McDonald’s Inevitable Automation

 

It seems to me that the Ricochet community could use some good news right now. So here it is:

McDonalds

The left tried to unionize McDonald’s and force a higher minimum wage; McDonald’s responded by minimizing the need for wages.  I suspect fast food chains were headed in this direction anyway. If so, this was the extra incentive they needed to dive in. Thanks, unions!

Of course, the picture’s not entirely rosy. As someone pointed out on Facebook earlier, this could eliminate many thousands of entry-level jobs. Those jobs help teenagers begin a work history and help adults re-enter the work force, as well as provide assurance of job opportunities in economically depressed areas.

But I have faith that when one economic door closes another opens. The opportunities aren’t always available nearby. They aren’t always well-paying or fulfilling jobs. But — provided the nanny state will get the heck out of the way! — there are always new jobs being created.

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  1. James Of England Moderator
    James Of England
    @JamesOfEngland

    drlorentz:

    Aaron Miller: ….. when one economic door closes another opens.

    Not so fast there. Maybe it will work out that way, or maybe humans need not apply for many jobs in the future. In that case, there will be lots of folks hanging around with nothing to do, “…unemployable through no fault of their own.” A substantial fraction of jobs humans do now will be filled by robots soon.

    As the video notes, “…if you still think new jobs will save us: here is one final point to consider. The US census in 1776 tracked only a few kinds of jobs. Now there are hundreds of kinds of jobs, but the new ones are not a significant part of the labor force.” Many in this list are potential robot jobs:

    The current mix has pretty high rate of employment; right now, we’re not doing so badly.

    The reason for Aaron’s confidence to be generally right, though, and the reason it has been until now, is because the US hasn’t had a crazy minimum wage.

    The problem with Aaron’s analysis isn’t that jobs are going away intrinsically, but that the reason that McDonalds is reducing entry level jobs is the same reason that many other employers of teens are also being pressured to reduce their demand.

    • #31
  2. captainpower Inactive
    captainpower
    @captainpower

    SoDakBoy:Efficiency is not the highest good.

    Whose job is it to make sure society does “the highest good?”

    Sounds dangerous.

    • #32
  3. Ricochet Inactive
    Ricochet
    @SoDakBoy

    captainpower:

    SoDakBoy:Efficiency is not the highest good.

    Whose job is it to make sure society does “the highest good?”

    It’s your job.  It’s my job.  Not everything needs to be done by government.

    This is why I don’t use self-checkout lanes despite the scorn my whippersnapper son heaps on me.  I don’t use ordering kiosks.  I patronize stores that employ youngsters to carry bags for old ladies.

    We are not talking about using robots to fill dangerous jobs that produce elderly 45 year old men.  IMO, that is a worthy use of technology because it eliminates a job that is harmful to people.  In this case, we are talking about robots that replace a menial but valuable employment opportunity that is really a huge rite of passage.

    It is really a question of whether money is the priority or people are the priority.

    My point is that it is not conservative to celebrate replacing people as if they were a commodity.

    • #33
  4. CandE Inactive
    CandE
    @CandE

    SoDakBoy:Efficiency is not the highest good.

    For efficiency we are sacrificing a huge source of entry level jobs which teach every new generation how to interact with the public, how to show up on time, how to earn a living, the value of money, the value of hard work, and more. I am glad I grew up in a time when I could perform unskilled labor for a pittance.

    We also sacrifice interacting with humans. The human-human interaction taking place at McDonald’s or IHOP is small but the sum total of all those small interactions has a huge affect in a country of 350million people. Anybody who agrees that the thesis of Charles Murray’s

    If it makes you feel any better, there is a strong case to be made that it is market inefficiency caused by minimum wage laws that is driving this change.  Kiosks may be inevitable, but the threat of higher wages is accelerating their implementation so that businesses can get ahead of the impending surge in labor costs.

    -E

    • #34
  5. drlorentz Member
    drlorentz
    @drlorentz

    James Of England:

    The current mix has pretty high rate of employment; right now, we’re not doing so badly.

    The reason for Aaron’s confidence to be generally right, though, and the reason it has been until now, is because the US hasn’t had a crazy minimum wage.

    The problem with Aaron’s analysis isn’t that jobs are going away intrinsically, but that the reason that McDonalds is reducing entry level jobs is the same reason that many other employers of teens are also being pressured to reduce their demand.

