Pricing jobs out of existence

August 15th, 2014 at 11:00 am by David Farrar

Jazz Shat at Hot Air blogs:

McDonald’s employees who picketed for a better (whatever that means) may come to regret that decision. According to a Redditor, a McDonald’s in Illinois replaced their cashiers with machines. The machines appear to be the cousins of the ones found in grocery stores, big box stores, and CVS that allow customers to complete transactions.

What are the economics?

For a location open 24 hours: The cost of human cashiers, not counting benefits, $15/hour * 24 hours * 365 days/year = $131,400

For a location open 6AM to Midnight: $15/hour * 18 hours * 365 = $98,550.

For the machine to be cost effective, all it needs to do is cost less than $100,000 a year to buy and maintain.

That’s not much. This could all happen very quickly.

Yes, as the Forbes article makes clear, it didn’t exactly require a rocket surgeon to predict that if you drove the labor costs up too far in an unltracompetitive market such as the fast food industry, automation would begin to look too tempting to ignore. You’re going to make us pay the guy at the fry machine 15 bucks and hour? Well… we decided to pass on that and pay a robot nothing instead.

A great result for the low paid workers – unemployment!

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31 Responses to “Pricing jobs out of existence”

  1. labrator (1,851 comments) says:

    I saw a recent article on trainable robotics recently. They basic premise was that they were now approaching cost and performance levels of unskilled labourers on assembly lines. As such they were expecting a resurgence in USA manufacturing using these robots as it would then become cost effective to not outsource to foreign countries for their cheap labour. Unskilled labourers will very shortly be completely redundant.

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  2. Yogibear (375 comments) says:

    Also far more likely to get the fricken order right

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  3. RRM (10,099 comments) says:

    Maccas is just DIRT cheap in the states though isn’t it?

    Probably a slightly different equation here.

    When the youth rates were abolished here, it was quite noticable that McDonalds started hiring more mature people for their front counters, and their service just became so much better than BK that I stopped patronising the latter…

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  4. kowtow (8,935 comments) says:

    I often hear leftists talk dismissively of America and particularly so of what they contemptuously call “MacJobs”.

    I have visited the US and been to the odd Macs there. Busy city location. Not one white face behind the counter ,some actually struggling with the English language.All young.

    Clearly these are jobs for new immigrants ,possibly not well educated.

    I say thank goodness these people are given a chance to get onto the work ladder, a break, a start ,to be employed and to earn money……that’s what Macjobs do.A great chance for people, no one would say they will stay in that work for ever,they’ll move on to better work when they learn enough English, when they acquire more skills etc.Some will get promotion within the org etc.

    America is one of the few countries in the world where people like that can do all tha.

    What the chardonnay socialists want is for everyone to be like themselves immediately, a PHd in bolloxs! Living off taxpayers in a leafy suburb .

    Life ‘s not like that.

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  5. Fentex (1,134 comments) says:
    You’re going to make us pay the guy at the fry machine 15 bucks and hour? Well… we decided to pass on that and pay a robot nothing instead.

    A great result for the low paid workers – unemployment!

    An interesting point of view to contrast with common debates that automation is not to be feared, that it just indicates work and employment must move upwards to new skills in an expanding economy. Someone who would take that position, one would think, would argue that the issue isn’t that people should accept low wage jobs but should feel liberated to find a place in the expanding economy that automation surely enables.

    I am shocked to read DPF believes automation destroys jobs and concludes people should allow it to depress their income rather than having the confidence it’s an indicator of a bigger and brighter future.

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  6. IGM (614 comments) says:

    Russel will be announcing moves for unions to assess the number of employees we must employ to perform tasks. That is the reason many of us have excellent contingencies in place for, and I hope never, a coalition of the leeching losers trying to ruin NZ.

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  7. burt (7,424 comments) says:

    OK, so lets take away all the problems this will cause in one easy move. Robot cashiers will pay union fees.

    There – The unions will be very happy and support this now.

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  8. burt (7,424 comments) says:

    Just look at how many ‘tellers’ a bank has working now. ATM’s are everywhere. If that isn’t writing on the wall – what is ?

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  9. Lance (2,712 comments) says:

    Love the mixed metaphor

    “rocket surgeon”

    Automated systems, robotic or otherwise are the future, like it or not.
    Remember the wailing and gnashing of teeth when automated money machines came in?
    Now who would go back to no money machines at all?

