The Washington Post writes today about a new robot that can make french fries:
Restaurants have toyed with robotics for years, cropping up as early as 1983 when Two Panda Deli in Pasadena, Calif., used robots to schlep Chinese food from the kitchen to customers....But now — with restaurants facing a protracted labor shortage and robotic technology becoming both better and cheaper — restaurant brands are doing new math. How long before an initial technology investment pays off? How long will it take to train human employees to work alongside robot co-workers? And, ultimately, how many restaurant jobs will be permanently commandeered by robots?
First off, this is not exactly new math. It's what everybody in every industry does when they consider purchasing a piece of automation.
And second, I know that fast food restaurants are all supposedly desperate for workers, but take a look at this:
It looks to me like employment in fast food restaurants has fully recovered and is back to its pre-pandemic trendline. And they sure aren't trying very hard to attract new workers:
Average weekly earnings are lower than they were a year ago. How much of a labor emergency can there be if fast food places figure they can pay less than they used to?
Anyway, there doesn't seem to be much of a labor shortage here. And fast food places are always experimenting with new technology. So why not just write about this cool robotic thing without faking up a bunch of labor nonsense to hang it on?
Every fast food restaurant I see has a help wanted sign. And it's a case of companies preferring to take hit on staff rather than share their wealth. Now they stretch the workers they have grinding them down.
That doesn't mean they don't need workers badly, it means corporate would rather burn their offices to the ground than grant workers more benefits because they are fanatics.
Fast food restaurants *always* have a help wanted sign. Even before the pandemic. It doesn't necessarily mean they're short-staffed. Frequent turnover of a minimally-trained staff is actually assumed in their business model. They have to keep hiring all the time just to run normally.
Kevin - you've constantly used inflation adjusted wage numbers to state that employers aren't desperate to recruit.
I think I agree with your conclusion but I don't think those real wages are necessarily the best proof.
A business may want to recruit but be capped in its ability to pass on higher employee costs and/or unwilling to cut its own profit margin to do so.
At a more macro level and regardless of whether you're correct at the micro/single employer count, I don't think we should hope for a wage price spiral...
We know that many businesses have increased their profit margins in the inflation, while wages have not increased as fast as inflation. At least some fast-food businesses are doing very well:
https://www.nytimes.com/2022/01/27/business/mcdonalds-earnings.html
Doesn't look like they McDonald's is being squeezed by high wages or lack of labor. Reducing wage costs increases profits, but it is also a kind of religion in many businesses.
Yes, but McDonald's sells fast food restaurant supplies and franchises. It doesn't sell prepared burgers or fries. Fast food restaurants have cut back on marginal shifts and some with drive through lanes haven't reopened their dining rooms. They still have help wanted signs, but I notice that fewer are posting an hourly rate.
I'm waiting for robots that can write newspaper articles. Oh, wait.....
That would be great. Robot writers of click bait with robot clickers, readers and commenters! Then you and I could get back to real life.
As for the fast food workers…. They are quite a rough bunch of folks these days. At least where I live. It’s nice to see that misfits and eccentrics have job opportunities. This is what full employment looks like.
Maybe not fast food, but two of my favorate restaurants are currently closed because of staffing issues.
The last time I went to McDonalds I ordered a quarter pounder without cheese and got home with a double quarter pounder with extra cheese. So I won't cry when the robots take over.
By the year 2025, all operations at fast good restaurants will be robotic.
And all the customers at the drive throughs will be self-driving robotic cars.
Waze ahead of you.
Kevin
While you are information-ally correct you left out one salient fact
Fast food sales are up 14%(+) Year over year
Do you know of ANY industry that can sustain a 14% YoY increase in sales and NOT have to hire anyone?
Your thought process that they have reached pre-pandemic numbers is correct but sales have taken off
Increased sales - from 2021 to 2022 - compared to employment levels prior to 2020 is a mistake and paints the wrong picture
If they needed more people, they'd pay more.
Crissa
Perhaps. But COVID changed that. Fast Food saw an opening in the dine out market via a drive thru and took advantage of it by staying open. While all the fancy restaurants closed and casual dining did too fast food was happily serving people.
All while people were afraid to go to work. It was the "perfect storm".
Fast food has always been the 3 or 4 full timers and high school kids type business. The PPP thing helped them a lot as well
But nobody expected sales to rise this much over the last two years.
Like gasoline this is all regional. They will pay the market wages. If you are in a hot market wages will be higher.
In my area we still occasionally have fast food restaurants close during normal business hours because of staffing issues, usually with a handmade sign on the window. That was extremely rare pre-pandemic. I'm not saying the data is wrong, just that it doesn't match what we're seeing. Maybe it's a highly localized problem?
Our sit-down restaurants still aren't open as late as they were pre-pandemic. Maybe the pandemic made them realize it's just not profitable to stay open an extra hour?
I don't really understand what's going on, and none of the explanations I've heard are very convincing. But, at least in my area, some things seem to have permanently changed, and less reliability from restaurants, and particularly fast food restaurants, seems to be one of them.
Also note that even DURING the pandemic fast food sales ROSE due to their already in place drive thru's which other types of restaurants just don't have.
Perhaps the way to really look at this would be #employees per $1M in sales or some other metric that will show us just how many employees it takes to operate a FF franchise. "Sit down only" restaurants just simply closed. FF remained open but had less staff but still continued to sell product
Fast food automating french fries has been ongoing for quite some time. Timers automatic lowering of fries into the hot oil etc have been available for years.