    Raising the minimum wage would certainly accelerate the trend towards automation but the trend will continue regardless, just at a slower pace. The point made by Humans Need Not Apply is that many jobs will be taken by robots and it’s not clear what will replace them. As robots improve and take over jobs that require higher cognitive ability, more humans are displaced. Charles Murray has made a similar point, wherein he quotes Tyler Cowan’s Average Is Over.

    The glib assertions that “there are always new jobs being created” and “when one economic door closes another opens” may not hold true in the future, at least not in sufficient numbers to compensate for jobs lost. As I noted in my previous response, it doesn’t all need to be true for there to be a big problem.

    • #35
  6. Bartholomew Xerxes Ogilvie, Jr. Coolidge
    Bartholomew Xerxes Ogilvie, Jr.
    @BartholomewXerxesOgilvieJr

    SoDakBoy:

    It is really a question of whether money is the priority or people are the priority.

    I certainly wouldn’t consider investing in a business for which money is not the priority.

    The story of human civilization, ever since we discovered how to cultivate crops, has been a story of increasing efficiency (which means increased wealth and a general elevation of the standard of living). That isn’t going to stop.

    Will it bring change to society? Of course it will. It always has.

    Will we adapt? Of course we will. We always have.

    • #36
  7. user_1065645 Contributor
    user_1065645
    @DaveSussman

    I want my teenager to serve food to customers. It paid my way through college but more importantly it provided me humility and communication skills, both of which are necessary in the real world.

    • #37
  8. James Of England Moderator
    James Of England
    @JamesOfEngland

    drlorentz:

    James Of England:

    The current mix has pretty high rate of employment; right now, we’re not doing so badly.

    The reason for Aaron’s confidence to be generally right, though, and the reason it has been until now, is because the US hasn’t had a crazy minimum wage.

    The problem with Aaron’s analysis isn’t that jobs are going away intrinsically, but that the reason that McDonalds is reducing entry level jobs is the same reason that many other employers of teens are also being pressured to reduce their demand.

    Raising the minimum wage would certainly accelerate the trend towards automation but the trend will continue regardless, just at a slower pace.

    I agree with this. Obviously labor productivity will rise regardless. It’s just that without a high minimum wage, the lump of labor fallacy will still apply.

    The point made by Humans Need Not Apply is that many jobs will be taken by robots and it’s not clear what will replace them. As robots improve and take over jobs that require higher cognitive ability, more humans are displaced. Charles Murray has made a similar point, wherein he quotes Tyler Cowan’s Average Is Over.

    The glib assertions that “there are always new jobs being created” and “when one economic door closes another opens” may not hold true in the future, at least not in sufficient numbers to compensate for jobs lost. As I noted in my previous response, it doesn’t all need to be true for there to be a big problem.

    It’s never been clear what jobs would replace ones being lost, but that hasn’t meant that we haven’t found things.

    • #38
  9. Ricochet Inactive
    Ricochet
    @SoDakBoy

    CandE:

    If it makes you feel any better, there is a strong case to be made that it is market inefficiency caused by minimum wage laws that is driving this change. Kiosks may be inevitable, but the threat of higher wages is accelerating their implementation so that businesses can get ahead of the impending surge in labor costs.

    -E

    Well, it doesn’t make me feel any better, but I know you are correct.

    It’s a bit strange, though, that we have many conservatives who bemoan the higher minimum wage laws because they hurt low-skilled workers but who celebrate the elimination of low-skilled workers in the name of efficiency.

    I think this is a case where we can drive into the ditch by swerving left or right.

    • #39
  10. Ricochet Inactive
    Ricochet
    @SoDakBoy

    James of England:

    It’s never been clear what jobs would replace ones being lost, but that hasn’t meant that we haven’t found things.

    I don’t think we have “found things” though.

    There is a lot of structural underemployment because a lot of people who would have owned a little mom-and-pop now till a cubicle farm because 10 momandpops have been replaced by a MegaTarget.

    I know this is more efficient, but does no one else think that we have lost something along the way?  If we have lost something, then was it worth it?

    • #40
  11. CandE Inactive
    CandE
    @CandE

    SoDakBoy:

    CandE:

    If it makes you feel any better, there is a strong case to be made that it is market inefficiency caused by minimum wage laws that is driving this change. Kiosks may be inevitable, but the threat of higher wages is accelerating their implementation so that businesses can get ahead of the impending surge in labor costs.

