Automation and The Productivity Paradox

When McDonald’s introduced Automated Ordering Stations at our local restaurant two years ago, a friendly young teenager stood beside the machines to explain to us how to use them. As I tapped in my order. I asked the young person what this innovation would mean for employees at McDonald’s like her, who had done the machine’s job for sixty years.

‘Oh, don’t worry’ she replied, ‘It actually means more jobs! These machines free up labour for the kitchen, for the McCafe, in the drive through. It means our staff can focus on serving more customers’.

The Automated Ordering Stations have been in place for about a year now, and most of us no longer need assistance to use them. I’ll admit that, along with self-service checkouts, they are my first stop at McDonald’s. They’re fast, convenient, I can correct my order if I make a mistake, and my kids can choose their own order simply and easily.

What I have yet to notice – and I have been looking – is more people working at McDonald’s. I also have yet to notice appreciably better service, burgers, or anything else that suggests that labour ‘freed up’ by the machines is being put to use to improve service efficiency or quality. My cheeseburgers still look and taste the same, and I still buy them. The same can be said of my local supermarket, where more banks of self-service checkouts were recently installed. So where are the people that used to take my order, and check out my groceries? My guess is they are simply gone.

The impact of automation on jobs across the developed world can be summed up by a single word: productivity. Automation increases the productivity of workplaces, factories, and companies.

The Automated Ordering Machines, the self-service checkout, and the high-tech factory create a gap in the demand and supply of labour. Over the past ten years, demand for goods, from burgers and nuggets to groceries, has increased. At the same time, prices have fallen relative to incomes, yet employment in the industries creating these goods and services has declined.

The Center for Business and Economic Research, at Ball State University, found in 2015 that while demand for manufactured items (both made in America and globally) increased even during the Global Financial Crisis total employment continued to decline. This observation was outside all normal cyclical fluctuations in manufacturing employment. The researchers instead attributed this job loss to increased productivity as a result of automation.

From 2000 to 2010, automation induced productivity improvements replaces 8,166,510 manufacturing jobs in the U.S. alone, the report says. These jobs traditionally supported men without a post-school qualification. In fact, 72 percent of employees in the manufacturing industry are men.

Similarly, retail, fast food, and manufacturing jobs have traditionally supported young school kids, parents, and those without a university education. These already vulnerable groups face the greatest job losses due to automation. The most recent labour market statistics in Australia show significant job loss among Checkout Operators and Cashiers.

My local supermarket can install one machine that will do the job of 10 humans, increasing the efficiency and productivity of the checkout process. Humans on the other side of the register hand over their hard-earned money without many complaints.

This change appears to have a universal effect. The CEO of one of the largest fast food chains in the United States, Carl’s Jr, recently unveiled a goal of replacing all fast food staff with Automated Ordering Stations and automated cooking stations. He argued that these mechanised staff would be more liked than the humans they replaced. ‘They are always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case,’ he said.

Robots, free from pesky distractions like bathroom breaks or personal problems, make perfect employees. Perhaps this forward-thinking CEO should consider that robots – agnostic to living wages, vacations or sick days – also require no food. These new employees, taking over factories, restaurants and supermarkets, will indeed make very poor fast food customers.

Image credit: CarlottaSilvestrini Pixabay

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