There’s an interesting article in SFGate titled Do we need humans for that job? Automation booms after COVID. I’m going to comment on it.
Ask for a roast beef sandwich at an Arby’s drive-thru east of Los Angeles and you may be talking to Tori — an artificially intelligent voice assistant that will take your order and send it to the line cooks.
“It doesn’t call sick,” says Amir Siddiqi, whose family installed the AI voice at its Arby’s franchise this year in Ontario, California. “It doesn’t get corona. And the reliability of it is great.”
And 10 MacDonald’s restaurants in Chicago are also testing AI drive-through ordering, with the company looking to roll the technology out nationwide in the US.
The pandemic didn’t just threaten Americans’ health when it slammed the U.S. in 2020 — it may also have posed a long-term threat to many of their jobs. Faced with worker shortages and higher labor costs, companies are starting to automate service sector jobs that economists once considered safe, assuming that machines couldn’t easily provide the human contact they believed customers would demand.
Economists are idiots. Artificial intelligence (AI) has been improving ever since computers were invented. Expert systems that can deal with specific problem domains (like taking orders) have existed since the 1980s. Speech recognition is also a decades old technology. It was only a matter of time until neural networks and machine learning advanced to the point where machines would be capable of doing simple repetitive tasks like order taking as well as people can.
Past experience suggests that such automation waves eventually create more jobs than they destroy, but that they also disproportionately wipe out less skilled jobs that many low-income workers depend on. Resulting growing pains for the U.S. economy could be severe.
I’m less sure that this wave of automation will produce as many new jobs as previous ones have, but it may well be true. Spreadsheets didn’t kill of the accounting department, computer aided design (CAD) didn’t make draftsmen completely obsolete. This time, I do think the shift will be more tectonic. The authors are bang on that the bottom rung jobs that provide the entry point for unskilled workers are the ones being lost this time around, and that adapting to this change will likely be painful.
If not for the pandemic, Siddiqi probably wouldn’t have bothered investing in new technology that could alienate existing employees and some customers. But it’s gone smoothly, he says: “Basically, there’s less people needed but those folks are now working in the kitchen and other areas.”
The pandemic merely accelerated the change. MacDonald’s was working on automating drive-thru order taking long before Covid arrived.
Ideally, automation can redeploy workers into better and more interesting work, so long as they can get the appropriate technical training, says Johannes Moenius, an economist at the University of Redlands. But although that’s happening now, it’s not moving quickly enough, he says.
You can’t force people to train for new careers. Governments can offer opportunities and incentives to take them, but individuals choose for themselves whether to do so.
Worse, an entire class of service jobs created when manufacturing began to deploy more automation may now be at risk. “The robots escaped the manufacturing sector and went into the much larger service sector,” he says. “I regarded contact jobs as safe. I was completely taken by surprise.”
Economists are idiots. Do they not look at the world around them? Ten years ago Watson, an artificial intelligence created by IBM, defeated the human champion in Jeopardy. This was a clear sign that learning machines had arrived, and would soon be doing these kind of jobs.
Improvements in robot technology allow machines to do many tasks that previously required people — tossing pizza dough, transporting hospital linens, inspecting gauges, sorting goods. The pandemic accelerated their adoption. Robots, after all, can’t get sick or spread disease. Nor do they request time off to handle unexpected childcare emergencies.
Robots are still relatively expensive (though many are available at lower cost via leasing). They do also require maintenance, and some level of expertise in operating them.
Economists at the International Monetary Fund found that past pandemics had encouraged firms to invest in machines in ways that could boost productivity — but also kill low-skill jobs. “Our results suggest that the concerns about the rise of the robots amid the COVID-19 pandemic seem justified,’’ they wrote in a January paper.
The consequences could fall most heavily on the less-educated women who disproportionately occupy the low- and mid-wage jobs most exposed to automation — and to viral infections. Those jobs include salesclerks, administrative assistants, cashiers and aides in hospitals and those who take care of the sick and elderly.
And this is merely the first wave. Are our ever more intelligent machines headed toward the AI singularity?
Employers seem eager to bring on the machines. A survey last year by the nonprofit World Economic Forum found that 43% of companies planned to reduce their workforce as a result of new technology. Since the second quarter of 2020, business investment in equipment has grown 26%, more than twice as fast as the overall economy.
Smart companies are always looking for ways to increase productivity. Those who don’t will be less profitable and competitive. We don’t need the technocratic World Economic Forum to tell us this.