My impression is that it's less fast food chains having trouble finding workers as much as it is small mom-and-pop diners and restaurants. The major chains in my area are now offering $16-18/hr if their help-wanted signs are any indication, and I haven't seen a "closed due to staffing shortage" in any of them for at least a year now. I think many small businesses, especially low-margin cafes and diners, generally can't compete with that and offer, at most, the tipped minimum wage, which is like $8/hr. No wonder they're having trouble hiring.
I wonder how many former fast food workers now work for Door Dash, Uber Eats, etc. Home delivery from all kinds of restaurants has exploded since COViD, and all these drivers came from somewhere.
You appear to have selected a logarithmic trend line for the employment chart. Why? When you discuss the macro employment figures you’ve used the same 90,000 new jobs just to keep pace with population figure. Going back as far as I can recall. Ie a linearly increasing need. What makes fast food logarithmic in its need/actual?
Unless fast food was not desperate/anxious/whatnot for workers pre-pandemic, employment retuning to pre-pandemic levels means nothing about being desperate/anxious/whatnot for workers. It just means they’ve returned to pre-pandemic levels.
Fast food is better-off than restaurants overall? https://jabberwocking.com/we-are-at-full-employment-more-or-less/
Which brings to mind noting, however pedantic it may seem, that the actual here is close to but not indeed at this Drum-selected logarithmic trend line.
The trend line looks like a very good fit pre-pandemic. I would expect most* single-industry employment trends to be negatively accelerated, reflecting increases in productivity. Overall, employment follows the trend in the labor force, equal to LFPR x population growth; as new products and services are introduced, creating jobs that didn't exist before.
*As Baumol noted, it still requires four musicians to play a Haydn string quartet.
But they have to pay them MORE!!!! (disregard inflation)....
The need to do online orders and deliveries, either thru an app or own employees, means cuts in profit margins--not to mention increase in swipe fees. It also means hiring either more people or vendors.
There is also a difference between fast food with drive through and mom and pop sit down diners.
Boy, there will never be another lockdown again for a mild pandemic. Lazy ass response by state health departments. The outside lockdowns repressing seat capacity were the worst. Idiots. Sports, state fairs are a drug....
Getting away from the main point, I've been pondering the high potential for the full robotization of fast-food kitchens for a while, and not just for the fries, but full meals. The steps of all items served at McDonalds are already very highly mechanized, and every human involvement is only to follow a list of predetermined steps.
But even this major change and the great impact it would have might only be a small first step. Why limit such a kitchen's offerings to those of a burger-oriented fastfood place? Many (perhaps most) fastfood cuisines from around the world could lend themselves to 100% automation so any of them could be available to the same robot kitchen for a menu that offers hundreds, or even thousands, of dishes. Or let customers combine them! Why not? Takes hybrid cuisine to a new level. Maybe have some mobile units that drive around town to follow midday demand.
Yes, it's kind of a crazy vision, and possibly frightening, and there are obviously a ton of problems which would need to be solved, but given the levels of automation already here and after seeing the kinds of things those countertop, consumer-oriented kitchen machines are already capable of, most of the problems seem mostly like organizational ones of putting all the pieces together into a functioning whole and creating an interface to operate it.
We know that many businesses have increased their profit margins in the inflation, while wages have not increased as fast as inflation. At least some fast-food businesses are doing very well:
https://www.nytimes.com/2022/01/27/business/mcdonalds-earnings.html
Doesn't look like they McDonald's is being squeezed by high wages or lack of labor. Reducing wage costs increases profits, but it is also a kind of religion in many businesses.
They have not reduced wages. The opposite.
Actual nominal wage reductions are rare, although there were some in 2008-9. Workers are squeezed and real wage costs are reduced by not granting wage increases for inflation, or granting less than inflation.
I don't agree. Inflation is not set in stone and misapplication of data is normal.
Lets also note government data uses previous years as a hedonic adjusters.....It's a mess.
Supply and demand somehow doesn't apply to businesses hiring?
Or something, they never think their compensation and treatment of workers has anything to do with their difficulty in hiring.
According to an article, a fry machine robot costs $3500 a month after an upfront installation fee of $5000. At $3500 a month, assume 30 days a month, 12 hours a day and you get $9.72 an hour. That's a lot cheaper than hiring a worker to do the most loathed and dangerous job in the business. Over the years, one expects that price to drift down as development costs are recovered, and one expects capabilities and reliability to improve. At some point, fry stations will be designed for robots, not humans to use.
This fits the pattern in manufacturing. The rule of thumb, maybe ten years ago, was that a $75,000 purchase price robot was cheaper than one relatively low skill worker. Why hire a person to feed chunks into a machine tool and then stack them as they come out when you can buy a bunch of robots and hire one more skilled, better paid worker to keep an eye on them.
I wouldn't dismiss this. Fast food is capitalism's implementation of material feminism, and women aren't going back to the kitchen any time soon. We are now at the technological cross over point where robots have gotten good enough to replace fast food workers. Why shouldn't a fast food restaurant be run like a highly automated factory now that robots are getting cheap and capable enough? As with so many other things, COVID accelerated an existing trend.
Lol, women never left the kitchen.....
I got to say a lot of reports/podcasts/articles keep claiming that many fast food or McDonald’s jobs pay $15/hr. It isn’t that I have doubts about Kevin’s sources. It is that I have doubts about every source on this issue. I got to wonder: How many fast food workers are getting even close to $15/hr? A few people here have brought up fast-food vs sit down restaurants. I think Kevin's chart isn't telling us what I (and a lot of other people) want to know.