President Biden is a friend of labor. Some of his biggest supporters are unions. His Labor secretary, Marty Walsh, is an ex-president of a local union. The policies that he supports are worker-friendly.
For example, Biden strongly supports a national $15 per-hour minimum wage. He supports legislation (like the PRO Act) that would make it easier for employees to organize unions and that could potentially reclassify many independent contractors as employees. He wants more workers to be entitled to overtime wages. He wants to eliminate non-compete clauses from employment agreements. He’s pushing for more safety standards and expanding the reach of OSHA and the EEOC. His latest stimulus package continued unemployment insurance through September.
His Democratic supporters cheer. But all of this is creating a tense atmosphere between many businesses – particularly small business owners – and their employees. There’s a labor shortage already in many industries. And there’s this underlying threat that we had better treat our workers right and pay them fairly…or else. As if most businesses don’t already do that.
Sorry, workers, but you’d better be careful. Your demands are backfiring. The president’s policies are accelerating job losses — permanent job losses.
For example, one company recently released a new warehouse robot called “Stretch” that pretty much does the job of a warehouse worker because it can be programmed to pick up and deliver packages and pallets. And guess what? It’s only about $75K, which is pretty much the cost of just one warehouse worker when you figure in benefits and taxes. Oh, and the robot doesn’t care about being part of a union.
This is not the only technology quietly transforming the shop floor. Robotic arms are geared specifically to small businesses in order to “optimize production” and can be “deployed quickly and easily in new product lines due to its small size and lightweight design.” Autonomous vehicles can bring raw materials from one part of the warehouse to the production floor with minimal human involvement. Drones can check on inventory levels and deliver packages to high places. Radio Frequency ID tags and geo-coding are now affordable ways to track inventory without warehouse workers being involved.
Construction companies are desperate for workers. Which is why one firm this week raised an additional $24 million to fund the development of a robot that puts up drywall and reduces the average finishing time from seven days to two. “Since our launch last fall, we’ve seen incredible demand for the Canvas system and our unique ability to set the bar on quality, safety, and predictability,” the company’s CEO said in a press release. Gee, I wonder why.
A restaurant in South Florida has purchased several robotic servers that “[greet] customers with a digital eye-wink and a cheerful ‘Here you are! Please follow me to your table!’” These robots don’t demand a higher minimum wage, more time off or special scheduling to avoid unpleasant co-workers.
Another company is selling its Flippy robot – which cooks burgers and other items – like hotcakes to restaurants big and small across the country. Why? Because, as the company says right on its homepage, Flippy “automates the activity around the fryer station, offsetting rising labor costs,” and requires only a “simple monthly fee that covers all operational costs.” And, oh yes, it asks for “no breaks and no sick days.”
Stratis Morfogen, who runs Brooklyn Chop House in NY, did some research into why fast-food restaurants closed and found – to the surprise of no one – that it’s higher payroll costs. So, what did he do? He started a new restaurant franchise that’s completely automated. Called Brooklyn Dumpling Shop, it is set to open this month and will serve “everything from dumplings to alcoholic drinks.” Other full or partially automated restaurants are also springing up around the country.
Speaking of fully automated, Amazon is opening up thousands of its Amazon Go stores, its self-service retail venture that uses the “internet of things” and artificial intelligence (AI) so that customers can pick, pay and leave quickly while automatic alerts ensure that suppliers are notified in order to keep the stocks flowing…all with a bare-boned staff. Airlines, airports, coffee shops, grocery stores and supermarkets are quietly sneaking in more self-service kiosks. Smaller retailers are letting employees check out and pay for themselves using touchless technology and QR codes.
It’s happening, people. And it’s happening fast. A 2019 study from Oxford Economics finds that robots will replace up to 20 million factory jobs alone in the next 10 years. And here’s a secret that no one wants to admit but everyone knows: It’s all happening because of the technology that’s replacing workers.
These technologies have dramatically come down in price over just the past few years. A cooking robot or server, a robotic assembly arm, a kiosk or a self-serving point-of-sale device now sets a business owner back a few thousand dollars, not millions. Financing rates are low for this equipment. The performance is reliable. The AI is getting better. The payback is in months, not years.
So, to the irate employees, the complaining workers, the opportunistic unions and the president and his party that desperately wants their votes, do you not see the writing on the wall? You’re asking too much too quickly and with too much anger. As a result, you’re pushing businesses to get rid of you.
It’s not that we don’t care about you. And it’s not that we’re greedy. It’s because we’re the ones taking the risks. And there’s just a lot fewer risks (and headaches) when investing in machines as opposed to people. Particularly in this political environment.
Gene Marks is founder of The Marks Group, a small-business consulting firm. He frequently appears on CNBC, Fox Business and MSNBC.