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Forums - General - Former McDonald's USA CEO: $35K Robots Cheaper Than Hiring at $15 Per Hour

Puppyroach said:
Isn't it cheaper to have a 35000$ robot than even paying 5$/hour in wage? It's a stupid argument since machines can always be more cost efficient than humans. McDonalds is about service to customers and being a good employer. Therefore 15$/hour minimum wage would be a given for any company that care about those two issues.

Yes, absolutely.

Even more than that, I saw that the new kiosks that can replace the people taking orders are only around $4k, with no moving parts and absolutely minimal maintenance (all solid state). Even a hypothetical $1/hour slave labor workforce couldn't compete with that.

As tech gets inexorably better, and especially AI, there will be a massive job destruction ironically mauling many of the people who made fun of the people who wanted $15/hr. Police, Firefighters, Soldiers, Construction, Nursing, Surgeons, any and all customer service, all drivers/transport workers, all pilots, and if you go far enough : even artistic/writing/abstract thinking jobs.

It will be either the total end of humanity or we will need a completely new system to replace capitalism, as there will be literally nothing that people can do to earn a living under such a system. Even in the most optimistic terms for a regular human, the leadup to this could be unbelievably dark and violent. Imagine 80%+ global unemployment because you're in an interim period where the vast majority of 'employees' are simply robots and/or AI devices.

In fact, one of the very first things an ASI might learn is that humans utterly failed in their tasks here on earth, and human governments and businesses of every political archetype for the most part exploited, divided, and oppressed their fellow humans for either personal gain, stupidity, or both.



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nanarchy said:

What a load of BS. Go take the huge financial risks of running your own business and see if you still think that garbage. Workers should be paid a fair wage for the skills and effort supplied, anything beyond that is purely at the good will of the employer as it should be.

Why, because I would own the means of production? If I would "own" a business, it would be a cooperative. Why? Cooperatives are finacially more stable and don't engage in wage theft. When you're CEO makes more then 2x the wage of the one who actually produces, you are engaging in wage theft.

Most CEO's don't even really tak responsability. Mismanagment is usually rewarded with job cuts.



Nuvendil said:
aLkaLiNE said:

No. I'm sorry but no, this is wrong. The $15 minimum wage needs to be mandated, and all the other people employed at the upper middle class and below need pay increases relative to the minimum wage increase.

 

The fact is that while wages have roughly doubled in the past 40 years, the costs of living have more than quadrupled. To say that workers at the minimum wage are the problem is so wrong when you see individuals being paid millions a year to simply represent a company. The problem isn't a 15$ minimum wage, the problem is overpaid CEOs, sales people, owners etc. This massive gap in the standard of living between wealthy and poor is not by any stretch of the imagination right and that's where the real issue lies. We could as a country easily support a $15 minimum wage of those funds came from wealthy individuals with hyper inflated salaries that allow them to live well above their actual contribution toward society.

You clearly have next to no knowledge of the small and middle tier business world.  90-95% of small businesses and middle tier business could not sustain $15 an hour.  And they don't have the war chest to float a transition.  I know this.  Also, let's not fall into the trap that CEOs are EVIL and the rich are EVIL.  While some can be dicks, many are very altruistic.  And the job of major executives is one 95% of people couldn't do.  I've seen that myself, most average joes couldn't run a taco stand much less a multi billion corporation.  

As for standard of living, that is radically different from state to state and that's the problem with a $15 minimum wage.  Cause cost of living effects pay and that effects business plans and structuring.  It effects EVERYTHING.  NY or Washington State might be able to support $15 without too much fuss.  But Texas?  NC?  SC?  No, it would be a complete and utter train wreck.  The US is huge, the cost of living, wage disparity, economic strength, etc is not universal.  Such a high federal minimum wage would be highly ill dvised.  Let the States decide in accordance with what the State needs.

This exactly. (Almost all of it so I'm not going to do bolding.

