Killing the 'Living Wage' with Robotics

I have often wondered why employees at QSRs (quick-service restaurants -- the industry's euphemism for fast food places) think demanding pay of $15 per hour won't result in the disappearance of their jobs.

Actually, that's not true. I'm pretty sure I know why:

• They have never received any education in economics, since it's not required in US high schools (and the schools probably botch it anyway);
• They are, by definition, low-level employees who have never held a management position where they are encouraged/required/incentivized to hold costs down;
• They don't give any thought to the subject beyond, “Hey, fifteen bucks an hour sounds really good” and "I need more money".

It's probably all of the above, plus of course that the unions and activists using them are unlikely to give them any sensible advice.

Last year, I posted this item about White Castle trying out automated ordering kiosks to eliminate their counter employees enhance the customer experience.

Here are a couple things I noted back then:

A store that is open sixteen hours a day would save $7,500 per month for each $15/hour counter employee displaced. I don't know what such machines cost, but it shouldn't take long to amortize them at that rate. 

Today I read this item that discusses a restaurant in China that is using robots to (mostly) cook the food and to deliver it to tables, and tells us that the robots cost $6500 each. Assuming the White Castle kiosks are of similar cost, and that two robots or kiosks (the battery life is only five hours, though that will no doubt improve) would be needed to replace each shift worker laid off, the investment in machines could be amortized in the first quarter. This is without figuring in the cost of benefits, though such jobs don't have a lot. It's also without hiring and training costs and payroll taxes.

If I owned a few QSRs, I'd be booking a flight to China to check this place out first-hand.

My post back then also asked, “... how tough can it be to robot-ize flipping a burger?” The answer, apparently is, “Not tough at all.” The article says:

The cooking robots -- which have a fixed repertoire -- exhibit limited artificial intelligence, and are loaded with ingredients by human staff, who also help to make some dishes.

Given that the menus are very limited at McDonalds or KFC, a 'fixed repertoire' should be no problem.

It seems obvious that the restaurant in China is mostly a curiosity. Diners at restaurants with tablecloths will continue to expect service from human beings. But nobody goes to a QSR for the ambiance or the service.

Given the costs cited in the article, together with White Castle already experimenting, it would not surprise me at all to see robotics introduced at QSRs even without 'living wage' legislation. If my calculations above are at all close to reality, then costs could be recovered quickly even at current minimum wage levels. An employee striking for higher wages for this sort of work is simply asking to be laid off sooner, and those urging ill-informed workers to strike are utterly cynical in the way they are playing with peoples' lives.

OK, I'll be kind: Maybe they are just equally ill-informed.

I'll quote myself again in closing:

And so youth unemployment will increase. Crappy as such jobs are, they are often the only thing unskilled workers can qualify for, and they can teach valuable life skills that such employees may never have learned in their broken homes or broken schools – e.g., the importance of dressing properly, treating customers and co-workers respectfully, punctuality, etc. 

Not having the opportunity to learn these skills at White Castle, McDonald's, or Taco Bell, they will be unable to move on to marginally better jobs, as they now can. 

Update 15 April 2015: They're at it again.