Dividends and Pandemic automation push comes at a cost for workers

The economy is opening up after COVID shut it down and that is a good thing. Governments around the world have battled a health care crisis and we are recovering, that is a good thing. It is not surprising that as the economy recovers changes are happening at a rapid pace and more and more involves technology. This is good because customers are served, not so good because once technology is in place, there is no turning back some jobs will be lost. If you think about the auto plants of Henry Ford time, there were thousands of jobs and to keep people on the job, Henry Ford offered higher wages. Those auto plants do not exist, the new ones go to You Tube type in making of F150 Fork Truck and see how many people are on the auto plant? The F150 is Ford’s biggest and America’s biggest selling truck.

In the service industry, automation has come partly because of a need and partly because after the pandemic starting wages have risen to attract people. Pre pandemic, if someone worked in the service industry the wage was near the minimum wage and to make a living, people needed to work well over 40 hours or had more than one employer. That has changed as people have choices to go to higher paying jobs or closer to $15 a hour.

In an article by Ben Casselman of the New York Times News Service, employers have been making choices because they need bodies or automation.

When Kroger supermarket customers in Cincinnati shop online, their products may be picked by a robot in a warehouse, not by a person in their local supermarket. If successful it will be rolled out to more stores. The warehouse is 375,000 square feet and uses more than a 1,000 robots.

Gamers at Dave & Buster’s in Dallas who want pretzel dogs can order and pay from their phones – no need to flag down a waiter.

At the drive-through lane at Checkers in Atlanta, the request is done by a voice recognition algorithm.

For years we have seen technology focused on the manufacturing world and when there are repetitive movements on a regular basis, robots are very useful to use. The robot does not have sick days, it works when the line is moving and it is capital depreciation asset. Now technology is going into the service businesses and when it goes in, it is very difficult not to use it.

Shana Gonzales, a Checkers franchisee in Atlanta was having a hard time finding workers and thought there could be another solution. She contacted Valyant AI, a Colorado based startup that makes voice recognition systems for restaurants. It took a while for set up and testing but it has worked very well and she has added the service in her other Checkers restaurants.

Ms. Gonzales has 4 restaurants and needs 30 people if she could find them. The pay in Georgia was $9 a hour and she has increased it to $10 a hour. Technology is easing pressure on the workforce. If she paid $15 a hour she might be able to fully staff, but would have to raise prices which might cut sales.

In a survey of 300 global companies at the World Economic Forum this past year, 43% of the businesses expected to reduce their work force through new uses of technology.

Some economists see the increased investment as encouraging, some do not. Some people in the industry see good in technology, but if the idea is to make it very simple why would somebody spend a career in the industry?

Linking to dividend paying stocks, all profitable companies need to need to use technology to their best advantage and see the glass half full. When one company is using technology to meet customer demand, others will hear and see what they are doing in the trade journals and follow suit. One company will have an edge and the large profitable companies buy the company to offer their customers the edge, is an age old story. Profitable companies do not have to be on the edge, they have patience to see the positive affects and the resources to duplicate to maintain their market share and margins.

There are more questions than answers, till the next time – to raising questions.

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