Former McDonald's USA CEO: $35K Robots Cheaper Than Hiring at $15 Per Hour (foxbusiness.com) 1023
An anonymous reader shares an article on Fox Business: As fast-food workers across the country vie for $15 per hour wages, many business owners have already begun to take humans out of the picture. "I was at the National Restaurant Show yesterday and if you look at the robotic devices that are coming into the restaurant industry -- it's cheaper to buy a $35,000 robotic arm than it is to hire an employee who's inefficient making $15 an hour (warning: autoplaying video) bagging French fries -- it's nonsense and it's very destructive and it's inflationary and it's going to cause a job loss across this country like you're not going to believe," said former McDonald's USA CEO Ed Rensi during an interview on the FOX Business Network's Mornings with Maria. According to the Bureau of Labor Statistics, 1.3 million people earned the current minimum wage of $7.25 per hour with about 1.7 million having wages below the federal minimum in 2014. These three million workers combined made up 3.9 percent of all hourly paid workers.
obvious response (Score:5, Funny)
Re:obvious response (Score:5, Funny)
Can these robots also bag hot grits?
Re: (Score:3)
I read this first as: "Can these robots also bag hot girls?"
If they could, I'd be interested in getting one!
If not now... (Score:5, Interesting)
And in six months buying a $25,000 robot will be cheaper than paying an employee $12/hr...
And in a year buying a $15,000 robot will be cheaper than paying an employee $9/hr...
They're going to replace employees with robots anyhow, I don't buy that increasing the minimum wage to whatever has anything to do with it.
Re: (Score:3)
Hopefully some of those ex-employees go to school, learn to build, program, maintain, and recycle the robots. Most of those jobs should pay better than $15/hr.
As for the rest, they can spend their time lobbying for UBI.
Re:If not now... (Score:5, Funny)
I suspect this article was posted for political reasons rather than for robot tech reasons.
In Slashdot way back in the year 1900, they had similar articles like "Does the latest steam tractor throw one 2 cent an hour + food laborer out of work? They were political back then, too, even though it was News for Farmers, Stuff that Manures.
Re:If not now... (Score:5, Insightful)
Yup. This isn't really a valid argument against increasing the minimum wage.
At worst, it merely hastens the inevitable by a few years, but this is going to happen.
This is relevant to the current election cycle for multiple reasons - free trade agreements are a major source of contention, and Trump talks about bringing manufacturing jobs back to the US - the problem is, as the recent massive Foxconn layoffs proved, the majority of those jobs are NEVER coming back no matter what you do, unless you enact a New Jersey-style law against automation. (New Jersey requires all gas stations to be full-service, you cannot pump your own gas. One of the reasons for this rather unique law is to create jobs.)
Re:If not now... (Score:5, Interesting)
Yup. This isn't really a valid argument against increasing the minimum wage.
At worst, it merely hastens the inevitable by a few years, but this is going to happen.
This is relevant to the current election cycle for multiple reasons - free trade agreements are a major source of contention, and Trump talks about bringing manufacturing jobs back to the US - the problem is, as the recent massive Foxconn layoffs proved, the majority of those jobs are NEVER coming back no matter what you do, unless you enact a New Jersey-style law against automation. (New Jersey requires all gas stations to be full-service, you cannot pump your own gas. One of the reasons for this rather unique law is to create jobs.)
But then you won't be able to compete with countries that do not enforce anti-automation laws.
I think the game is already over. A significant fraction of the population is already useless to the economy, and in 30 year it will be the vast majority. Let's face it, for the past 40k years, we built our societies based on the value of human labour. Today, human labour is worth almost nothing. It's decreasing so fast, we will see it reaching 0 in our lifetime.
Where do we go from there? Do we fight barbarian style to survive while the 0.1% enjoy the robotic enabled leisure society utopia? It seems so inevitable, it's extremely sad. Look at what happening right now in France: it's obvious all these guys will be replaced by cheaper and more docile robots in less than a generation, what will they do when that happens? Riots, civil war.
The sad part is, while a few will be happy, the vast majority will not, whereas it could have been to other way around thanks to technology if the right political decisions were taken in the 70s.
Re:If not now... (Score:5, Insightful)
Yup. This isn't really a valid argument against increasing the minimum wage.
At worst, it merely hastens the inevitable by a few years, but this is going to happen.
I addressed this [slashdot.org]. You repeat a line that comes from the thinking that jobs go away forever and no new jobs come. Circa 1790, 90% of American workers were farmers; today that's 2%, and a total of 11% of the workforce (including the farmers themselves) provides all the supporting infrastructure (energy, machines, pesticides, fertilizer, shipping, retail, marketing) to supply our food.
It's not "Hastening"; it's "Compacting." You're creating a situation where people become unemployed at a higher rate--more jobs lost per month--and replacement jobs come at a lower rate. Instead of shaking a little as we push up to 6% unemployment and then come back down to 5% over 5-10 years, we spike up to 30% unemployment over 2-3 years and then require some 70 years to recover--if our economy doesn't fucking collapse first.
You will incur enough injuries and blood loss in your life that, were I to take all that blood from your body today, you would die immediately.
Re:If not now... (Score:4, Insightful)
You should watch "humans need not apply"
This time is different.
Re: (Score:3)
Yup. This isn't really a valid argument against increasing the minimum wage.
At worst, it merely hastens the inevitable by a few years, but this is going to happen.
This is relevant to the current election cycle for multiple reasons - free trade agreements are a major source of contention, and Trump talks about bringing manufacturing jobs back to the US - the problem is, as the recent massive Foxconn layoffs proved, the majority of those jobs are NEVER coming back no matter what you do, unless you enact a New Jersey-style law against automation. (New Jersey requires all gas stations to be full-service, you cannot pump your own gas. One of the reasons for this rather unique law is to create jobs.)
It's not unique. Oregon does this too.
Re:If not now... (Score:5, Informative)
But when you increase the labour cost by 25-100%, all in one go, you shock the system so bad that they will naturally look to any and all means necessary to rein in their labour expenses.
Not been tracking this issue in the news have you? Nobody is proposing increasing the minimum wage to $12 (much less $15) "all in one go". The "Raise the Wage Act" being submitted to Congress raises it to $12 but does it over four years. The law recently signed in California reaches $15 an hour, but takes 6 years to do it.
Re: (Score:3, Insightful)
This assumes that the Robot can clean itself daily, clean the fryier, and replace the oil.