The fastest growth is expected in the roving machines that clean the floors of supermarkets, hospitals and warehouses, according to the International Federation of Robotics, a trade group. The same group also expects an uptick in sales of robots that provide shoppers with information or deliver room service orders in hotels.
The simplest and least desirable tasks, like floor cleaning, are of course the first to be automated. irobot launched the Roomba in 2002. During the pandemic, one of our favourite resort hotels began delivering room service in bags that were hung on the doorknob. You would receive a knock letting you know your meal had arrived. I’d think robot delivery could easily offer a superior experience.
It’s not just robots, either — software and AI-powered services are on the rise as well. Starbucks has been automating the behind-the-scenes work of keeping track of a store’s inventory. More stores have moved to self-checkout.
And stores that don’t do so will have to find other ways to compete or risk becoming unprofitable. Notice that Starbucks supports ordering via their automated app, but still retains intelligent, friendly staff who offer excellent customer service. They are clearly using research to determine what should be automated and what should not.
Scott Lawton, CEO of Bartaco, was having trouble last fall getting servers to return to his restaurants when they reopened during the pandemic, so he decided to do without them. With the help of a software firm, his company developed an online ordering and payment system customers could use over their phones. Diners now simply scan a barcode at the center of each table to access a menu and order their food without waiting for a server. Workers bring food and drinks to their tables. And when they’re done eating, customers pay over their phones and leave.
Online ordering works reasonably well if you have a small menu without many options for customization. Machines will have to get much more sophisticated before they can come close to replicating the experience of being served by a well trained waiter who comes to know you personally. This will remain a differentiator for high end restaurants whose margins let them afford to pay human staff.
The innovation has shaved the number of staff, but workers aren’t necessarily worse off. Each Bartaco location — there are 21 — now has up to eight assistant managers, roughly double the pre-pandemic total. Many are former servers, and they roam among the tables to make sure everyone has what they need. They are paid annual salaries starting at $55,000 rather than hourly wages.
This seems like a smart way of dealing with the lack of the human touch in ordering. If the managers are able to influence change in the automated systems when systematic problems with them are identified, I could see this being a reasonable approach for the middle tier “family restaurants” to take.
For now, the short-term benefits of the economic snapback [from the pandemic shutdowns] are overwhelming any job losses from automation, whose effects tend to show up gradually over a period of years. That may not last. Last year, researchers at the University of Zurich and University of British Columbia found that the so-called jobless recoveries of the past 35 years, in which economic output rebounded from recessions faster than employment, could be explained by the loss of jobs vulnerable to automation.
Innovation is always the driver of increase productivity. When wages become the dominant cost of business, innovations that reduce labor requirements will be those that are the most beneficial.
Despite strong hiring since the middle of last year, the U.S. economy is still 5.3 million jobs short of what it had in February 2020. And Lydia Boussour, lead U.S. economist at Oxford Economics, calculated last month that 40% of the missing jobs are vulnerable to automation, especially those in food preparation, retail sales and manufacturing.
With Covid unemployment benefits set to expire in the US this month, we’ll see how many of the positions that employers are trying to hire for can be filled. The fact that employers are having a hard time filling jobs will certainly act as an accelerant for their automation.
Some economists worry that automation pushes workers into lower-paid positions. Daron Acemoglu, an economist at the Massachusetts Institute of Technology, and Pascual Restrepo of Boston University estimated in June that up to 70% of the stagnation in U.S. wages between 1980 and 2016 could be explained by machines replacing humans doing routine tasks.
I find that very difficult to believe. I would have bet that the massive shift from manufacturing to the service sector was due far more to offshoring of manufacturing jobs to Japan, Taiwan, Korea, Singapore, and China, where lower wages, not automation, allowed the eastern Asian countries to do what American companies could at lower cost. What were their estimates based on?
“Many of the jobs that get automated were at the middle of the skill distribution,” Acemoglu says. “They don’t exist anymore, and the workers that used to perform them are now doing lower-skill jobs.”
While this may have been true in the past–for example, I’m sure many autoworkers displaced by robots moved into lower paying jobs–it won’t be true when automation comes for the unskilled jobs that unskilled workers rely on as their entry into the world of work. If we avoid the AI singularity, will machines lead to further class stratification, where the middle class do the jobs that humans can do better than machines, and the lower class become a permanent welfare class who cannot compete? Let’s hope neither outcome prevails.