When human labor is replaced by technology, what will humans do for work?

State senator John Kavanagh recently demonstrated his lack of concern for low wage workers in a comment, “And if you want to see ‘innovation,’ raise the minimum wage for fast food workers to $15 an hour and watch robots replace many of those workers.”

The GOP has always been the party of low wages, reflecting the views of its corporate masters, who would eliminate human labor entirely if possible, just as Sen. Kavanagh cavalierly suggests.

The Washington Post reports, Robot-run restaurants? Pay hikes may spur automation:

Robot-I-RobotThe [fast food] industry could be ready for another jolt as a ballot initiative to raise the minimum wage to $15 an hour nears in the District and as other campaigns to boost wages gain traction around the country. About 30 percent of the restaurant industry’s costs come from salaries, so burger-flipping robots — or at least super-fast ovens that expedite the process — become that much more cost-competitive if the current federal minimum wage of $7.25 an hour is doubled.

“The problem with the ­minimum-wage offensive is that it throws the accounting of the restaurant industry totally upside down,” said Harold Miller, vice president of franchise development for Persona Pizzeria, who also consults for other chains. “My position is: Pay your people properly, keep them longer, treat them right, and robots are going to be helpful in doing that, because it will help the restaurateur survive.”

Many chains are already at work looking for ingenious ways to take humans out of the picture, threatening workers in an industry that employs 2.4 million wait staffers, nearly 3 million cooks and food preparers and many of the nation’s 3.3 million cashiers.

The advent of fast-food chains may have ushered in an era of new efficiencies, but the industry as a whole has largely been resistant to cuts in labor. According to the Bureau of Labor Statistics, since 1987, labor productivity in ­limited-service restaurants has grown at a rate of only 0.3 percent per year, which is low compared with most other industries.

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Labor isn’t the only ingredient that factors into the price of a Big Mac: There’s also real estate, which has been getting more expensive, especially in the hot urban markets where restaurants are seeking to locate. Wholesale food costs, meanwhile, have escalated 25 percent over the past five years.

The avalanche of rising costs is why franchisers are aggressively looking for technology that can allow them to produce more food faster with higher quality and lower waste. Dave Brewer is chief operating officer with Middleby Corp., which owns dozens of kitchen equipment brands, and is constantly developing new ways to optimize performance and minimize cost.

“The miracle is, the wage increase is driving the interest,” Brewer said. “But the innovation and the automation, they’re going after it even before the wages go up. Why wait?”

All that innovation helps restaurants streamline other parts of their operations — and draw more customers. Electronic menus can be constantly updated so that items that are out of stock can be removed. Connecting the point of the sale to the oven’s operating system allows precise amounts of food to be cooked, which helps cut down on costs. Other inventions save energy, reduce maintenance and better dispose of grease. On the digital side, restaurants are working on apps that include reward systems and location tracking that prompt customers to eat with them more frequently.

It’s possible that new inventions could start to eliminate positions faster than they have in the past.

The labor-saving technology that has so far been rolled out most extensively — kiosk and ­tablet-based ordering — could be used to replace cashiers and the part of the wait staff’s job that involves taking orders and bringing checks. Olive Garden said earlier this year that it would roll out the Ziosk system at all its restaurants, which means that all a server has to do is bring out the food.

Robots can even help cut down on the need for high-skilled workers such as sushi chefs. A number of high-end restaurants use machines for rolling rice out on sheets of nori, a relatively menial task that takes lots of time. Even though sushi chefs tend to make more than $15 an hour, they could be on the chopping block if servers need to make $15 an hour, too.

“For our operation, we’re not buying entry-level labor, but if entry-level labor goes up a huge amount, everything goes up,” said Robert Bleu, the president of True World Group, a seafood distributor and consultant that also owns a sushi restaurant in Chicago. “I don’t consider rice-forming a high art. You can escape some of the drudgery.”

Of course, it’s possible to imagine all kinds of dramatic productivity enhancements. Persona ­Pizzeria’s Miller predicts that drone delivery systems will eventually get rid of the need to come into a restaurant at all, for example. Brewer has a bold prediction: He thinks that all the automation working its way into restaurants could eventually cut staffing levels in half. The remaining employees would just need to learn how to operate the machines and fix things when they break.

“You don’t want a $15-an-hour person doing something that the person who makes $7 an hour can do,” Brewer said. “It’s not downgrading the employees. It’s that the employees become managers of a bunch of different systems. They’ll become smarter and smarter.”

Not everybody, however, agrees that machines could make that much of a dent in labor costs. Implementing new systems is expensive, and mistakes can be devastating. And for some concepts, it’s possible that the presence of employees is actually a restaurant’s competitive advantage. Compared with grocery stores and gas stations, many people come to restaurants exactly because they want some human interaction.