And a robot in a hot oil and salt environment will be low maintenance.
Re: (Score:3)
Re:If not now... (Score:5, Interesting)
And someone on Slashdot will make a 3-D printed, Arduino-controlled version for $250 that also checks the fry temperature and saltiness, and counts each fry for maximum efficiency.
Then someone else makes a 3-D printed, Arduino-controlled restaurant that takes raw potatoes, flour, and meat in big hoppers. It creates a burger and fries in a few minutes and is entirely controlled by a smartphone. And the whole thing fits in the space of a standard minivan. Cost? $8500.
Now McDonalds is out of business because any fool can buy one and put it on a corner.
BFD.
Re:If not now... (Score:5, Insightful)
The basic problem with McDonalds is that it's the same generic pseudo-food everywhere.
This generic pseudo-food concept is, actually, once of the keys to their success.
McDonalds' marketers found that a *lot* people often want to go to a place where they know exactly what they're going to get (i.e. familiarity and uniformity) and they've capitalized on that. A place where you order "X" and you'll get "X" just like you do in the next town over, or the next country over.
One time when we were tired and wrecked from traveling we went to a McDonalds in Vietnam....and we got *exactly* the same familiar food we'd have gotten in Seattle or Denver or Memphis. Yes, it was shit food but it was familiar and that was a kind of comfort all in itself.
McDonalds knows this, they understand this bit of food psychology, and that's why they're soooooooo big on everything being exactly the same in every restaurant (food-wise, anyway). You go there and you know what you're gonna get, no surprises. It's one of their keys to success.
Re:If not now... (Score:5, Informative)
Ironically, it's not like McDonalds has ever even BEEN a food company. Ray Koch has given multiple talks in which he spelled it out: McDonald's is a property company. The whole restaurant schtick was just a way of acquiring valuable corner properties right outside city CBDs which would be IN those CBDs a few years later.
McDonalds makes far more from renting out the properties where a restaurant stood decades ago than they have ever made from selling food. Hell the main corporation doesn't even sell any food at all. They sell franchises, and they allow you to buy one by signing over the deed for the place where the restaurant will go and paying the bond on the property. That's how they acquired such a massive supply of valuable properties.
To quote Koch himself: "Every person I've ever met can make a better burger than McDonalds, but none of them are as rich as me, because McDonalds is not a company that makes money from selling burgers".
One side effect is that anything the McDonald's corporation says about labor should be treated as bullshit since they are not in a labor intensive industry at all - they are landlords. The franchise owners care about labor costs, but they are not part of the corporation and the corporation decidedly does not speak for them - they are merely tools the corporation uses to acquire more land.
McDonalds corporation has consistently insisted on that seperation when it came to any and all forms of liability. The case a few years ago in New York where thousands of workers were cheated out of their paychecks by outright fraud (altering their timesheets to lie about how much they worked) ended up having to be pursued against individual franchise owners as the corporation denied any involvement in the management of the franchises nor any liability for anything they do.
Different courts have shown different levels of agreement with that argument (the famous coffee case - which everybody knows only the bullshit corporate-spin version off that has no resemblance to reality at all found the corporation liable for the fuckup at a particular franchise, most cases have not).
Re:If not now... (Score:5, Interesting)
They're going to replace employees with robots anyhow, I don't buy that increasing the minimum wage to whatever has anything to do with it.
Businesses have risk appetite and risk tolerance. Risk appetite is how much money they want to throw in a hole for a likely conversion to more money; risk tolerance is the point at which they will not throw more money into the hole because the return--whether or not it's coming--is sinking the ship too hard, and they're no longer interested in trying to squeeze out more promised droplets of gold.
Because of risk appetite, different businesses will implement labor-reducing changes at different times. Sure, you have an $8.25/hr employee now, and the machine costs $8/hr; but next year the machine should compare to a $7.25/hr employee, and in three years it should compare to a $5.50/hr employee. It seems to me that, over the ten-year period, you will come out with a higher profit if you wait three years before deploying expensive machines. These are $35,000 machines replacing $16,500 employees, so you need a little over 2 years to get a break-even ROI (replace benefits with maintenance).
To some businesses, switching onto machines right away seems like a good idea. Poor foresight I guess. Other businesses will vary between how they roll out--how long to delay, how fast to carry out the roll-out, etc. That means moving everyone out of their jobs and getting machines in here could take a decade or more if wages are competitive with machines and we believe machines will get cheaper. The risk of moving onto machines isn't offset by the 25 cents savings, and the potential return for paying that 25 cents for the next few years is that you turn it into a 4 dollar savings instead.
This breaks when you suddenly make labor expensive.
Now instead of $8.25/hr vs $8/hr, you're doing $15/hr vs $8/hr. In one year, avoiding the 25 cent savings means $500 per employee per year; but at $15/hr, you're losing $7,000 per employee per year for not going in right now. That's going to hit risk tolerances a lot faster, and jobs are going away much more rapidly in those conditions.
It's even worse if machines are *more* expensive than people: you get the price increase that comes with, say, $11/hr (machine) labor, but you fire a bunch of $8.25/hr human labor. Normally, we replace a high-labor process with a lower-labor one and make cost savings, leading to a reduction of prices, leaving more money in consumer pockets, allowing more purchasing [wordpress.com], creating new jobs to make the new stuff we're buying. If the machines are more expensive than wage-workers before the wage bump, then costs go *up*, and consumer ability to buy goes *down*: rather than reacting to the reduction of jobs by creating new jobs, the consumer base reacts to the increase in cost by not being able to financially support the wages of *even* *more* *jobs*.
In 1790, 90% of Americans laborers (in a ~58% labor force) were farmers; we've replaced most of them with machines, and they now make up 2% of the labor force, and about 11% of consumer spending in total goes toward food to cover those farmers, the people building and maintaining farm equipment, logistics and sales moving that kind of thing, chemical companies making fertilizers and pesticides, and oil mining and refining to get the fuel for energy to drive all this. That means 18% of the labor involved in making food is on the farm, and 82% is in supporting infrastructure. You'll notice we don't have an 82% unemployment rate today; and automated fast food won't destroy our job market unless the method by which we transition is damaging--which this particular method *is*.
On target (Score:4, Interesting)
In the 1950s, Henry Ford II, the CEO of Ford, and Walter Reuther, the head of the United Auto Workers union, were touring a new engine plant in Cleveland. Ford gestured to a fleet of machines and said, “Walter, how are you going to get these robots to pay union dues?” The union boss famously replied: “Henry, how are you going to get them to buy your cars?”