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  10. Nukuleka (399 comments) says:

    Both my grandchildren have part-time jobs at local McDonalds, and what a wonderful working environment it is for them. I realise that we are talking part-time youth employment here as opposed to mature folk struggling to provide for a family but McDonalds teaches young people the very best work ethics. My grandchildren are delighted to have these jobs and love the McDonalds working environment. I may have mixed feeling about the product, but I don’t have mixed feelings about McDonalds as employers.

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  11. Tautaioleua (324 comments) says:

    A friend of mine picks and packs at a warehouse here in South Auckland. He tells me that it used to be a 24 hour operation but, after minimum wage increases, it only operates during the day now. He also told me that he wears a headset and it gives him instructions using his own voice (he had to record himself and these phrases were stored on the headset). This used to be done by supervisors but they no longer exist.

    Ironic, isn’t it? that the unions claim to be defenders of the working class. You even need tertiary qualifications for early childhood now because of health & safety concerns brought about by the unions lol.

    Eventually, every job will require technical/academic qualifications. What’s left of the blue collar industries will be shipped off to South East Asia in no time at all. Companies are hiring fewer people for the same amount of work. Expect alcoholism and violence to spiral out of control as people are overworked and undervalued. You can’t legislate prosperity. Every increase of the minimum wage is an attack on the working class, not a helping hand.

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  12. kowtow (8,935 comments) says:

    “Every increase of the minimum wage is an attack on the working class, not a helping hand.”

    And so is mass immigration and multiculturalism.

    But the left don’t care about the working classes ,just look at how they despise the traditional jobsof the west coast .They are prepared to see the whole thing go tits up cos they’re waiting in the wings to impose a new order.

    They don’t care that society becomes more fractured and impoverished in the meantime because the marxist dialectic will make all things right, eventually!

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  13. edhunter (554 comments) says:

    KFC installed similar machines in a mining town in Queensland, not because of strikes or protests just that they couldn’t get anyone to work for what they were offering.

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  14. lolitasbrother (774 comments) says:

    the little burmese girl, is paid only 350 baht a day , thats $NZ 14 to us, so you can imagine her eyes wide as my Wife tips her only 50 baht NZ$2. Do it if you come here.. it is nearly three in the afternoon and the warm breeze will not stop, it flows over that Thailand gulf and its water laps down only a few metres from this restaurant, and my own favourite chair . that warm breeze , and some of the girls are asleep or resting in other chairs, my God they have been here since daylight and another 6 hours to go. The cat underneath my feet also resists my kick away. typical fucking lazy Thai cat I say.
    I said to my Wife , I sleep in chair now. She said it OK, you spend far too much time with the Bangkok Post, and General..you can not take over NZ and Thailand at the same time.. soon we go and your I say in English to her, you just wait my friend many farang come and your wages double

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  15. G152 (418 comments) says:

    In supermarkets now there are automatic checkouts.
    And one staff member to reset errors and authorise the sale of wine.
    Firm reps load the shelves with their products.
    Another unskilled/semiskilled employment possibility disappearing

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  16. william blake (109 comments) says:

    Will a fully automated McDonalds still call itself a restaurant?

    How about McDonald’s drive thru vending machine.

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  17. Fletch (6,521 comments) says:

    The liberals jumped up and down in the U.S recently when a cafe (while having to abide by a new minimum wage) started openly charging customers a 35 cent ‘MIN WAGE FEE’, (actually putting that charge on their customer receipts for all to see).

    A small cafe in Stillwater has thrown itself into the big battle over Minnesota’s minimum wage increases, inundating the cafe with dozens of phone calls and online comments this week after it tacked on a 35-cent fee to meal tabs.

    Oasis Cafe owner Craig Beemer said the fee is needed to offset the 75-cent wage hike that took effect Aug. 1, the first time Minnesota’s minimum wage has increased in a decade. Even with only half a dozen servers, Beemer says it will cost him $10,000 more a year to pay servers $8 an hour instead of the federal rate of $7.25 an hour. Instead of adding it on to food prices, he added the “minimum wage fee” — the only restaurant known to do so in Minnesota so far.

    It’s set off a firestorm of debate on Facebook and in the east metro community, with one customer calling the cafe Wednesday to demand a refund and others taking to Facebook to encourage people to boycott the roadside cafe.

    “We’re shocked at what’s going on,” manager Colin Orcutt said of the public response. “We’re all appalled at the response for just protecting his employees. We’re just doing what we have to do.”

    It’s not the only restaurant responding to the wage hike.

