Jack in the Box CEO Leonard Comma told a room full of attendees at a Tuesday conference that the company is considering replacing cashiers with robots as the minimum wage in California rises.
“As we see the rising costs of labor, it just makes sense,” said Comma.
Jack in the Box CEO Leonard Comma
The San Diego based fast-food chain says that with California’s minimum wage rising to $15 by 2022, automated kiosks and other previously tested technology which was previously failed to pencil out are now economically feasible.
Jack in the Box Kiosk
18 states are raising minimum wage in 2018, including California, with the Golden State scheduled to be the first to hit $15.
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Meanwhile, McDonald’s and Wendy’s have been testing automation to reduce labor costs. McDonald’s is adding 2,500 kiosks to its stores, while Wendy’s unveiled plans last February to install self-ordering kiosks at 1,000 restaurants – 16% of its locations nationwide.
“Last year was tough 5 percent wage inflation,” said Bob Wright, Wendy’s chief operating officer, during his presentation to investors and analysts.
Wright noted that over the past two years, Wendy’s has figured out how to eliminate 31 hours of labor per week from its restaurants and is now working to use technology, such as kiosks, to increase efficiency.
Wendy’s chief information officer, David Trimm, said the kiosks are intended to appeal to younger customers and reduce labor costs. Kiosks also allow customers of the fast food giant to circumvent long lines during peak dining hours while increasing kitchen production.
“With government driving up the cost of labor, it’s driving down the number of jobs,” then Carl’s Jr. and Hardee’s CEO Andy Puzder told Business Insider in 2016. “You’re going to see automation not just in airports and grocery stores, but in restaurants.”
And yesterday at CES, Pizza Hut announced a driverless delivery concept vehicle straight out of Demolition Man (the non-US version of the movie).
Introducing the first Pizza Hut fully autonomous delivery concept vehicle. Excited for our future with @Toyota #CES2018 pic.twitter.com/YGNQUgijha
— PizzaHut (@pizzahut) January 8, 2018
Who could have seen that coming? As we have noted in the past, minimum wage laws – while advertised under the banner of social justice – do not live up to the claims made by those who tout them. They do not lift low wage earners to a so-called social minimum. Indeed, minimum wage laws imposed at the levels employed in Europe push a considerable number of people into unemployment. And, unless those newly unemployed qualify for government assistance (read: welfare), they will sink below, or further below, the social minimum.
As Nobelist Milton Friedman correctly quipped, A minimum wage law is, in reality, a law that makes it illegal for an employer to hire a person with limited skills.
Despite the piling up mountain of evidence on the harmful “unintended consequences” of artificially high minimum wages, we suspect we already know how this story ends.
The reality of the situation is that in some cases the service will be of a higher quality and faster…..
This will probably be better than ordering from an illiterate, Neegrow.
…and robots don’t spit in your food.
over- you can program a robot to do anything!
But higher wages mean people will be able to buy more stuff!
(Sarcasm off)
I remember when NPR was respectable, they did a story on the concept of raising wages would result in a more consumer spending.
They concluded that the low skilled minimum wage worker would be no better off with higher wages as the cost of goods and services would also rise to keep pace with higher wages.
Zero sum gain for the worker.
But we already knew that.
By that logic, you should ask for a pay cut.
Whoosh……
The free market and the law of unintended consequences at work. All the burger type joints to rapidly follow suit decreasing entry level job experience for thousands of kids. Who didn’t see that coming? Politicians and liberal nut jobs who have no idea about free markets.
Wages should reflect the value added by the employee to the product or service of the business not to mention the profit margin to the company . The got time to lean you got time to clean attitude goes far in many cases .
The sad case has two sides , business owner/ operator being squeezed by taxes , insurance , permits etc… then higher utilitiy costs water sewage and power then labor costs . Then there is the employee some are dillagent accountable and trustworthy others are sorry POS with their hand out . Still many fast food franchises are corporate and are very profitable “LOCATION , LOCATION , LOCATION” ! Most jobs at these establishments were for students and entry level or part timers boosting retirement . These jobs are now part of the financial survivability of what would be the higher paid industrial worker , the jobs that no longer exist for the middle and lower middle income population . No or to low social security funding , low withholding tax income to our fed and state . There is a pattern here !
The cost of material goes up we raise the cost of the product , the cost of labor goes up OH MY GOD WE ARE OUT OF BUSINESS !
Boat guy – a quarter pounder takes quarter pound of beef. No option on that. But labor is variable. And can be cut.
And. That is exactly what happened to the industrial jobs. The output did not disappear, just the labor. The US makes as much manufactured goods as it ever has as a percentage of GDP. It just does not need labor to do so anymore.
That is what a business does. It cuts variable costs and labor is variable indeed. Give biz incentive to cut labor by increasing its costs and cut it will.