Nothing to See Here... (Score:5, Interesting)
The only news here is a former McDonald’s CEO got some air-time on FOX Business Network’s "Mornings with Maria", saying something that happens to dove-tail with Fox's anti-everything that keeps its audience agitated and receptive to ads for Cialis (for daily use) and other products directed to the aging demographic that sits at home watching cable news all day.
Flash: There are already automated order-taking machines in McDonald's restaurants throughout Europe. And automated check-out lines in Supermarkets throughout the U.S. And robots welding cars together throughout the world. Progress marching on, regardless some barely adequate minimum wage.
OTOH, whether people LIKE robot-made-and-served food remains to be seen. The only thing that's certain is robots are far more sexy in the Board Room than people. Nobody gets props anymore for motivating people to be more productive, not when there's a guy with a fancy suit and a toothy grin from Acme Robots showing fancy color pamphlets to a hungry Vice President who wants the Big Promotion.
By the time the dust settles and McDonald's is shelling out support contracts to third, fourth, and fifth-party vendors who show up as reliably as a Comcast repairman, the VP with the great idea will have moved on, maybe to run HP (another nail in that coffin). And who keeps the McDonald's running when the robots break? That same tired assistant manager you always see picking up the slack at the fryer or turning the key when the cashier fucks up. At least he'll be making $15 whole dollars an hour for his trouble.
Re:If not now... (Score:5, Insightful)
And in six months buying a $25,000 robot will be cheaper than paying an employee $12/hr... And in a year buying a $15,000 robot will be cheaper than paying an employee $9/hr...
They're going to replace employees with robots anyhow, I don't buy that increasing the minimum wage to whatever has anything to do with it.
Robots will replace people in lots of professions. Economically this will be fantastic, but it's going to require a serious restructuring of our economy, and the faster it happens the more painful it will be.
Raising the minimum wage will increase the pace of the transition, which will make it hurt more.
Re:If not now... (Score:5, Insightful)
Re:If not now... (Score:5, Insightful)
When a burger flipper starts getting $15.00/hr, what do you think my skills are going to cost you? Right now I'm only making 3 times minimum wage, if minimum wage doubles, so will mine, sooner or later and a lot of people think that way. Oh yeah and Business owners are going to want to keep wages at 20% of revenues so you know what that's going to do to the price of a burger, that $6.75 meal deal will go up to $8.45.
Talk to me about hedge fund managers Ken Griffin and James Simon who each made 1.7 billion last year - which is the equivalent of around 300,000 minimum wage jobs. Explain how minimum wage workers are paid too much, and how it is good policy for your's and my tax dollars to subsidize them.
Math doesn't work out (Score:5, Insightful)
Guess what? Those $35K robots are also cheaper than paying people $8/hr.
Human beings are incredibly expensive. They're also the economic engine that turns a single business into part of a functional economy, but I digress.
There are very, very few positions that could be automated in a way that makes sense financially at $15/hr that wouldn't also make sense at $5/hr. Either a position is automatable, or it is not, and at 4000-5000 hours per year (plus benefits, etc) that's a lot of money for a single position that could be thrown at a robot if that's the way you wanted to play it. Basically, automating that position will either be super-cheap or super-expensive.
Automation is a very important discussion point. Its disingenuous to tie it to the current debate over moving the minimum wage back up to a living wage.
Re:Math doesn't work out (Score:4, Insightful)
Automation is a very important discussion point. Its disingenuous to tie it to the current debate over moving the minimum wage back up to a living wage.
The reason they're tying it to the current debate is so they can blame the victim; victim-blaming is practically mandatory these days.
Re:Math doesn't work out (Score:5, Insightful)
Either a position is automatable, or it is not,
It is automatable now, or it is not yet automatable. There is no reason to believe that any job is safe from robots/computers in the long run.
Re: (Score:3)
In the long run, we are all dead.
What is your point?
Quite frankly, somewhere along the tipping point, we have enough robots to move away from a scarcity economy.
Very few people will need to work, but some number will want to work.
Re:Math doesn't work out (Score:5, Insightful)
In the 1980s, $3ish minimum wages were also not living wages.
Re:Math doesn't work out (Score:5, Insightful)
Automation is a very important discussion point. Its disingenuous to tie it to the current debate over moving the minimum wage back up to a living wage.
I'm old enough to have been through multiple debates regarding raising the minimum wage - some national, some state-wide (Washington), some city-wide (Seattle and environs).
The bogeyman of massive unemployment always gets trotted out whenever anyone mentions raising the minimum wage. And guess what we've seen when the minimum wage goes up? A few isolated businesses will lay off a few people (which is trumpeted loudly in the media), but that's the sum total of it - there are no mass layoffs. Prices may go up a little, but that's about it.
The real "issue" here is that upper class people want to hang onto as much of their money as they can. That's certainly understandable, but it's not a particularly compelling argument.
Re:Math doesn't work out (Score:4, Insightful)
No, the real "issue" here is that the minimum wage unfairly targets particular employers, those who hire unskilled workers. An increase to minimum wage will impact some industries much more than others.
A better solution would be a universal basic income, with no minimum wage. It would be fair by not targeting particular industries (a progressive tax would pay for it), it would force employers to compete, it could eliminate unemployment (any income you earn, no matter how small, is more than you have and is not needed to survive), and in particular to this discussion it would eliminate much of the competitive advantage of robots.
Re:Math doesn't work out (Score:4, Insightful)
But what actually IMPROVED during those previous hikes? Did people just start making more money at their existing jobs, without an increase in cost of living? Or did many, many jobs go away and people moved to other industries? What I saw happen was this: labor costs go up, factories close and move production somewhere cheaper. Minimum wage factory worker gets a job as minimum wage order-taker, making a little more money. But the factory workers who were making MORE than minimum wage are also now forced to take a minimum wage job, LOSING money in the process. Yeah, the bottom moved up a little, but now there are a whole lot more people closer to the bottom, which is exactly the opposite of what should happen.
In the 70s and 80s, when the manufacturing sector was imploding, there were low-paying but available jobs, mostly in retail and food service. Those jobs were deemed 'safe' because people need to buy things and eat. Now, we see that those jobs are very vulnerable. Where are the displaced retail and food workers going to get jobs? You can't just say 'unemployment didn't happen in the past so it won't now'. In fact, there was MASSIVE unemployment in certain sectors, it was just that other sectors were able to absorb the workers (although they are making less money).
