The great automation scare
BEN KRITZ
IF you happen to visit a McDonald’s outlet in the United States in the next couple of years, chances are very good that your order won’t be taken by an actual human, but by a computerized kiosk. Other restaurant chains have already piloted variations of the concept. McDonald’s intends to implement it on a massive scale, installing it in all its US stores by 2020.
In an opinion piece for Forbes published over the weekend, former McDonald’s USA CEO Ed Rensi put the blame for the drive for automation of the sort his former company is implementing on higher labor costs. Those higher costs, in turn, are the result of the demand for higher minimum wages, Rensi argues, which is a significant shift in the thinking behind automation.
Rensi explains that automation has always been a priority in his former industry, but until recently, the goal was to find ways to make human workers’ jobs easier and more efficient. If labor could be saved by automating some processes, people could be used for the intangible sorts of things people should be better at doing than machines, such as interacting with customers. But with wages increasing, the only way for the fast-food industry to manage labor costs now that it’s otherwise about as automated as it can be is to start finding ways to eliminate human workers entirely.
An entire class of labor is essentially pricing itself out of the market, Rensi says, and this is as bad for the business side of the equation as it is for the labor side. Entry-level and low-skilled jobs, which are overwhelmingly filled by young employees, are being lost, and that obviously hurts would-be workers. At the same time, it’s depriving businesses of the pool of talents it relies on to sustain itself. Rensi is in a better position than most to draw this sort of conclusion. He began his career at McDonald’s as a lowly teenage grill cook, and gradually worked his way up to lead the company.
The eternal, and likely insoluble conflict between “labor” and “management” is that the former will always regard the employment of workers as some sort of social responsibility, while the latter necessarily considers workers for what they really are–components of the business process. Calls for imposing higher minimum wages or abolishing contractualization don’t consider the actual role of workers. Businesses don’t employ people simply for the sake of supporting those people, but because there are tasks and steps in production that require people to complete them.
By the same token, businesses have to recognize that employing a human comes at a certain cost that reflects what society deems that resource is worth. That value is reflected in stipulated minimum wages and permissible working hours, mandated contributions to things like health care and retirement funds, and so on. The calculation and the decision whether or not to employ a human worker is entirely up to the business. Knowing what the minimum labor cost input must be, if the business can still earn the profit it seeks for the goods it produces or services it provides at no less than that cost, and there are no less costly alternatives that provide a comparable labor input, then it makes sense to hire a person to do the job. If that minimum labor cost input is too high, however, the only options are to either find a lower cost alternative, stop producing the goods or services, or sacrifice profits. And only the first option is rational. The only way that labor can counter that is qualitatively – higher human labor cost must provide higher value that justifies its preference over a lower cost option.
The Philippines is a labor-intensive country because human labor happens to be inexpensive here, to the point of being ludicrous. There are likely few other places in the world where one could make a career of binding together sachets of laundry powder with scotch tape, or where the most cost-effective delivery method for a truckload of sand to make concrete is two guys with shovels. Companies in the business of developing automated systems ought to be looking at the Philippines and licking their chops. If ever there was a ripe market for labor-saving devices, this country is it.
Certainly, workers shouldn’t be exploited and compensated less than what they should be for their labor. One drastic but very effective way to ensure that doesn’t happen, however, is not to employ them at all. The continuing rapid development of automation, of which McDonald’s new system is but one spectacular example, should be a dire warning to those who cry for higher wages and benefits for jobs to which not nearly enough value can be added to justify their continued existence.
ben.kritz@manilatimes.net
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