Llpoh you are sadly mistaken , our GDP is a phony figure from government bureaucrats scurrying about like cats covering up Shit . Any time business can reduce labor costs it will and for obvious reasons $ This is not evil or gready however it does have unintended consequences as I have outlined before .
Your 1/4 lb beef comment left out the price per pound when it goes up so does the burger price . You my friend are hopelessly stuck in the your shit is shit but my shit is stuff and the only one worth a top salary is Me Me Me !
You can’t make a burger without burger. You can make it without labor. Your attempted point about “worth” is no point at all.
Iska – some folks get it, like you. Other folks, like boat, have no idea whatsoever.
I am not “stuck” anywhere. I understand that if cost of materials goes up, a biz has a few choices: 1) absorb the cost, 2) increase prices which invariably means loss of business and/or market share, to at least some extent, or 3) cut costs elsewhere (such as cut wage bill) so as to maintain margins.
Re labor costs – labor can be replaced. Almost without exception. The question is whether it is cost effective to do so. The higher the wage cost, the more cost effective it becomes to automate.
I made a career out of this stuff. I know what I am talking about. I am sought out, even today, by suppliers, customers, acquaintances, accountants, etc., to look at books, numbers, etc., so as to tell them what the hell is really going on.
Boat guy comes back, as these types always do, and say “the data is false”. No proof, nothing. The world is flat, they say, as though just saying it makes it true.
I can back up my data. It goes against the narrative they have created. But some things are facts, and some things are opinions.
One other little thing, boat guy: how hard do you thing it is for a supplier to get a price increase for their goods through a company like JackInTheBox? Answer: it is diabolically hard. The power the big organizations wield over suppliers is enormous.
Exactly.
Even a little peon painting contractor like me, I spend about $400k on paint a year, I can tell my paint supplier I want a price locked in for the entire year, and they do this, that way I can eliminate a variable when bidding jobs a year out.
I had a long time employee who is a fairly good painter come to me and say he wanted a raise, the reason?
He wanted to buy a truck and his wife told him the only way he could get a new truck was if he got a raise.
That’s it and he was adamant. It is not a requirement to have a truck to work for me, he just wanted one.
I replaced him.
What employees don’t understand is where their wage is generated. It comes from their production, if my charge out rate remains the same their production must rise to cover the cost of their raise. If the charge out rate and production remain the same, I go out of business.
Ain’t nobody got time for that.
Card – employees generally cannot or do not associate output with salary, as evidenced by your ex employee.
When employees ask for a raise, they need to tell you what more they will accomplish for the extra. How often does that happen? I am still waiting for the first time for it to.
I was union steward and sat on the negotiating team for the CBA between Boeing, the subcontractor and the NLRB agent sent to moderate the bargaining at arm’s length.
The union basically raped the company.
The union members “met” with the NLRB dude prior to the meeting with Corporate “The Company”… we chatted about what the employees would accept and then the agent came to our negotiation a couple hours later, we all “met” him and the Company members went off to chat with him as if the union hadn’t already put in their bids with him.
What a crock.
“labor can be replaced”
Of course it can. But like any other commodity, you get what you pay for . If you believe $9.00 an hour attracts the same motivation and skill set as $24.00 an hour you’re kidding yourself.
Biz has to pay the market rate. If the rate is $9, then you will not get monkeys. You get monkeys if you pay below the market rate.
If things get bad enough, you may well get PHDs in nuclear engineering for that.
Llpoh & Iska Get it and I think the earth is flat . You two must be a real joy to work with or around . Considering how you consider every thing and everybody can be replaced with technology . Many can and are , careful you may be next .
I sure as hell hope so. I would rather be 100% out of work.
“You can’t make a burger without burger. You can make it without labor.”
No you can’t. Unless you can build a machine to unload the trucks, stock the product, clean the cooking surfaces, clean the restrooms and dining area, etc.
Maggie, speaking about unions and rape.
A union company in my town (now closed down) had a rape of a new female employee.
She never saw her attacker’s face because the lights were off, but she knew it was the union steward.
She was asked how she knew it was the union steward if the lights were off.
She said; “Because I had to do all the work.”
Marsh – robots are available that can do all of that. Is it viable? It will be.
“robots are available that can do all of that”
Show me.
http://robotics.wynright.com
http://nordic.businessinsider.com/exotec-ai-shelf-climbing-robot-process-warehouse-orders-amazon-alibaba-2017-12/
http://www.cleanlink.com/news/article/Cleaning-Robot-Targets-Restrooms–7906
https://en.m.wikipedia.org/wiki/Automated_restaurant
Marsh – entire systems can be designed automating the entire process. There is almost nothing that human manual workers do that cannot be done by robots these days.
The entire system would be designed. It would not be a kitchen or bathroom as you currently know it. There are self cleaning public restrooms in Australia already.