Re:Math doesn't work out (Score:5, Informative)
The answer is yes. In every single case (22 times) where the federal minimum wage was raised by law, economic growth and standards of living went up faster than inflation. Every single time.
Re:Math doesn't work out (Score:4, Insightful)
A typical full time position, which fast food generally isn't, is about 2000 hours a year. The fact is that minimum wage employees are less than 5 percent of the workforce and there's a reason for that. You get either kids or the dregs at minimum wage. I know most fast food is run by part timers and a lot of them are under 21. I've seen the kiosks in the local McD's here and I don't think I like self service. I walk by them to the pimply teenager at the register. When they tell me use the kiosk or forget it.....well there's always somewhere else. I'll go home and fix a fucking PBJ first. As for automating the fryers and such there will still be a human overseeing the kitchen. I imagine they can cut some employees but still there will be no way to automate it all.
Re: (Score:3)
Plus the inevitable stories of:
3000 McDonalds auto-restaurants hacked this week. Dispensed free food until the doors were blocked by mounds of burgers and fries.
Re:Math doesn't work out (Score:4, Insightful)
There are very, very few positions that could be automated in a way that makes sense financially at $15/hr that wouldn't also make sense at $5/hr.
There is an awful lot of automation that doesn't make sense when the workers are cheaper and the payback is far off, and a factor of three is a good bit of money here. If your labor costs double because the minimum wage doubles, then there is a lot more incentive to find ways to automate those jobs. Some people "don't buy" that economic fact, but it's true.
Basically, automating that position will either be super-cheap or super-expensive.
The excluded-middle of "costs a little less to automate at a wage of $15/hour but more than $7/hr" still exists. It surprised the heck out of me when I saw my first automatic french-fry machine, but it was obvious that the costs of paying someone to do that job were going to be a lot more than the cost of the machine and paying someone to refill the freezer every so often.
Its disingenuous to tie it to the current debate over moving the minimum wage back up to a living wage.
It is disingenuous to claim that the minimum wage ever was, or was intended to be, a "living wage". It is supposed to be an entry-level introduction to employment wage. Saying "moving ... back up to" when it never has been is silly at best.
Re: (Score:3)
Interesting case, the self checkouts. The cheapest supermarkets in the uk (e.g. Lidl) don't have self checkout machines, they have staff who are very fast. I prefer gong to Lidl now not just because of the prices, but because you never get stuck in a queue with a really crap slow checkout person.
McDonalds won't be 1st, but they will be 2nd (Score:5, Insightful)
Re:McDonalds won't be 1st, but they will be 2nd (Score:5, Funny)
"I would like to order large fries".
"Do you want fries with that?"
"No, just large fries"
"Two orders of large fries. Drive to the window."
Re:McDonalds won't be 1st, but they will be 2nd (Score:4, Funny)
Re:McDonalds won't be 1st, but they will be 2nd (Score:5, Insightful)
My guess is on Wendy's. But the real trick will be how to make the drive-through person obsolete. Either through an app that produces a QR code that you scan - or a drive up touch screen - or something.
Why doe that person have to be at the store? Link multiple stores together to a central call center that then transmits the order to the proper store.
Even at $7.50, they still will save money... (Score:3)
Re: (Score:3)
Wendy's, McD's, it all comes from the same place (Score:3)
How quaint.
I expect nothing less than delivery from a central location by 3D-printed drone direct to wherever I am in 15 minutes or less.
Boom. Just replaced 15 McD's in the greater metro area, along with 95% of the staff.
During down times, the robots work on my plan to build [REDACTED] from baby [REDACTED] to [REDACTED] the [REDACTED].
Re:Even at $7.50, they still will save money... (Score:4, Interesting)
McDonalds et. al. are about a predictable customer experience - God knows not an excellent one, just predictable. Robots should deliver that much better than high school kids.
Re: (Score:3)
Easier to disinfect? I wouldn't be so sure about that.
A food-service robot had better be very well designed not to have little nooks and crannies where bacteria can hide and grow. Pneumatics blow air around. Hydraulics have lovely oils that could leak. All joints need lubrication fluids that might not mix well with the secret sauce. And because the robots don't change with the shifts, it's the same damn robot, collecting more and more dust, grease, and biscuit flower from the surroundings in the kitche
Blaming minimum wage (Score:3)
Minimum wage is a convenient scapegoat, but all businesses move to reduce overhead.
no sense (Score:3)
This scaremongering makes zero sense, there are plenty of countries with higher income than USA and they don't starve from unemployment, rather the opposite.
Few positions that can be replaced by robots will be replaced anyway, as robots are getting cheaper and it makes business sense. Somebody capable of working in robotics will get employment and move up the latter leaving low qualification position for others. There are plenty of low qualification positions that can't be replaced.
Re:no sense (Score:5, Informative)
This scaremongering makes zero sense, there are plenty of countries with higher income than USA and they don't starve from unemployment, rather the opposite.
Citation needed.
You're correct only if by "plenty" you mean 3-5. There are 5 countries with higher median income [wikipedia.org] than the US: Luxembourg, Norway, Sweden, Australia, and Denmark.
There are 3 countries with higher average wage [wikipedia.org] than the US: Luxembourg again, Switzerland, and Ireland (according to the OECD). (Though this depends on who you ask: according to the United Nations Economic Commission for Europe, the US is flat-out No. 1 for average income.)
All but 2 of those (Norway and Switzerland) have higher unemployment rates [wikipedia.org] than the US.
A McDonald's can run on a single employee. (Score:4, Insightful)
Re:A McDonald's can run on a single employee. (Score:4, Insightful)
This is a case where I prefer interacting with a machine. The big touch board means that I can select exactly what I want to order (in my own time) and I don't have deal with correcting somebody through a 2" speaker or wait for the person in front of me to argue through their order. I know I'm not alone in this assessment of the touch board. I'm sure they're a hell of a lot cheaper than a $35k robot.
So, if I was McDonalds (or any public service company), my approach would be to only install technology that provides the customer with a better experience and downplay the cost benefit issue (while taking more money to the bank).
The minimum wage isn't the trigger (Score:5, Insightful)
Also on the front page is how Foxconn is replacing manufacturing with robots. I can guarantee they're not paying $15USD/hr to employees. The talk about minimum wage is just to cut costs until the robots can replace the guys making $8/USD/Hr.