1)$15 in a lot of places is a death sentence to industry in many different areas. I live in an area were people who have office jobs don't even get $15.00/hour. So a mandated across the board price hike would kill off industrial and office jobs who are paying their workforce $12-to-$13 on average because it what the business can afford. So when topics like this come up from customers or employees, I explain to this that most minimum wadge increases in the past only affected the service industries, but a deep pay rate like this where it is nearly doubling the current one will affect all businesses across the board and they will not offset the pay, some may but it is up to them and no the goverment really can not mandate it. I have been through 3 minimum payrate hikes and I can say two of the three screwed me one of them screwed my little brother where they finally got out of the minimum and there they are again.

2) Since $15 is too much for some and not enought for others. I argue that the US governement should mandate the states set up the minimum wadge according to the price of living in the area. (Untilities, average rent, and the cost of three meals a day, times that by 3 and then divide by 160.) The three is because living expenses should be about a third of a person's wadge. The 160 is 4 weeks of 40 hour work. And allow each state to make regions in the state with different minimum wadges so it the state has an area or two with a higher living cost it will not adversly affect the areas that don't need a higher wadge hike. And require the states to review and adjust the wadge every few years.

3)McDonald's tried to use "robots" before, but they were far too expensive at the time, in the 90's, as replacments for having a person cook at the grill. It was expensive per robot and they needed constant repair. But as a person who has worked fast food, things like this would be welcomed, I can not tell you how many undesireable employees who are retained because there is no one else to hire we could have gotten rid of this way. I had one person who though wearing gloves ment one hand, and with the other bare hand handled raw meat, which isn't against food safty practices if she washed her hand right afterwards but she would constantly had to be reminded, she also made way too much and kept them food for way to long.

4) As for CEO's there are a lot of good CEO's who don't "give themselves", it usally the board that decides the CEO's pay,  pay raises as the compay has problems. Two prominate examples whould be Ford's CEO how slashed his salery to $.01 a year, he still had his perks which were based on how well them company did, when the big "three" were having problems. Because of this and other measure such as selling off company jets etc, Ford didn't need to get a bail out. The other would be the late Iwata who cut his pay to help Nintendo when they were having losses.

And thing to add is article brought out about those who are being paid below federal minimum, this is allowed when food a board or tips are involved and they have their own federally mandated minimum wadge. (I think it is about $3/hour) So technically they are not being paid under the federal minimum. I had other thoughts but forgot them while I was eating with my parents.



JRPGfan said:

Do people want to eat at a resturant, where your meal is prepaired by a robot arm? and maybe you dont even have a guy takeing orders, but you talk into a mic like siri?

Is that really the future?
If they go that route just boycut eating there.

McDonalds be greedy :p

Yeah, I'd much prefer to actually. Robots can't spit in your food or forget to wash their hands after going to the toilet or drop salad on a dirty counter and still put it in the food. Robots are clean, I'd rather them make my food than people



WolfpackN64 said:
Nuvendil said:

OK, we are just retreading ground I covered a couple pages ago but I'll go on :P

When you go and do all the math, the increase would reduce their net income - their bottom line -to less than $600 million dollars by the best.  Yeah they make 25 billion, but that all but a bit over 7 billion gets eaten up in costs of operations and payroll right now.  McDonalds is a massive company, running that is exorbitantly expensive:  utilities, maintenance, cost of supplies, construction, shipping, and of course payroll. Taxes and interests take that to around 4.5 billion.  That's the companies bottom line.  The hike in payroll costs would bring that to less than 600 million.  And that's before raising pay even further for shift managers and such.  Or factoring in the impact from closing franchises which would be imminent.  The company could easily go into the red with the current setup.

And again, employees DO eat up the majority of payroll by a country mile.  The total disclosed executive compensation for McDonalds is  currently 24.36 million.  This total factors in the CEO, CFO, and the three other most compensated officers.  Like I said, the executive level IS highly paid, but it is ultimately insignificant compared to the total payroll costs and the proposed payroll hike.  