There would be a food prep and cleaning system. There is an automated barista system I have seen somewhere.
It is all possible right now. This very minute. It just depends on the cost benefit analysis.
As many as 40% of all current jobs could be automated out of existence in the next ten years. Automation gets cheaper and cheaper, and labor does not.
Amazon is a good place to see this stuff in action. Or a Mercedes engine plant. Just a few guys and a huge factory making engines.
And making engines is far harder than flipping a burger, or cleaning a restroom.
Once again……
The business sector often repeats this mantra – wages make up a huge portion of the costs of doing business. Fine – so you want me to take advantage of your “self serve” kiosk. What discount are you offering me, to use this service, now that you don’t have these employees? I thought so……
And to the workers I say…..
“Please don’t ask me to use this kiosk, to do you out of a job” The reply…..
“Oh they would never get rid of me”………
Kinda reminds me of bank ATM’s and teller’s
Fiat – that is idiotic.
The kiosks go in to prevent your burger price from going up as a result of the increased labor costs. The reason the kiosks are not in now is because labor costs are less than kiosk costs.
I was being sarcastic Llpoh…..
The local Mc D’s manager was telling me even with the kiosk’s in place, the costs for meat have gone up 23% last year alone. ( my significant other works in the restaurant supply industry and can verify that) Even factoring in the promo’s they give out, he is losing money just trying to keep the numbers up. If it weren’t for the drive thru’s expansion he’d be underwater.
That’s where they are making their money, because of efficiencies in the drive thru’s.
At $15 an hour, it’s not worth keeping them around, as the front lines are too inefficient, and end up costing more than they bring in.
It seems the data shows that 68% of minimum wage earners in Canuckistan live at home with their parents.
Those that demand a livable wage, have no skill sets to offer and hence find themself’s at the bottom.
Too bad the liberals can’t see that logic.
Fiat – my apologies. That is why Intend to put (sarcasm off) after some comments. Otherwise, I would get stomped on.
If beef prices are being passed through to McD, then there must be huge pressure on meat prices, as getting increases through a place like McD is damn near impossible. They wield enormous market power.
They – big players – also hedge in the futures markets.
You think the price of a burger won’t go up again? John
The kiosks currently take longer than a live cashier.
“prevent your burger price from going up”
In contract law this is called an “Illusory Promise”.
Our future is open borders and guaranteed minimum income, alongside gated communities with private security contractors. The rape of the middle class will be complete.
Jobs that don’t produce as much in income as their wages and associated liabilities produce in outgo are eliminated.
Either because the boss puts an end to them or because the boss’s bankruptcy puts an end to him if he doesn’t.
Another big advantage of robots over human labor is that it doesn’t carry all the potential legal problems and liabilities that human labor does.
Anon – let me think, would I rather have 10 human workers, and the associated headaches, or one robot that never has marital issues, rarely gets sick, never squabbles with other robots, does not need retraining every day, never hurts itself and claims compensation, etc.
Let me think, let me think. I think I will take the damn robot.
So much of the argument can trace back to the source, which is the central bankers ZIRP and printing press.
There’s your root cause.
Effects:
-Dollars are worth less, cannot buy as much.
-Rising cost of everything for everybody.
Without a decent profit, business fail.
-As costs rise, more and more businesses are forced to try an do more with less people. We see it in every industry.
-And, as Llpoh has frequently noted, most employees don’t bring that go-the-extra-mile work ethic, personally and professionally.
Result: Minimal effort = minimal compensation.
Simple Rule:
– If an employee wants to earn more, he must increase his value to the business first, and become difficult to replace. Raises are earned when that happens, whether deemed fair enough or not.
If the pay is not enough, there’s the door. Walk.
$15 /hr. mandated wages in fast food industry is misguided attempt at ‘fair compensation’ that is insane.
Talk about a ripple effect.
Those are stepping stone jobs that shouldn’t pay that much, because of the minimal skill level required. Those non-managerial jobs are for high school kids just entering the work force. Now, too, sadly, limited skill elderly folks re-entering out of necessity.
On the flip side of the argument, the rank and file blue collar workers are always wanting more pay, for the reasons stated.
Where it seems unfair, especially in the large corporations, is when they see executive compensation and bonuses are paid, at X times the rank and file compensation packages. Life isn’t fair.
Fair small business owners seem to be the most advantageous to work for, if you’re not able to work independently. That said, they need very few ducks, which are easily found. The rare eagles that work for a fair SBO will gain good compensation, invaluable experience, and most likely find a good mentor or two at the top, to help hone those skills for the benefit of all in the organization.
In any scenario, save for the elite 1%, the shrinking value of the dollar, and the scramble by everyone to afford rising costs, is a result of a currency’s value being wickedly eroded by inflation.