There's a fundamental conflict in capitalism. As an owner, you want to cut costs, including wages. But wages are also known as "purchasing power". We've gotten past this by growth. Capitalism requires growth. But we're cutting so fast, im not sure we're growing fast enough to cover all the lost purchasing power. We'll see
It's all about who subsidizes whom (Score:5, Insightful)
Even at $15/hour, it's not a livable wage in most places. You can't survive on it when your pre-tax, gross income is less than the average one bedroom apartment costs per month, as is the case in Los Angeles. So what happens is that people making minimum wage doing scut work jobs are subsidized by family, friends, or, far more often than not, the taxpayer. They can't afford a car, so they go to work on subsidized public transportation. They can't afford medical insurance, so they get subsidized by the taxpayer, or go to the emergency room they can't afford to pay for. They can't afford child care, so they sign up for subsidized versions of that, or their children grow up feral, and the taxpayer pays for keeping them in prison.
All that so we can buy a cheap, mass produced hamburger for 99 cents.
The problem isn't paying employees $15/hour, the problem is paying McDonald's a quarter of the true cost of making a Big Mac, so that the corporate investors can get richer.
All big, national chains are heavily (if covertly) subsidized by the taxpayer. Sam Walton became a billionarire on those subsidies, while his employees were living on food stamps.
If you can't afford to pay your employees enough to live on without subsidies, then your business model is broken, and you should be driven out of business by pitchfork wielding mobs.
Automation is a GOOD SIDE EFFECT of minimum wage (Score:5, Insightful)
Automation is a good thing. That a livable minimum wage encourages some companies to automate is also a good thing. We MAY need to use other policies to maintain full employment, but at this point, I don't see why anyone should be making just $15/hour.
A big criticism of a minimum wage is that it's "not a free lunch" and just causes inflation. But if a minimum wage encourages automation, then it actually increases per-person productivity, thus partially paying for itself and keeping a minimum wage from being purely inflationary (there will, of course, be some amount of inflation due to a minimum wage increase, but nowadays a small amount of inflation is actually a good thing).
If we're paying just, say, $2/hour for people to work menial jobs, which is far below a livable wage, then they are, de facto, being subsidized in some other way. For instance, government assistance through subsidized housing, food stamps, etc. Or perhaps they're living off of charitable organizations. Or perhaps they're living off the good will of their family and/or friends. But paying a sub-livable wage is being subsidized in SOME WAY, perhaps even just being taken from that person's health. It's not a society-optimal solution.
In our society, even low-skilled workers' productivity has increased due to technology. But because there are so many low-skilled workers, their bargaining power is low, and thus their wages don't increase. Thus something like a minimum wage is necessary in order for those people to make a livable wage and to not be on foodstamps, etc.
Again, I see automation in response to a wage hike as a good thing. Ultimately, provided we maintain full employment, this will help everyone. Given our modern technology, human labor is worth more than $5/hour even if the workers do not have the bargaining power to get a higher wage. So employing people at below $15/hour in positions that could be automated if they were paid a livable wage is actually a misallocation of human resources. In a sense, by NOT paying workers a livable wage and NOT automating more, companies are, in fact, having their labor subsidized by the rest of society (government, family, friends, charities).
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In all seriousness, what exactly was it that you were trying to say? Are you for minimum wage, no minimum wage, more automation? I couldn't follow.
For example, what does this mean?
Again, I see automation in response to a wage hike as a good thing. Ultimately, provided we maintain full employment, this will help everyone. Given our modern technology, human labor is worth more than $5/hour even if the workers do not have the bargaining power to get a higher wage. So employing people at below $15/hour in positions that could be automated if they were paid a livable wage is actually a misallocation of human resources.
Are you saying they need more than $15 per hour, or between $5 and $15 or something else?
At least $15/hour.
If we had adjusted minimum wage for per-capita gdp growth (a kind of measure of economic productivity) since the 1960s, it'd be up around $20/hour or so. $15/hour is comfortably below that, so I'm certain a $15/hour minimum wage would not bring devastating inflation or anything like that. We can, as a society, afford to pay people at least $15/hour. And with more automation, we could afford to pay even higher wages.
Need to replace CEO CFO with robots first (Score:4, Insightful)
Talk about wasted money. Overpaid senior execs actually reduce the ROI of any business, as numerous studies have shown.
Let's not be fooled... (Score:5, Insightful)
Let's not fool ourselves, replacing the minimum wage worker at McDonald's with a robot isn't a new idea. They've been working on that since the early 2000's. The increased minimum wage has been a slight, if not small, acceleration to the plan to do so.
Even when they were paying less than $8/hour, they were thinking they wanted to have a one-time-cost robot to do the work for them.
Related news: foxconn (Score:3, Informative)
Foxconn cuts 60000 jobs, replaces them with robots [slashdot.org]
That means that robots can be cheaper than a $320/month wage [marketwatch.com]. It's not a minimum wage issue.
All talk (Score:5, Interesting)
If these robots were practical at the price he is quoting they would be in use today. Payoff period would be 2/3 of a year instead of 1/2 a year, but that's barely any difference. This is a scare tactic pure and simple.
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Is it?
Other countries have brought in minimum wages much higher without issue from places like McDonald's. UK current minimum wage for over 21's is GBP 6.70 which is about $9.86, for over 25's is GBP 7.20 ($10.59), and it's legally prescribed to rise every year. But even here there are campaigns for a "living wage" higher. There's not really any great fuss from places like McDonald's or other "minimum wage" employees.
The robots, however, just keep getting cheaper. My bank has gone - in my lifetime - fro
Misleading (Score:4)
if McD's cost is $35,000, and they're open 16 hours per day, then it pays for itself in less than a year with employees making less than $8/hour.
(8 * 16 * 365 = $46,720)
I know that for myself, I go to McDonalds embarrassingly often, and I would absolutely not go if that were the case, just as when I go to the super market, I intentionally don't use the self checkout lines. I don't care if its cheaper, and even if they extended a fraction of the savings to me, I'd RATHER help kids keep employed and have some money to spend. And even if they're not kids, I'd rather they get paid the money, than just give huge bonus' to the C-level guys for thinking "hey, lets automate away everyones jobs! what could possibly go wrong with that? oh and while we're at it, lets support politicians who want to do away with social safety nets! Like anyone actually needs those things!"
