Don’t blame the robo-arms, Ed, you’re just cheap | Photo: Ryan Somma, CC BY 2.0
According to a recent article at Ars Technica, Ed Rensi, former CEO of McDonalds Corporation, thinks a $15 minimum wage will give rise to a mass wave of replacement-by-robots. Even if he’s right — and I’m not saying he is — that shouldn’t stop us from raising the minimum wage. Here’s why.
Let’s start off with the premise, presented to us by Ed (can I call you Ed? I’m going to call you Ed). Ed thinks “it’s cheaper to buy a $35,000 robotic arm than it is to hire an employee who’s inefficient making $15 an hour bagging French fries.” Is his math right? Well, let’s start with the basics: how much does it cost a year to hire a “fry bagger” for $15/hour, 40 hours/week? The reason I say 40 hours a week is because the $15/hour minimum wage doesn’t usually apply — at least in many of its recent incarnations — to all employees. Just the ones who are adults, and therefore the ones we think, you know, need a living wage. So 15 x 40 x 52 weeks a year, since Robots don’t take days off. A little arithmetic tells us that a $15/hour “fry bagger” costs us $31,200/year. So with that math, we can see that by week 59, we’ve passed $35k and your investment in robots has paid off.
But then, robots need maintenance. Let’s pretend for some reason that robots are like cars. They aren’t — they’re arguably more complex (because we managed to build cars a hundred years ago and we’re still waiting on the commercialized robots) — but just for back-of-the-napkin stuff let’s argue they’re both complex machines that require service. The average American drives an hour and a half a day, and we want that car serviced every six months. Let’s say 6 months is 186 days, at 1.5 hours/day of operation, and you want you car serviced every 279 hours. Let’s say 300 hours. Just for, say, an oil-up and (for our robots) a few bolt tightenings.
An oil change can cost as little at $20! That’s not a lot to add, is it? At 3120 hours per year of continuous operation (like our trusty minimum wage employee) that’s as few as 12 tune-ups in the same 59 weeks, meaning another $240. For which price you can only have your “fry bagger” for another 16 hours, or roughly another 2 days.
But what about the cost of electricity? The average US price per kWh is only 10.4 cents, but mechanical power is kind of tough to gauge. Let’s pretend our robo-arms use as much electricity as your air conditioner. They’re going to me moving a lot, after all.
Let’s say your arms run at 500 Watts. I have no idea if this is realistic, but when my AC’s compressor is running it probably uses about that much. So: 0.5kW x 40 hours gets us 20kWh/week, or a weekly cost of only $2.08! That’s a great deal. Maybe we shouldn’t bother counting the electricity, because at 59 weeks, that’s only adding $122 and change, and that’s just over a single 8-hour shift for our lousy human. Chump change!
So maybe he’s right: maybe it is cheaper to have a pair of robot arms than a human at $15/hour.
But what about $10/hour? That’s the minimum wage in Massachusetts right now, where I’m sitting. That’s what “fry baggers” get right now in the state where I live. At $10/hour, the break-even point is about 88 weeks, and even with the additional tune up it won’t matter much.
Because, you see, if the math is that simple, robotic arms are a great replacement for “fry baggers” right now. They’d be a great replacement for “fry baggers” if this were the 1960s and the federal minimum wage was an inflation-adjusted $8/hour.
Now, maybe the math isn’t right. Maybe robo-arms take more than $20 every few weeks to service. Maybe when something goes wrong it goes wrong badly. Maybe there are additional costs for installation over and above the $35k for the arms themselves. Maybe they only last a year, in which case, again, it doesn’t matter whether you pay $10 or $15/hour for the human, s/he’s a better deal.
But when it comes down to it, the difference between $20,800/year (assuming $10/hour, 40 hours/week, 52 weeks/year) and $31,200/year for a human is a pretty small window to tip McDonalds into all-robo-arms all-the-time mode. If robo-arms cost $35k, $40k, even $50k, if they last three years without any major failures, they’re going to be cheaper than a human at any price.
Basically put, Ed (I’m going to keep calling you Ed), robo-arms are a terrible reason not to pay your employees a livable minimum wage. Either they were always a better deal than humans, and you’d switch to them the moment you could anyway, or there’s something catastrophically wrong with our calculations, and they won’t be worth it for some time yet.
If you don’t want to pay people to work, just say so. But don’t blame the robots because you’re cheap.
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Richard Ford Burley is a human, writer, and doctoral candidate at Boston College, as well as an editor at Ledger, the first academic journal devoted to Bitcoin and other cryptocurrencies. In his spare time he writes about science, skepticism, feminism, and futurism here at This Week In Tomorrow.