And that, I’ve come to believe, is by design. Helluva dilemma.
-suds
Suds – nuce comment. They one I have quibble is that small biz employs huge numbers of people, and has always been the growth engine for jobs. Unfortunately, rules and regs and high minimum wages etc., have starved the engine of gas, and it is sputtering and dying.
Instead of promoting big biz, small biz should be catered to by govts everywhere. That is when you would see job creation.
Agreed, Llpoh. I think the T admin is trying to improve on that for small biz, but the tax cut and the Rules & Regs slashing may be seen by some around here as more beneficial to the large corps more than to SBO’s.
Interesting, that one other recent post on TBP was the opinion put forth that T’s approval rating at a high level, as considered by SBO’s.
But, there’s much more that could be done to jumpstart small business ability to not only survive, but thrive in this economic climate.
-S
Minimum wage used to be for teenagers and a first job, well I take that back.
Historically minimum wage was created by democrats to force the black man out of the white man’s workforce.
But now minimum wage is looked upon as a living wage for the increasing number of idiots pushed out of public education with very little reading or math skills who can only find work in chain restaurants or the Walmart.
I guess I should add progs with liberal arts degrees to the above group of idiots as well. So we have idiots with $80k in student debt and the only job they are remotely qualified for is asking, “youse want ta supersize dat?”
The line is drawn and it seems to be near where businesses that are forced to hire unskilled and low moral mouth breathers at a unsustainable wage will simply innovate.
Business has always innovated when forced by the idiots in government, and welcome to your replacement.
It’s not just businesses that have a bottom line to watch; the worker has expenses to cover (food/housing/transportation/health care). So how about this, if the employer’s wage is so low that the taxpayers have to subsidize the worker’s income with SNAP/Section 8/Free School Lunches/etc., then we apply an additional tax on that employer to cover his employees’ costs on these tax funded programs?
How about fuck taxes on business?
You don’t seem to understand where the money comes from to pay employees or pay additional taxes.
Let’s say the government drops a new tax on Shell Oil, you think Shell Oil takes money out of their pocket to pay that new tax, or the price of gas at the pump goes up to cover the new tax? I’ll take a guess and you think it comes from the pocket?
This discussion is on the “minimum wage” that the government created to force business, big and small, to pay an unskilled just out of school prospective employee so they can learn how to work and gain new skills.
Not an adult wage earner with a house, car, medical bills, etc.
If the adult wage earner has zero skills, marginal education, and is only qualified for minimum wage then get two minimum wage jobs and supplement that with a cash paying job like mowing lawns, delivering pizza, painting houses, etc.
Don’t place the burden of subsidising a higher minimum wage to a low skill worker onto the businessman, who then has to pass that new burden to a cash strapped consumer.
Work harder, do what you have to do to gain new skills to make yourself more employable.
I have a cousin with your attitude. She’s sick and tired of working so she can pay her bills so she can go to work, with nothing left over.
I’ve suggested she get a second job rather than sit on her fat ass when she gets home from work. Looked at me like I was from another planet.
What did I expect though?
She was given an opportunity for free Community College through the Kalamazoo Promise. Free.
She failed and failed again, and then failed again so they kicked her out of a free opportunity to make her future brighter.
I’m guessing because being the little fatass worthless liberal/prog/democrat/FSA/racist bitch she is, with a fatass single mom liberal/prog/democrat/FSA/white apologist bitch she has never learned the lesson that hard work and personal responsibility is what brings satisfaction.
Not a new tax or a new higher wage to bail out another mouth breather.
Interesting diatribe, but it’s you who fails to see where the money comes from. If my tax dollars are keeping your employees housed & fed, then I am subsidizing your payroll. You are effectively a welfare recipient! (and not a very grateful one)
“How about fuck taxes on business?”
Nice try, lol
Marsh – instead of taxing business to pay for welfare, here is an idea: stop all welfare.
I bet you never thought of that.
Card – nicely put. Marsh has zero understanding of the realities of running a business, job creation, etc. He is clueless that robots are going to take high wage unskilled jobs by the millions.
I guess they are hoping for a new national wage once their jobs are outsourced to automation and they have that shocked look on their faces because they never saw that coming!
In the 80’s I was an apprentice painter in the union papermill.
Even back then the mill was installing new German automation so when a high cost union worker retired, a new employee was not hired, but that job was automated.
Another foundry in town makes crank shafts, they just automated the pour line. While they eliminated jobs they increased production and quality control.
The new robot doesn’t call in sick, works overtime without demanding double time, and then repeats 24/7.
They did this because they have to compete with foundry’s all around the world.
This hasn’t sunk into the American workers peabrain yet, this is a world market now, America doesn’t have the corner market on manufacturing like we did in the 50’s.
Who could have seen that coming…back ’round again?
https://en.wikipedia.org/wiki/Automat