And I wish I was sarcastic about that...
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Liberal answer: The benefits are localized, the pain spread throughout. In other words, its a tragedy of the commons. Typically, you need government intervention to prevent those.
Conservative answer: They'll get one of the many other jobs waiting to absorb the unskilled labor. Also, fucking government caused this problem by not allowing wages to settle at $5/hour
5$ / hr is not sane in the current economy (Score:5, Insightful)
All wages at $5 an hour do is make the rest of us support the workers via the social safety nets.
And if you take the social safety nets away, then you have people who are earning $200/week for 40 hours labor.
That means no medical care, rent is impossible to pay in many circumstances, etc., etc., ad nauseum.
Even as it stands now, we subsidize those corporations with our taxes; that's the only thing that makes the wages they pay now survivable in any real sense of the word in any urban environment. Small town or country living, maybe you can make some kind of sane go of it for less than $10/hour, but it's definitely the exception, not the rule.
For McDonald's and the like, when the cost of functionally adequate automation falls below the cost of employment, they're going to move to automation. We either figure out how to handle the consequences ahead of time, or we take the beating when it happens without any fallback position. My guess is that it will probably be the latter, inasmuch as politics-as-usual always seem to target only the nearest term headlights-in-the-tunnel.
Also... speaking now with my AI researcher hat on: I think it's a slam dunk that the automation that will suit the fast food service industries is going to arrive very, very soon. With other service industries soon to follow. This problem is basically on our doorstep right now. Most people fail to see it because it represents a paradigm shift - things will be as they have never been before in history, and it's just very difficult to imagine fundamental changes in one's worldview that have no precedent.
Grab the popcorn and lock your doors. Show's going to start shortly.
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And when you replace all the workers with robots, who's going to buy your fast food?
People on guaranteed basic income. Liberals are pushing for it, but it's going to co-opted by the 1% who will dump the burden of paying for it, as much as possible, on the middle class. Partially through high taxes on the middle class and partially through debt that will be inflated away, which will destroy the savings of the middle class. The 1% will, of course, pay for as little of it as possible.
Re:Cool (Score:4, Interesting)
If you do it slowly enough, the fast food prices won't rise as quickly as inflation, and consumer buying power will increase. That's what actually happens [wordpress.com]. To buy more stuff, we need more workers--operating the machines, of course--which means new jobs. We spend a smaller proportion of our income on the stuff we buy now, and the remainder goes to new things--since the 80s, we've moved our money from food and clothing onto more and better healthcare, as well as smart phones and electronic entertainment; and houses have gotten bigger, while cars have gained luxury, performance, and safety features while remaining roughly 56% of the median income.
If you do it quickly, you get an unemployment spike, which damages the economy. The bigger the spike, the longer it takes to recover, and the poorer your society comes out of it.
If you do it poorly, you get rough destruction of wealth. Raising minimum wage already concentrates wealth into a poor elite--some minimum-wage workers get richer, all other consumers become poorer, and we lose jobs: The cost of a burger increasing by 17 cents, with 282 billion burgers sold per year, is $50 million; that's over 3,000 $8.25/hr jobs. Raising minimum wage such that the old wage was cheaper than a machine *and* the new wage is more expensive ($8.25 wage becomes $15 wage; machine is $9.50) eliminates the minimum wage jobs and exchanges in more-expensive machines, so your economy takes it both ways.
A lot of people can't grok this because it's a continuous-operation function. Basically, people reason, "Hey, but the minimum-wage worker has more money to spend, and so you wouldn't lose any jobs!" By such reasoning, you have infinite money, and thus infinite jobs, and we are all fabulously wealthy (we are, but that's not the point). You have so much income *per* *time*, and the cost of purchasing certain goods increases, and so the number of goods increased *per* *time* decreases, thus the jobs decrease. Again: doubling down on this kind of damage by making wage workers non-competitive with machines is bad.
It gets even worse: normally, product price increases occur slightly more slowly than inflation for products whose costs have decreased. That is to say: If you displace 10% of the labor cost of making a hamburger, that hamburger will approach 1.8 times the price after 100% inflation--10% of its price doesn't keep up. As this money returns to the consumer, the consumer base becomes capable of paying the wage of another worker, and thus can buy new products. If you've pushed up the cost of labor, then it takes *longer* for those two things to intersect, and so the transitional period of unemployment extends: jobs lost to technical progress take more time to become new jobs.
So you're de-employing workers *quickly* (unemployment coming more rapidly); you're increasing the cost of goods instead of decreasing it (setting the far point of technical progress growth years farther out); and you're making human labor more expensive (requiring much more purchasing power movement back to the consumer's hands before replacement jobs are created--and reducing the total replacement jobs possible).
That's a recipe for an economic disaster and a permanent feedback loop to make a society poorer. It's one of the reasons I push for a Citizen's Dividend that migrates costs off wage-labor (reduce payroll taxes and replace minimum wage raises with a non-wage income basis): that plan increases the number of consumer take-home dollars per employer wage-labor dollars paid to have an employee. You can describe that as "decreasing costs" or "increasing consumer buying power"; if you stare long enough, you realize the two things are eventually the same.
Technical progress is what makes the middle-class, the poor, *and* the rich richer. It's what's given us the ability to *afford* modern healthcare, high-speed internet, wireless ph
Re:Where are the robots from? DeVry, that's where (Score:3)
If that was the case they wouldn't be doing it, because that would be rolled into the price of the robot.
Hold Ma Beer and Watch This! (Score:4, Insightful)
The whole push for a $15 minimum wage will been seen as a "Hold ma beer" moment for the minimum wage activists.
Re:Hold Ma Beer and Watch This! (Score:5, Insightful)
The whole push for a $15 minimum wage will been seen as a "Hold ma beer" moment for the minimum wage activists.
Unlikely. If people were willing to learn about economics by looking at how past policies worked in the real world, we wouldn't be having this debate in the first place. I have never heard an activist, of any ideology, admit they were wrong.
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The entire market is equally "handicapped" and very, VERY little changes in terms of net employment.
Re:Hold Ma Beer and Watch This! (Score:4, Informative)
Well excepting the fact that there are such studies
http://www.frbsf.org/economic-... [frbsf.org]
You don't have to be Milton Friedman to figure this stuff out.
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Re:Hold Ma Beer and Watch This! (Score:4, Insightful)
$15 per hour wouldn't even be the highest it's ever been. $15 per hour isn't a high number.
