Patrick Carroll has a degree in Chemical Engineering from the University of Waterloo and is an Editorial Fellow at the Foundation for Economic Education.
With the labor market in rough shape, restaurant owners across the country have been forced to find new and creative ways to run their businesses. Many restaurants have changed their hours and services, while others have offered hiring bonuses in a desperate attempt to attract workers. But while these may be good ideas, one restaurant chain in Florida has been trying out a completely different approach.
“Robot waiters are proving to be beneficial for one Florida restaurant chain whose CEO claims they’re leading to larger tips for human servers,” Fox Business reports. The chain, called Sergio’s Restaurant, is optimistic about keeping the robots long term. As president and CEO Carlos Gazitua explains, “With robotics, what we’ve been able to do is basically run the food back and forth so our wait staff has been able to spend a little bit more time with our guests, getting to four to five tables.”
According to Gazitua, the robots have improved the restaurant’s service efficiency by 20 to 35 percent.
“The guests love it because they see their server more,” Gazitua continued. “They’re able to have a better hospitality experience, manicure that table, and that’s a big win for the server who’s actually making more and working less.”
At $1,000 a month, the robots aren’t cheap. But they save servers from walking 100 ft per table, and that saved time can add up quickly. The robots can also interact with customers, even learning kids’ names and singing songs.
In all, it’s an investment that seems to be paying off for the customers, staff, and owners alike.
The Benefits of Technology
Of course, the primary motivation for this initiative was profit. Like all other businesses, Sergio’s Restaurant is looking for ways to cut costs so it can make as much money as possible. But notably, this cost-cutting measure didn’t come at the expense of their employees’ wages. If anything, their employees are actually making even more because of the extra tips.
Though it may sound counterintuitive, this is a common occurrence when new technology is introduced to a workplace. Of course, sometimes technology simply replaces employees, such as with self-serve kiosks. But in many other situations, robots and machines are really beneficial to workers, because they free up a worker’s time and energy. Even in jobs where earning tips isn’t a possibility, robots still help by taking on many of the dullest parts of the job, freeing up the employee to spend a larger portion of their time on the more fulfilling aspects of the job, such as interacting with people.
But technology doesn’t just make work more enjoyable, it also leads to higher pay in the long run. The reason is because wages are determined by productivity. It’s not so much how hard you work that counts. It’s how much value you create. Thus, since technology helps us create more value, it inevitably leads to higher wages.
For example, consider a kitchen assistant working in a restaurant. If he has to wash dishes by hand, he isn’t going to be very productive, and he would likely be paid very little. But what happens when the company invests in an industrial dishwasher? Obviously, the company benefits, because their dishes get washed much faster. But the worker has also become more productive. As a result of his access to the dishwasher, he can contribute a lot more value to the company with each hour of labor. Thus, while the company will earn more because of the dishwasher, the worker will too, because the capital investment has increased the value of his labor.
Of course, the company could try to keep his wages at the old rate, but that would be a losing strategy. Another restaurant, which also has an industrial dishwasher, would simply offer him more, because they too see an opportunity to profit from his more efficient labor. Thus, the competition for labor will ensure that compensation is pushed up toward the amount of value a worker produces.
In the same way, introducing robots will make waiters more productive, because they can serve more customers in the same amount of time. Not only has this helped them earn more tips in the short run, but it will also put an upward pressure on wages in the long run.
The Truth about Capital and Labor
Regrettably, many people still believe that “capital” and “labor” are antagonists, and that the only way for business owners to increase their profits is at the expense of their workers or customers. But as the Austrian economist Ludwig von Mises explained in his book Human Action, this is simply misguided.
“In the capitalist society there prevails a tendency toward a steady increase in the per capita quota of capital invested,” Mises wrote. “The accumulation of capital soars above the increase in population figures. Consequently the marginal productivity of labor, wage rates, and the wage earners’ standard of living tend to rise continually. But this improvement in well-being is not the manifestation of the operation of an inevitable law of human evolution; it is a tendency resulting from the interplay of forces which can freely produce their effects only under capitalism.”
In short, investments in capital such as tools, machinery, and robots are beneficial to both capital and labor. Indeed, capital investment is one of the most important mechanisms for making people better off.
To appreciate the critical role that capital investment plays in the economy, take a look at the graph below. It’s taken from a textbook called Economic Growth by David Weil. The data are admittedly a little old, but the overall point is still crystal clear.
The economic theory together with the empirical evidence presents an irrefutable case: capital accumulation is good for workers. Thus, if we really want to help workers, we shouldn’t disparage profit-seeking initiatives like the introduction of robots at Sergio’s Restaurant. To the contrary, we should embrace them.
This article was originally published on FEE.org. Read the original article.
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