The Rise of the Minimum Wage Machines – Robots are cheaper than $15 an hour

The Fight for $15 May End in Losing Jobs to Robots

People are fighting to get the minimum wage raised to $15 an hour. #FightFor15 is trending on Twitter as people are demanding more pay for fast food jobs. Restaurants are rethinking their labor costs as the business model may shift under the weight of new mandatory wage increases. Many businesses that hire minimum wage employees are looking at robotic and artificial intelligence options. Once robots become cheaper than $15 an hour, the argument for wage increases may turn into the rise of the machines and the loss of millions of jobs.

Restaurants will be hardest hit by the wage increase uprising happening in New York and California. Democratic presidential candidates have been touting the populasist wage increase with dangerous disregard. If wages increase to unsustainable levels, businesses will be forced to use cheaper technology to stay afloat.

The Washington Post explained the economic impact of wage increases on the fast food industry: Many chains are already at work looking for ingenious ways to take humans out of the picture, threatening workers in an industry that employs 2.4 million wait staffers, nearly 3 million cooks and food preparers and many of the nation’s 3.3 million cashiers.

The advent of fast-food chains may have ushered in an era of new efficiencies, but the industry as a whole has largely been resistant to cuts in labor. According to the Bureau of Labor Statistics, since 1987, labor productivity in ­limited-service restaurants has grown at a rate of only 0.3 percent per year, which is low compared with most other industries.

The market research company IBISWorld has calculated that the average number of employees at fast-food restaurants declined by fewer than two people over the past decade, from 17.16 employees to 15.28. And restaurants tend to rely more on labor than other food outlets: According to the National Restaurant Association, dining establishments average $84,000 in sales per worker, compared with $304,000 for grocery stores and $855,000 for gas stations.

Business Insider reported on a company called Momentum Machines.  They have built a robot that may dramatically alter the fast-food industry and replace minimum wage burger flipping jobs.

According to their interview with Momentum Machines, the robot can “slice toppings like tomatoes and pickles immediately before it places the slice onto your burger, giving you the freshest burger possible.” The robot is “more consistent, more sanitary, and can produce ~360 hamburgers per hour.” That’s one burger every 10 seconds.

The next generation of the device will offer “custom meat grinds for every single customer. Want a patty with 1/3 pork and 2/3 bison ground to order? No problem.” 

Momentum Machines cofounder Alexandros Vardakostas told Xconomy his “device isn’t meant to make employees more efficient. It’s meant to completely obviate them.” Indeed, marketing copy on the company’s site reads that their automaton “does everything employees can do, except better.”

Minimum Wage Jobs Will be Eliminated in Multiple Industries

Fast food jobs are not the only ones at risk of replacement. Here are a few other minimum wage jobs that may be affected by the economic impact of an increased minimum wage:

• Cashiers: Cash is almost obsolete as credit and debit cards have become the primary form of payment for goods and services. Apple introduced their Apple Pay system built into the popular iPhone line and other smart phones have similar features. In a few short years, physical credit cards will be obsolete as smart devices will be the primary way people pay for their items at stores. With this kind of technology, a kiosk or payment device can easily replace a cashier. The costs of payment machines continue to drop as innovators like Square and Visa continue to find more convenient ways to take customer’s money.
• Factory Workers: Robots have already invaded auto manufacturing due to the rising cost of unionized auto workers. As collective bargaining led to skyrocketing employment expenses, manufacturers were forced to innovate and find cheaper ways to build their competitively priced products. 3D printing is getting better every day and may soon overtake other parts of the manufacturing industry.
• Customer Service Representatives: Facebook recently introduced chat bots designed to help business engage with customers online via their popular messenger product. While this machine learning technology is quickly turning into an artificial intelligence, it already has the capability to answer simple questions and solve basic customer problems. A minimum wage employee at a call center can hardly compete with the speed and accuracy of a bot. The cost of this software will soon be cheaper than hiring a small army of people to answer phones as more customers are getting used to text based services that can be handled by a machine.

Minimum wage jobs are best meant for people who are seeking to improve their lives, a stepping stone job on the way to a better job. Education and training are the very things minimum wage employees should be seeking instead of the dangerous #FightFor15.  The economics of $15 an hour have been proven to not be sustainable in certain industries and the people who are demanding more are likely to lose everything as their employers replace them with robots.

Related: $15 An Hour for Flipping Burgers in California