It looks like the mimum wage was historically the highest back in 1968:
"The minimum wage reached its (inflation-adjusted) historic high in 1968, when it was raised from $1.40 to $1.60 per hour. Adjusted for inflation using the BLS online inflation calculator that would come to $10.55 per hour in 2012 dollars."
http://inequality.org/minimum-... [inequality.org]
Clearly, whatever mimium wage society thinks is appropriate, it should really be indexed somehow to inflation or agerage wages or something like that.
I have always liked the idea of setting mimimum wages as some fraction of the top wage in a company, or as some fraction of the wages of politicians - though that would not work well in states with underpaid legislators.
Re:Hold Ma Beer and Watch This! (Score:4, Insightful)
Foxconn (Who make devices for Apple and basically every other major electronics brand) is replacing Chinese workers (who make the equivalent of about $2/hour) with robotics.
With that in mind, only an idiot would believe that keeping the minimum wage at $7.25 will save any jobs from being replaced by robots.
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Sure seems like it would cost a lot more than $35k.
It is not likely anyone will burn the restaurants. Fast food joints already have high turnover, and few employees are there for a long term career. So you bring in a robot to make fries, shift the ex-fry-maker to sweeping the floor, and reduce your workforce through attrition. By the time the next employee quits, maybe a floor sweeping robot will be available. There will not be a big mass layoff, just slow dwindling of entry level jobs.
Re:And then those employees burn down your restaur (Score:5, Insightful)
Re:And then those employees burn down your restaur (Score:4, Insightful)
2 robots at $70k is still cheaper than one employee. One for cleaning and one for frying.
Re:And then those employees burn down your restaur (Score:4, Interesting)
Perhaps, or perhaps not. $70k is the equivalent of 2 1/3 years of a $15/hour wage (eight hours per day, five days per week, 50 weeks per year). So even in a perfect world, it'd take 2 1/3 years to break even, assuming you can only replace one employee's job with each robot. And that also assumes that your robots never need maintenance, adjustment, calibration, cleaning etc., nor do they use any power or consumables.
That's a pretty unlikely scenario, to be honest. Far more likely is that your two robots will set you back the equivalent of around three years before you've saved a cent. After all, while you got rid of the unskilled labor to assemble burgers, you replaced it with skilled labor to maintain the robots, and you probably have to pay that skilled labor for their travel time and expenses servicing robots at many, many locations around the country. (No single location or district is going to provide sufficient work for the robot techs to live locally, so they'll be traveling to and from your stores for a large proportion of their time.) If much maintenance, calibration or cleaning is needed at all, you'll find the projected cost savings quickly vanishes.
And then what's the service life of the robots? Answer that, and you'll know whether this is going to be worth the PR downside. If a robot lasts ten years and pays for itself in three, you've got a good argument for phasing out the meat puppets it replaces. If it takes three years to pay off, but you're having to replace it after just four or five due to its service life or obsolescence, well, that's another matter entirely.
But then all of this is pulling numbers out of our butts -- both on your part and mine -- and has little to do with the real world.
Re:And then those employees burn down your restaur (Score:5, Interesting)
There's more to hiring people than just giving them a paycheck. On average, an employer has to pay an additional 2/3's of the employee's pay in taxes, insurance and in some places other benefits.
But lets forget all that for a moment and stick to the numbers we have, while thinking in MAN HOURS:
35k divided by 15 an hour is 2,333 *man hours*
Most stores at peak times have 5 crew members.
That's 466.6 hours of operation for 5 people.
Assuming there are 5 people running a 24/7 store that's 19 *days* of operation that will be required to return on that investment. ( Gross )
But without people the costs of operation will drop also.
- You wont need the space or restroom facilities for a crew.
- Without people Minimal HVAC will be required.
- Robots can certainly run 24/7
- The building size for a drive through only restaurant can now shrink.
- Multiple lanes with highly efficient production will shorten wait time and provide much more consistent quality.
Cons:
- You still need someone to unload trucks, restock machines, and maintain the automated devices. An owner can pay one person minimum wage to do the rounds, responding to alerts for low stock or malfunctioning equipment etc.
Additionally, I KNOW someone won't be spitting or adding any other 'secret sauce' to my food in the back.
Re:And then those employees burn down your restaur (Score:5, Insightful)
Here's the thing though, that $15 wage is a strawman. They are already planning on buying the robots, they're just using the wage increase as a smokescreen. If the wage continues to stagnate they will still buy the robots and dump those workers! They've been talking about centralizing the drive thru to a call center so they don't have to staff the window for years.
Personally I think robots are the worst thing they'll ever do, for a lot of reasons.
Robots won't stop teens from coming into the store and spray painting penises on all the terminals.
Robots won't notice when the homeless guy who smells like a tuna sandwich that's been in the sun for a week decides to take a nap in the store.
Robots won't stop the aforementioned homeless person from shitting on the table.
Robots have no idea how to deal with humans who give no fucks and want to be destructive.
Re:And then those employees burn down your restaur (Score:4, Informative)
You can't just design a machine that doesn't need to be cleaned.
but you can design a machine that only needs to be cleaned occasionally.
Everything that touches food needs to be cleaned. Food has to be removed from all the cracks and crevices.
It can be designed literally without cracks and crevices, and with self-flushing systems for any parts where that's not true.
I agree that machines could be designed to reduce cleaning, but cleaning of automated food service equipment is a nontrivial and very important part of the operation.
Taking the humans out of the process is nontrivial, but removing them will actually improve cleanliness and quality! Every leaf of lettuce can be UV-inspected for contaminants before it's used and every slice of tomato can be checked for sugar content with laser spectroscopy and rejected if it's sour, let alone has a discoloration indicative of some defect. A human touch may be beneficial for more complex foods for the foreseeable future, but the sad truth of fast food is that the human touch is often primarily a vector for pathogens.
Most humans wouldn't use a spatula to flip burgers if the spatula was very dirty. They would clean it, or get another one. The machine is going to keep going because that's what it was programmed to do.
The machine will both clean its own spatula and scrape its own grill, and it will sense when the bucket is full and a robot will come to empty it. It's not 1985 any more. These days, we can use visual processing to determine whether a spatula (or grill) is dirty. I would scrape every time, and use visual processing to determine if I had been successful.
The automated burger flipping mechanism may be buried inside the machine where it can't even be seen.