And as I also said in that previous post, McDonalds could survive but it would require enormous changes to the company, many unpleasant.  Jobs would be cut, franchises shut down, prices would be raised, etc.  It would be exorbitantly costly and could indeed destroy the company depending on how fast the payroll hike hit.  Cause it's not just the changes, it's maintaining their consumer base through the transition.  But yes, if the change came closely it would be entirely possible for them to survive.  But it wouldn't be fun, thousands of franchises currently doing middling business would become unsustainable quickly.  

This isn't to say I think minimum wage is fine, it is too low.  This is to say that a FEDERAL minimum of $15 is too high and that people really don't do the research and thinking to realize how huge this is for these companies.  In some areas (California, for example) $15 makes absolute sense.  Cost of living is high enough and the economy strong enough to support it. South Carolina?  North Carolina?  Texas?  Probably something around $10 to $12 is better.  The US is enormous with hundreds of millions of people, different taxes in different states, etc.  Regions vary in economic strength and cost of living.  The federal minimum wage has to take that into account.  

And all this is to say nothing of the absolute havok a $15 federal minimum wage would bring on the small business sector.  

Ok, I do understand your concern. At least we're agreeing the minimum wage should be higher than what it is now. It would seem to me though, that McDonalds model of cheap chain-operated fastfood is in itself unsustainable.

In Belgium, we have had a rise of "quality burger restaurants", which are more expensive, but prepares much better food. We even have some "local fast food" concepts that are catching on. In my home town, we have a Burger King-like fast food place called the Ketchup. You can get a burger with fries for 5€ (about 6€ if you take a medium soda). That's more expensive that the McDonalds here, but the burgers and fries in the Ketchup are bigger, better and all in al more filling. I can get a hamburger at McDonalds for 1€, but to actually have a satisfying meal, you'd come at about the same cost as the Ketchup, while the latter provides better food and higher wages.

It seems the competition is really starting to cut into McDo's, but it might just as wel be that their business model is starting to rot in this day and age.

Well - and this is going to sound terrible - McDonalds operates based on the idea of the "come and go" employee as I call it.  They neither are interested nor care to pursue having really long term employees.  They are entirely aware of the fact most who come there are also not interested in staying.  They're highschool students, college students, people in between jobs.  They basically capitalize on the idea of fluidity in the workforce, that at any given time there are people in between jobs.  It sounds exploitative and to a degree it technically is BUT it is a model that provides jobs and product that wouldn't exist otherwise.    It allows McDonalds to be the size it is and employee as many as it does.  Without that system, many of the people working for McDonalds would simply be unemployed because the very reason they work for McDonalds is they haven't found something else yet.  How you feel about this is your business.  I'm mixed myself cause I see the benefits, but also the problems.  

Now, as for some of your other posts about executives and higher managers and their pay, don't underestimate their job's difficulty, importance, and the rarity of their ability. I know executives in just midsizded companies.  It's stressful, time consuming, complicated, and a couple of mistakes can make the whole thing go to shit.  CEOs of large companies don't work 40 hours but the decisions they do make are very high stakes and very complicated.  There are a few big CEOs who can set it and forget it, but most can't.  Afterall, anything goes wrong they can very quickly be voted out.  

And I said it already, but most people cannot - can. not. - fill a CEOs or other executives shoes.  50 to 80% of businesses (statistics vary based on many definitions including what businesses are counted) fail within 5 years.  And the more complex the business in mind, the more failure prone it is.  But the point is the majority of small businesses fail in short order, 90% of the time because the people running it simply can't run a business.  Cause it's hard.  Not saying every CEO should make 10 mil, but there's a reason skilled executives make good money.  They are few and hard to come by.

Also, businesses keep sizable rainy day funds for good reason.  Major recensions, scandals, fines, lawsuits, and other unexpected costs need to be able to be covered directly.  You don't want to be begging for loans every time something bad happens, that's a short road to the busines  graveyard.



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WolfpackN64 said:
nanarchy said:

What a load of BS. Go take the huge financial risks of running your own business and see if you still think that garbage. Workers should be paid a fair wage for the skills and effort supplied, anything beyond that is purely at the good will of the employer as it should be.

