Businesses switch to automation at the expense of cheap labor as shortage persists

  • Companies are tired of waiting for workers and are turning more and more to automation.
  • The trend has swept through the restaurant industry as labor shortages hamper hiring.
  • People have long feared automation could destroy jobs, but it could also trigger a “virtuous circle” that helps the economy.

After months of waiting for workers to re-enter the workforce, some companies have had it.

Only 10% of job seekers urgently seek vacancies, according to a recent survey by recruitment giant Indeed. Whether it is because of virus fears, childcare costs, financial cushions or improved unemployment benefits, the unemployed are not clamoring for many of the jobs on offer, which are largely found in restaurants and hospitality hard hit.

Enter the QR code. This technology, which allows a small-staffed restaurant to save on having one person physically bring a menu to a restaurant table, is the canary in the coalmine of automation. Other signs of an automation revolution are emerging.

Hiring problems have been rampant in the restaurant industry for several months, as Insider reported, with large companies like McDonald’s struggling to cope with the nation’s labor shortage. A handful of them have started to turn to technology to replace low-paid workers. For example, Cracker Barrel has deployed a mobile application that allows customers to pay for their meals; McDonald’s has started testing automated steering wheel controls at 10 Chicago locations; and Dave & Buster’s plans to expand their contactless orders.

The advantages are obvious. Automated solutions are often one-time investments, increase productivity, and do not require costly solutions to resolve a personnel crisis, such as signing bonuses which are also growing in popularity.

Economic data suggests the shift to automation has been underway for months now. Productivity jumped 5.4% in the first three months of 2021, its fastest rate of improvement in over 20 years. This jump came as companies had just started to rehire, suggesting the increase was more tied to continued use of pandemic-era technology.

Companies that embrace new technology, mainly in restaurants so far, have not shied away from admitting that yes, automation will replace workers. Dave & Buster locations using contactless control “were able to expand the size of server sections and reduce staff levels to be more efficient,” said Margo Manning, COO of the company, during a call for results in June.

People have long feared that the adoption of new technologies could set off a vicious cycle of job destruction and stagnant wages as robots take control of the workforce. This type of thinking is often referred to as Luddite, after a group of British workers who destroyed the machines that had taken their jobs during the early years of the Industrial Revolution in the early 1800s. But automation can fuel a virtuous circle instead of a vicious Luddite cycle.

The use of technological innovations has tended to increase productivity during the last centuries of economic history. This gives workers a stronger argument for higher wages. A higher wage leads to an increase in economic activity, which increases the demand for labor elsewhere in the economy.

Accepting automation can also optimize job growth, wrote business writer Noah Smith in a June 13 post. blog post. Americans who took orders and occupied tables could develop new, more valuable skills as low-wage jobs are taken over by technology. Past periods of massive innovation – from the industrial revolution to the dot-com boom – haven’t killed jobs, but moved them elsewhere.

A push for automation “is about believing in the potential of humanity,” he said.

New technologies are invented by humans, after all, and they could be used to improve people’s jobs instead of making them worse. This could be the start of this movement. Again, this may not be the case.

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