    -E

    Well, it doesn’t make me feel any better, but I know you are correct.

    It’s a bit strange, though, that we have many conservatives who bemoan the higher minimum wage laws because they hurt low-skilled workers but who celebrate the elimination of low-skilled workers in the name of efficiency.

    I think this is a case where we can drive into the ditch by swerving left or right.

    I understand where you’re coming from, but my point is that I don’t think that efficiency is what’s eliminating low-skilled workers.  Quite the opposite, in fact.

    I’m actually trying to write a separate post on this question of what the future is for low-skilled workers.  Can I quote your comment in it?

    -E

    • #41
  12. drlorentz Member
    drlorentz
    @drlorentz

    “It’s never been clear what jobs would replace ones being lost, but that hasn’t meant that we haven’t found things.”

    A comforting thought, to be sure, but one that does not address the specific points made. As it happens, the video makes an attempt to answer that rather commonplace retort. If it’s too tedious to watch the whole video (I sympathize), you can read the transcript at the link in about 5 minutes.

    • #42
  13. Ricochet Inactive
    Ricochet
    @SoDakBoy

    CandE:

    SoDakBoy:

    CandE:

    If it makes you feel any better, there is a strong case to be made that it is market inefficiency caused by minimum wage laws that is driving this change. Kiosks may be inevitable, but the threat of higher wages is accelerating their implementation so that businesses can get ahead of the impending surge in labor costs.

    -E

    Well, it doesn’t make me feel any better, but I know you are correct.

    It’s a bit strange, though, that we have many conservatives who bemoan the higher minimum wage laws because they hurt low-skilled workers but who celebrate the elimination of low-skilled workers in the name of efficiency.

    I think this is a case where we can drive into the ditch by swerving left or right.

    I understand where you’re coming from, but my point is that I don’t think that efficiency is what’s eliminating low-skilled workers. Quite the opposite, in fact.

    I’m actually trying to write a separate post on this question of what the future is for low-skilled workers. Can I quote your comment in it?

    -E

    Yes, you may.  I look forward to your post since I have been mulling this over quite a lot lately too.  I still have 2 semi-skilled kids in college and 6 unskilled kids living at home to think about.

    • #43
  14. Frozen Chosen Inactive
    Frozen Chosen
    @FrozenChosen

    There will still be lots of little mom&pop pizza or burger joints for teenagers to work at – they aren’t going to be automating anytime soon.

    If you’re concerned about a robot replacing your job go into sales as it will be a long time before robots do that job.

    • #44
  15. Douglas Inactive
    Douglas
    @Douglas

    Aaron Miller:

    But I have faith that when one economic door closes another opens.

    I don’t. I agree with Francis Cianfroca (of the excellent Coffe & Markets podcast); computerized automation of jobs differs greatly from past technological changes that actually increased other jobs. It really is a permanent job killer. Skilled workers are increasingly being left with no future as their jobs are automated. What hope have unskilled workers when they’ve been replaced with machines?

    There will be a shrinking pool of even unskilled jobs in the service sector now, driving down wages as a glut of people chase the same positions serving coffee or mopping floors. And even some of those jobs are gonna go bye-bye.

    • #45
  16. Ricochet Inactive
    Ricochet
    @SoDakBoy

    Frozen Chosen:There will still be lots of little mom&pop pizza or burger joints for teenagers to work at – they aren’t going to be automating anytime soon.

    If you’re concerned about a robot replacing your job go into sales as it will be a long time before robots do that job.

    Our local MomandPop hamburger joint just put ordering kiosks in the lobby.  This is a family owned business with a single location that has been on the same street corner for over 50 years.  Father just died shortly after handing it over to his son.   I mean…momandpops operate in the same marketplace as McDonalds don’t they.  When they automate, it forces everyone in the marketplace to meet the same price point.  The only difference is that McDonalds has an easier time buying the automation because of their scale.

    As for sales?  Amazon.

    • #46
  17. Douglas Inactive
    Douglas
    @Douglas

    Miffed White Male:

    Aaron Miller:

    And notice that automated checkout stations are more common in supermarkets, yet even years after the innovation was introduced many (most?) customers continue to prefer manual checkout.

    One local grocery chain here in Milwaukee just finished removing the self-checkout lanes from their stores (at least the ones near my house). Personally, I wish they’d have left at least one.