Why, because I would own the means of production? If I would "own" a business, it would be a cooperative. Why? Cooperatives are finacially more stable and don't engage in wage theft. When you're CEO makes more then 2x the wage of the one who actually produces, you are engaging in wage theft.

Most CEO's don't even really tak responsability. Mismanagment is usually rewarded with job cuts.

Then start a business and run it that way, no body is stopping you or anyone else from doing it. The reality is most business owners risk their entire financial futures and lives on their business and work insane hours for years to get them into a position where they are making large profits, many of which fail long before they even get their (part of the risk of running your own business), yes there are many CEO's that don't deserve what they earn but they are by far the minority. I think you will need to provide some proof/citations that cooperatives are better, as current evidence does not seem to support that.



It's also cheaper than $7.25 an hour. Or $5 an hour. Because you literally need to pay a robot nothing. All it requires after the initial installation cost is the electricity it needs to run, and occasional maintence (though I have no doubt many of these machines will be poorly maintained). Blaming "$15 minimum wage" on something that's been inevitable since the technology became viable is disingenuous. This was inevitable, and would have happened regardless of what the minimum wage is, because companies do not hire people out of some sense of moral responsibility. A smart business is always looking for ways to cut costs and raise profits.



nanarchy said:
WolfpackN64 said:

Why, because I would own the means of production? If I would "own" a business, it would be a cooperative. Why? Cooperatives are finacially more stable and don't engage in wage theft. When you're CEO makes more then 2x the wage of the one who actually produces, you are engaging in wage theft.

Most CEO's don't even really tak responsability. Mismanagment is usually rewarded with job cuts.

Then start a business and run it that way, no body is stopping you or anyone else from doing it. The reality is most business owners risk their entire financial futures and lives on their business and work insane hours for years to get them into a position where they are making large profits, many of which fail long before they even get their (part of the risk of running your own business), yes there are many CEO's that don't deserve what they earn but they are by far the minority. I think you will need to provide some proof/citations that cooperatives are better, as current evidence does not seem to support that.

Cooperatives don't produce as much economically since most aren't fully profit oriented. But less risky business practices also makes it so that cooperatives generally excist longer.



JRPGfan said:

Do people want to eat at a resturant, where your meal is prepaired by a robot arm? and maybe you dont even have a guy takeing orders, but you talk into a mic like siri?

Is that really the future?
If they go that route just boycut eating there.

McDonalds be greedy :p

Actually it would improve food safety outcomes, and no one would spit in your burger because they didn't like the look of you. I hate McDonalds food, but  if I liked McDonalds I'd be happy to buy Big Macs (always at least 2) and Fries from a vending machine that was set up to make burgers on the fly.

The world is destined to automate shitty repetitive jobs that kills people in their souls, and that is a good thing because the world will also adjust so that there are all sorts of other meaningful jobs in areas that no one has even dreamed of yet and unemployment won't be higher than it is now. The important hing ofcourse is a good education system that doesn't spit out a proportion of people who are capable of nothing but shitty soul destrying crappy work.

If a $35,000 robot is better than hiring someone at $15/hr then over time it will be better than hiring someone at $7.25 an hour and the cost of the robot will come down soon enough as the cost of all tech eventuyally drops, especially as businesses start to adopt the new tech.



“The fundamental cause of the trouble is that in the modern world the stupid are cocksure while the intelligent are full of doubt.” - Bertrand Russell

"When the power of love overcomes the love of power, the world will know peace."

Jimi Hendrix

 

The problem with the CEO's statement is not only that it is outright moronic since a robot can replace any worker at any salary, it is also counterproductive to their own profit. A minimum wage worker earning 15$/hours will spend a lot more money in the capitalistic system than one making 10$/hour. This in turn will generate more profit for other companies and higher sales for their employees and therefore even more growth. This will lead to even more customers for McD and even higher profits. Having a economically stable low income class in society is fundamental to it's growth, since that class is more likely to spend the cash than to save it.