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Former McDonald's USA CEO: $35K Robots Cheaper Than Hiring at $15 Per Hour (foxbusiness.com)
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.
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.
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.
I've said this before on Slashdot, but I'll mention it again. This is not for everyone, especially for those who hate the outdoors or manual labor.
A little over a year ago, I damaged an arm and a hand and was unable to maintain my own lawn for a couple of months. I hired a local Mexican (I live in Texas) guy and his two workers to maintain my lawn, once a week, for two months. HOA requires mowing and cleanliness.
I spoke with the guy about what he charges and this is what I took away:
- He cuts about 10 lawns a day, Monday- Friday @ between $50-75 per lawn. He splits the costs three ways and pays for the gas/oil/weed eater cable his guys use. A nice guy all around.
Math:
At $50, that's 500 a day, that's 2500 a week, 10,000 a month. That works out to about 3333 per man. Not too shabby. No nights, no weekends.
At $75, that's 750 a day, that's 3750 a week, 15000 a month. That works out to about 5000 per man. Again, not too shabby. Again, no nights, no weekends.
In other words, for a small outlay, a man and a friend or two could really make some decent coin. Yes, it's actual work, but work that always requires doing.
You could probably do this with house cleaning, too.
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.
Jumpstart the tartan drive.
Last time we had a discussion about raising the minimum wage (decades ago) McDonalds actually demonstrated a fully automated restaurant. It promptly went back to wage slaves once the talk died down. Now they're so lazy they're not even bothering with the proof of concept store.
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.
I read the internet for the articles.
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.
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. 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
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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.
Take it easy, Charlie, I've got an Angle...
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?”
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.
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.
~ People that think they are better than anyone else for any reason are the cause of all the strife in the world.
And, unsurprisingly, the source you quoted is a BANKER operation uninterested in jobs
As opposed to, say, Dept of labor
Minimum wage mythbuster, for instance. or Center for Economic Progress demonstrating that no such job loss exists and why the Bankers keep repeating the lie and...seriously. Do try some actual research for like, 3 seconds.