    Down in the South, they just started arriving in our grocery stores a couple of years ago, and everyone hates them. They don’t work very well, and customers are always calling for a human attendant to come fix what’s screwing up. As of yet, the automated stations just can’t work as well or keep up with a good checkout worker. Maybe that’ll change, maybe not.

    • #47
  18. Fake John Galt Coolidge
    Fake John Galt
    @FakeJohnJaneGalt

    Frozen Chosen:There will still be lots of little mom&pop pizza or burger joints for teenagers to work at – they aren’t going to be automating anytime soon.

    If you’re concerned about a robot replacing your job go into sales as it will be a long time before robots do that job.

    you are right.  Nothing can sell better or faster than a person.

    Well maybe this can.

    http://www.amazon.com/

    Wonder how many stores are not hiring salespeople because they can sell on Amazon?

    • #48
  19. drlorentz Member
    drlorentz
    @drlorentz

    Douglas:Down in the South, they just started arriving in our grocery stores a couple of years ago, and everyone hates them. They don’t work very well, and customers are always calling for a human attendant to come fix what’s screwing up. As of yet, the automated stations just can’t work as well or keep up with a good checkout worker. Maybe that’ll change, maybe not.

    They’ve been around my area for a while. Some people still require assistance, but many do not. There’s a learning curve so people will get better at it. I’d guess some grocery jobs have already been eliminated with more to come. There will be a continued role for checkout workers, albeit a diminished one.

    • #49
  20. Frozen Chosen Inactive
    Frozen Chosen
    @FrozenChosen

    SoDakBoy:

    Frozen Chosen:There will still be lots of little mom&pop pizza or burger joints for teenagers to work at – they aren’t going to be automating anytime soon.

    If you’re concerned about a robot replacing your job go into sales as it will be a long time before robots do that job.

    As for sales? Amazon.

    I’m talking about real sales jobs like B-to-B type stuff, not retail stores.  Fortune 500 companies are not going to buy their enterprise software from robots.

    • #50
  21. drlorentz Member
    drlorentz
    @drlorentz

    Fake John Galt:

    Frozen Chosen:There will still be lots of little mom&pop pizza or burger joints for teenagers to work at – they aren’t going to be automating anytime soon.

    If you’re concerned about a robot replacing your job go into sales as it will be a long time before robots do that job.

    you are right. Nothing can sell better or faster than a person.

    Well maybe this can.

    http://www.amazon.com/

    Wonder how many stores are not hiring salespeople because they can sell on Amazon?

    Retail sales clerks are definitely on the decline.

    In the long run, almost any job can be automated. Then again, in the long run we’re all dead, right? It’s all a question of the time scale. People like Charles Murray are making the case that it’s sooner than you think. Sounds plausible to me.

    • #51
  22. drlorentz Member
    drlorentz
    @drlorentz

    Frozen Chosen:I’m talking about real sales jobs like B-to-B type stuff, not retail stores. Fortune 500 companies are not going to buy their enterprise software from robots.

    Not yet. Or maybe already so. We buy our software online. I don’t think Wolfram (Mathematica) or Mathworks (Matlab) has much of a sales force; I’ve never met any of them in person. We also buy our computers (servers, workstations) directly. Same goes for most lab equipment. Usually the sales staff on high-end hardware is only peripherally involved, and only after we’ve figured out what we want.

    • #52
  23. CandE Inactive
    CandE
    @CandE

    SoDakBoy got me thinking about what this might mean for entry level workers, so I wrote a post about it here.  Please come share your thoughts there too, and try to ignore the fact that I’m just piggy backing off of Aaron’s success. ;)

    -E

    • #53
  24. Aaron Miller Inactive
    Aaron Miller
    @AaronMiller

    Douglas:

    What hope have unskilled workers when they’ve been replaced with machines?

    The hope to learn new skills.

    Most people work because they have to, not because they want to. If they have to learn new trades, they will. If employers have to pay for training, they will.

    That is… unless politicians, unions, and the bunch get in the way. And, of course, they will.

    And I’m not forgetting human nature. People often act against their own interests. There are always some people who would starve before they would help themselves. Perhaps there is a growing number of such people today. But those people can’t be planned around. Initiative can be learned, but not forced.

    • #54
  25. Douglas Inactive
    Douglas
    @Douglas

    Frozen Chosen:

    I’m talking about real sales jobs like B-to-B type stuff, not retail stores. Fortune 500 companies are not going to buy their enterprise software from robots.

