatives for being hard hearted and greedy and putting people out of their jobs.

    Man, think how good it will be to have all those immigrants, sitting idle next to the Americans and collecting the government dole!
    Democratic Pander divisions overrunning the country!

    • And unions will reinvent “featherbedding”.

    • I predict the sabot will take the form of laws and ordinances against automation in “food delivery”.

      I suspect one pretext will be “sanitation”. Totally bogus, but watch.

  • Another thing with automated fast-food restaurants — the customers won’t have the aggravation of trying to interact with counter help that doesn’t really understand or speak English.

    • And think of the video when they go over the counter and attack the robot because it forgot to put cheese on their burger.

  • But will this make “the awful legacy of the last eight years behind us” seem like the “good old days” ?

  • The awful food has kept me out of fast food joints for the last 40 years.
    If I have to eat-on-the-go, I’ll make the effort to find a mom & pop sub shop.
    It does tend to be hit-and-miss, but there are some gems out there.