    MORE (includes photos on the side) –
    http://www.startribune.com/politics/statelocal/270235821.html

    Well, what else are they supposed to do? They either have to put prices up, or employ fewer people.
    Liberals seem to think that the money will magically appear from nowhere. The real world doesn’t work like that.

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  18. Maxx (12 comments) says:

    Saw these in action at McDonalds in Paris. They were fantastic. Offered different langauages which was perfect (don’t speak French), order was accurate, order was ready in a minute which was handled with the exchange of a coupon. And they still tried to upsell something, just like the current machines

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  19. burt (7,424 comments) says:

    Hang on here people. Labour told us that increasing the minimum wage will not reduce the number of jobs available. That settles it OK – Socialism might have failed every single time it’s ever been tried but it will work next time.

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  20. BlairM (2,340 comments) says:

    They had those machines at Jack In The Box for a while. They suck – it takes people a lot longer to order than simply talking to someone. I suspect people will soon find the machines lose them customers.

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  21. thor42 (971 comments) says:

    “Labour – learning lessons since………… yeah, nah.”

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  22. Tautaioleua (324 comments) says:

    They used to say that about the pay & display machines too, Blair. They replaced parking booths manned by humans. I remember when you could only pay a human at the Auckland International Airport. Now you don’t even need to speak to one. Face it, machines are replacing low-skilled jobs. If your children left school early without qualifications and next to no work experience, they’re going to need all the help they can get.

    :-)

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  23. MH (830 comments) says:

    No matter what we say,there will be idle hands due to technology and violence will be the result. We can’t all be upskilled,the pop growth will exceed so called jobs. And those with jobs and skills will be targeted by an unruly mob,with greed and despair to spurn them on. I think wer’e kidding ourselves that the next 50 yrs will be skilled workers happily labouring away and those displaced will just sit back smoke dope and help themselves to benefits or volunteer for learning programmes when a gun is more fun,half the world is at war now or on UN or American aid.

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  24. Scott1 (588 comments) says:

    The MacDonalds protests do not cause automation – they just speed it up a little. It is probably better for them to do that because that makes the introduction of the automation more gradual.

    In the scenario that Macdonalds keeps them on as part of a good will project for years after they cease to be efficient – there is a breaking point at which it fires almost everyone in one go – and the flood of macdonald’s “chefs” onto the market makes them largely unemployable.

    So in a surprising sort of a way their protests could benefit them by putting some of them out of a job whilst getting others a minor pay rise, a quirk of the tendency towards risk avoidance.

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  25. lurcher1948 (151 comments) says:

    I see the day when Mr Farrar is sent fulltime away on one of his picture trips,His i7 HP which really runs his blog? gets onto the national party computer which really runs kiwiblog and both computers decide on what rubbish they think the kiwiblog lapdogs while be fired up over enough to post about. Slates computer posts that Hagers computer tickled her hard drive so she downloaded every thing she knows and all this happened because some lazy leecher* was given a $1 wage increase
    *IGM

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  26. V (763 comments) says:

    Why stop at the cashiers? Management and supervisory roles can go as well.
    $30/hour * 18 hours * 365 = $197,100.

    http://marshallbrain.com/manna1.htm

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  27. Viking2 (11,668 comments) says:

    OSH are currently doing over every engineering shop in Whakatane, Tauranga and Hamilton.

    Pre inspections for the incoming Australian Osh standards due next year. So up go the costs for engineering companies.

    Off go the jobs to China.

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  28. Matt (213 comments) says:

    Rarr!! Break the machines!!! And those damn looms while you’re at it…

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  29. Mark (1,502 comments) says:

    We have the conundrum, lift wages and jobs become less assured. The Minimum wage concept and training wage is a sound protection but you still come across some arses who abuse the system. Actual case – a person working for a cleaning contractor is employed on a casual contract. Paid minimum wage on an hourly rate, the employer makes no provision for holiday pay, so sick leave and despite this worker being enrolled in kiwi saver no employer contribution is made.

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  30. wat dabney (3,840 comments) says:

    “Labour told us that increasing the minimum wage will not reduce the number of jobs available. ”

    Well yes, but that said that cynically.

    They calculated that such knowingly-dishonest political rhetoric would earn them substantial votes and that those who lose their jobs often can’t directly attribute it to the minimum wage; and because having even more people on the dole can itself only be good for Labour.

    They threw the low paid under the bus.

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  31. SPC (5,664 comments) says:

    National the party dedicated to as many low wage jobs as possible – wages that would not support families without WFF financed by taxes paid by other wage earners but not those earning capital gain…

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