    The pool for that kind of job… selling Oracle and Saleforce licenses for six figure incomes … ain’t all that big either.

    • #55
  26. CandE Inactive
    CandE
    @CandE

    drlorentz:

    Frozen Chosen:I’m talking about real sales jobs like B-to-B type stuff, not retail stores. Fortune 500 companies are not going to buy their enterprise software from robots.

    Not yet. Or maybe already so. We buy our software online. I don’t think Wolfram (Mathematica) or Mathworks (Matlab) has much of a sales force; I’ve never met any of them in person. We also buy our computers (servers, workstations) directly. Same goes for most lab equipment. Usually the sales staff on high-end hardware is only peripherally involved, and only after we’ve figured out what we want.

    It probably varies greatly on industry and technology.  There are still tons of sales guys running around selling their technical services and specialties in refining.  Which is a nice perk, because they love to take us out to lunch.

    -E

    • #56
  27. Douglas Inactive
    Douglas
    @Douglas

    Aaron Miller:

    Douglas:

    What hope have unskilled workers when they’ve been replaced with machines?

    The hope to learn new skills.

    What new skills? For what new jobs? That’s the whole point of computerized automation: it doesn’t spawn many new jobs comparable to the number it eats. When the auto industry grew and displaced horse-and-cart transportation, it spawned whole new related sectors… oil and gas, maintenance, infrastructure (building new roads for the new cars) that common workers could get into. But the point of cars was getting people around better: faster, with a higher load capacity that increased productivity. With the automation and computer revolution, there’s just not nearly as many related jobs being created to take the place of the ones going away.

    The point of automation is not to improve human productivity, but to replace the humans themselves. THAT’S where the cost savings come in with automation. Getting rid of the people, period (at least as much as possible). This kind of system simply doesn’t spawn new jobs the way past technologies did, because, by design, it’s all about increasing the employer’s bottom line not by efficiencies or greater production, but by completely removing one of his costs… people.

    Horses used to do everything for us until the auto came along. In this case, people are the working horses of old, replaced by machines, never to return in great numbers. Charles Murray has tackled this in his last book.

    • #57
  28. Fake John Galt Coolidge
    Fake John Galt
    @FakeJohnJaneGalt

    This whole issue goes away if the economy is performing. It is only when we get one of these stalls and don’t do what needs to be done to rev the economy that we get this stuff. DC needs to cut the BS, and stop worry about giving out money they don’t have and start worrying about how the average guy can make a living and thrive then this whole job discussion falls away because there is more jobs than people again.

    • #58
  29. Ricochet Inactive
    Ricochet
    @SoDakBoy

    Aaron Miller:

    Douglas:

    What hope have unskilled workers when they’ve been replaced with machines?

    The hope to learn new skills.

    Most people work because they have to, not because they want to.

    I disagree.  Yes, people work for wages, but humans also have an innate, spiritual need to be productive and to have a purpose in life that extends beyond entertainment and strictly family responsibilities.  That, of course, is one of the great tragedies of the welfare state.  It takes care of the physical needs of the body, but only by greatly damaging the spiritual need to be a productive, contributing  member of a community.

    Also, what Doug said.  By its nature, jobs lost to this type of automation will not be replaced by humans.  200 teenagers lost their jobs to 200 machines which are built and maintained by 2 FTE’s.

    • #59
  30. CandE Inactive
    CandE
    @CandE

    Douglas, I think you’re painting a bleaker picture than the situation merits.  Let’s look at the industry at hand: fast food.  While these kiosks will perform tasks that people used to perform, that doesn’t mean that it will get rid of people.  Rather it frees people from doing those tasks so that they can go be more productive elsewhere.  This is not a new trend.  Computers have been performing increasingly complicated tasks to simplify ordering for a long time, yet employment in the fast food industry has not declined.  Where fewer employees were required at a restaurant, the chain would open another, thus increasing employment.

    The improved efficiency of the robots may also improve the efficiency of the workers in unexpected ways.  There is precedent.  Most stores now use an ordering system that tells the worker preparing the food what to make before the order is complete, allowing the worker to get a jump on it.  This single change allows the restaurant to process more orders faster even though the worker is doing nothing different.  That machine raised the workers efficiency and value.

    -E

    • #60
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