Personally, if I were building an automated restaurant, I'd put the machines where they could be seen, with shutters to pull down to hide them if I needed to perform maintenance. People would come in just to watch the machines work. How very postmodern.
Re:And then those employees burn down your restaur (Score:5, Interesting)
Sure seems like it would cost a lot more than $35k.
True, but that means the employee(s) would make way, way less than $15/hr. at their new job - stamping out license plates in prison.
Pretty sure that's not what most folks would want to end up doing...
So essentially moving the cost burden from the private industry to the state? Always find it curious that we oppose elements of a social system and then end up paying for it anyhow, but in some other way.
Re:And then those employees burn down your restaur (Score:5, Insightful)
If the state runs prisons directly it's public expenditure, which is communism and encourages homosexuality.
If the state pays twice as much to corporations which run prisons that's private enterprise, which is 100% American and apple pie and NUMBER ONE!!!!
Re:And then those employees burn down your restaur (Score:5, Insightful)
Generally speaking, the fry bagger does not replace just one employee for $15, but two, possibly 3. There are many locations where they are open more than 16 hrs a day, and some 24hrs.
And $15 employee does not cost $15 per hour, it is more like $25 with payroll taxes, SS and benefits added on. $30K a year becomes $50K a year.
So that is $50K a year, X the number of shifts.
In reality, having actually worked at a McDonalds, it takes a full employee only during the rush hours to run the fryer and bag the potatoes. So call it 1 to 2 FTEs.
Re:And then those employees burn down your restaur (Score:4, Informative)
Why?
The robot that fills the baskets with fries does not brake down that often.
It is not precision engineering here, it is sticking the right weight of fries in the bag. Ever watch "How It's Made"? They show lots of machines that do exactly that, hundreds of times an hour for things like bagged candy. The only difference is they seal both ends of the bag.
And believe me, they spend a LOT of time training people to do it right, even a 5% overfill makes for losses, 10% underfill makes for pissed off customers who think they were cheated.
Re: And then those employees burn down your restau (Score:3)
Given that those restaurants are owned by franchisees, it doesn't affect McDonalds. Besides, nobody is going to fault them for hoodlum behavior.
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So, what we need now is work for the 90% of displaced employees who are _not_ getting jobs building, maintaining, and recycling the robots.
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In China.
In India.
That aside, how many of those jobs do you think there'll be?
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Looking at the math, if a McDonalds location is making fries from 11:00 am until 10:00 pm daily, a $15/hour wage would be about $1,155 per week or about $54,750 per year. Using your argument that a single employee is not dedicated to making only fries at a single location, lets say only about 1/3 of a man-hour per business hour, that still is about $18,250 per year in wages for making and bagging fries. However with the same assumptions at $8/hour is only $9,7333 per year in wages for making and bagging fr
Re:Not apples to apples (Score:4, Informative)
most workers work 40 hrs/week * 50 weeks/year for 2,000 hours...
Not at McDonalds they don't. The vast majority work part time and there's a reason for that. Hint: it's not to benefit the employees.
Re: Not apples to apples (Score:3)
Re:Not apples to apples (Score:5, Insightful)
Here's how it works from a previous comment (https://slashdot.org/comments.pl?sid=9101743&cid=52105397):
I imagine that not only customer facing personnel will be replaced by kiosks, but food preparation, waste disposal, cleaning, and restocking will become automated as well. Accompanying this, I can see a wave of new positions available for robotics, IT, and kiosk repair technicians. I can see a busy McDonalds location staffed by as little as 2 people, there mainly for emergencies and "turning the machines off and then on again" as necessary.
Its hard not to perceive the future of fast food locations. There will be an app that allows you to order on the way to the location. You pay from your phone and a robot prepares your meal just in time for your arrival. Timing this is trivial because you share your location with them. Forecasting the next 15-30 minutes of business through the app makes for fresher food and drastically more efficient order fulfillment. A dedicated lane for app-placed orders ensures quick in-and-out drive through service. Customers are served better, orders are machine precise, profits are higher, and the only people that lose are low income workers.
Customer service rep positions are replaced with machine repair and maintenance positions. The law of unintended consequences is preserved and the inevitable slide towards machine replacement for most human tasks is moved forward. Everyone wins, except of course for the people that the higher minimum wage laws and Affordable Care Act were designed to help. They have been priced out the job market. They are just too expensive to keep on board.
Re:Not apples to apples (Score:5, Insightful)
Customer service rep positions are replaced with machine repair and maintenance positions. The law of unintended consequences is preserved and the inevitable slide towards machine replacement for most human tasks is moved forward. Everyone wins, except of course for the people that the higher minimum wage laws and Affordable Care Act were designed to help. They have been priced out the job market. They are just too expensive to keep on board.
If this analysis is correct, not changing the mimium wage delays this type of thing by only a few years I would guess.
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Yeah but a machine doesn't require benefits, insurance, sick days, vacation, workman's comp, schedule changes or a training...
Sure -- but how many times has your computer been out-of-commission as it's updating itself/botched update (= sick days), your device (ahem, Google...) been completely orphaned (= I quit), or your device been broken outside of warranty (= needs insurance)?
That said, I largely agree that human jobs -- particularly entry-level ones -- will be replaced by robots, but the cost analysis isn't as simple as, "robots don't need health insurance so they're better."
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Dear RoboFlipperTM customer:
It has come to our attention that you are now completely dependent on our equipment in order to provide service to your customers. Please be aware that effective next week, your service contract fees will increase by 100%. Thank you,
RoboFlipperTM Accounting Department
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Robots break. When your burger robot breaks your entire store is out of commission vs calling in another worker to cover their shift. Robots can be hacked, robots will not notice of someone introduces foreign substances into the food, leaving the owner liable.
On the up side, robots will not riot when there are no jobs and nobody has any money.
Re: Not apples to apples (Score:4, Insightful)
Of all the things they could have supported and glamorized, they chose shitty fast food. Pathetic.
Any gang of capitalists would do the same. When stuff costs money, then stuff that makes money happens — and that's about it.
No, no it did not (Score:3)
Random Olds [wikipedia.org] invented the automobile assembly line. Ford perfected it. But the assembly line dates back to around 1800...
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Same goes for a real, actual restaurant: I want a human chef creating my meal, and I want human waitstaff to deal with.
A big portion of the process is already automated - ever seen a point of sale system at a restaurant? Or do you think that bakeries knead dough by hand? Or wash each dish by hand?