Andy Wiederhorn, chief executive of Fatburger — who is testing tablet systems in his sit-down chain, Buffalo’s Cafe — doubts improvements in technology are going to be enough to keep up with the mandated wage increases, especially when actual people can be his best sales tool.

“I think that tablets have a place at the table, but it’s pretty hard to ask questions, get suggestions from a tablet. I don’t think they replace a server, they make a server more efficient,” Wiederhorn said. “We’re selling hamburgers shakes and fries, and [customers] want to talk to somebody and say, ‘Here’s how I want it.’ So I think in the hospitality industry, to assume that technology will take the place of workers is a false assumption.”

That’s why some restaurants have tiptoed in the direction of increased automation, rather than sprinted, even as minimum-wage hikes loom.

“Because the industry remains overall an industry of hospitality, their challenge remains how to remain high-touch in a high-tech environment,” said Hudson Riehle, the National Restaurant Association’s senior vice president for research and knowledge. If they’re not careful, restaurants could jettison the one thing that kept people coming through the doors.

The world is expected to add another billion people within the next 15 years, bringing the total global population from 7.3 billion in mid-2015 to 8.5 billion in 2030, 9.7 billion in 2050, and 11.2 billion by 2100, according to new estimates from the UN.

But corporations are using technology — computerization, automation and robotics — to eliminate human labor. Without gainful employment opportunities and a means of supporting themselves, this is a recipe for disaster. And no politician is addressing this problem, certainly not John Kavanagh.

Maybe it’s time for this Ted Talk: Implementing a Star Trek Economy, and to read this new book, The economics of Star Trek: how does it work, and how do we get there? Trekonomics, by Manu Saadia. At least someone is thinking about this problem.

6 responses to “When human labor is replaced by technology, what will humans do for work?

  1. Sooner or later, the time will arrive for the basic income guarantee, or a much shorter work week, or both.

    Dramatic productivity increases like those discussed here should not be a bad thing. They should make life for everyone better. The problem is that the policies we have in place allocate all the productivity gains (and then some) to those at the top.

  2. Tatiana Covington

    I knew about all this more than 50 yr ago, from Science Fiction.

  3. Why only $15 an hour? That seems as arbitrary as any other figure. Going for the higher minimum wage is typical for liberals…it is a compassionate, good sounding idea that ignores the unintended consequenses of what happens if it actually occers.

    Seattle is the current example of what happens when – for all the right reasons – liberals do raise the minimum wage to $15 an hour. Businesses are relocating outside the city, some workers are complaining it is still not enough and a lot of workers are asking for fewer hours because with the higher wages, they are about to lose some of their government benefits. The $15 an hour has proven to be insufficent to bridge the gap between minimum wage and government support and minimum wage without government support.

    And that doesn’t address the inflationary effects of $15 an hour minimum wage. Despite the earnest effort to eliminate poverty, the poor will always be with us. Someone will ALWAYS be at the bottom of the economic scale regardless of what is done for them. That is just a simple fact of life. As more money becomes available, prices rise because there is greater demand. So that initial little boost in buying power quickly dissipates and they are back where they started.

    As your posting adequately discusses, many workers will price themselves out of the market. The idea of eating out being a better experience with human interaction may be true, but it doesn’t apply to fast food restaurants. Automation has been the trend for years, and making human costs more expensive simply moves automation along a little faster. I agree that out of work laborers is not a good thing, but that fact is not going to stop automation from continuing.

    • Steve, your third paragraph is rather simplistic analysis. Wage growth doesn’t necessarily increase the supply of money. Moreover, if an increase in the money supply is matched by an increase in productivity, there is no inflationary impact. Wages skyrocketed between 1945 and 1970, at a pace far greater than the pace of inflation. If your analysis were sound, that would not be the case.

      And it’s just not true that the poor must “always be with us.” If you plot per capita income and per capita wealth for developed countries other than the U.S. against poverty rates, the regression line suggests that a country with the wealth and income of the U.S. should have close to zero poverty. We’ve simply made policy choices that have caused us to be an outlier (not in a good way) in that regard. If what you say is correct, there would be some baseline poverty rate that a country never could eliminate get below. But there isn’t.

      • Bob, Steve knows that if poverty were eliminated the Republican Party’s rich masters would not be able to take advantage of poor people trying desperately to claw out a living on inadequate minimum wage pay. Instead they would have to pay people better and give them decent benefits.

        • TS, I don’t know that “if poverty were eliminated the Republican Party’s rich masters would not be able to take advantage of poor people trying desperately to claw out a living on inadequate minimum wage pay”. I have entirely different reasons for thinking that poverty will never be eliminated. But since I think you were just using this to take a metaforical shot at me, I won’t bother you with the reasons why we will always have the poor with us.