The Low Cost of Waiters Deters Restaurants From Substituting Capital For Labor

Annie Lowrey has a cool piece about a firm that wants to use tablets to reduce the need for human waiters. The technology can’t completely replace a human beings since, as Rajat Suri explains, “You still need people to bring the food, to fill up the glasses, for customers to [interact with] if they want to make, like, a really complicated burger order.” But still, it could significantly reduce the staffing level necessary to run a restaurant. For now, though, firms don’t seem to be chomping at the bit to adopt the technology. Why? Well restaurant labor is already really cheap:
[L]abor costs are not 42 cents per table per hour, but they actually aren’t much more than that. Many waiters earn as little as $2 or $3 an hour, making the rest of their living in tips. Second, installing the system means paying some up-front costs and taking on some serious risk. Many customers like being waited on in restaurants and pay to dine out in part for the experience of being coddled, cared for, and catered to by some beaming teenager wearing 48 pieces of flair.
This highlights an important flaw in a lot of proposals to improve working class living standard. Sensible, risk-averse firms have good reason not to just fire people and replace them with new technology over a marginal reduction in costs. But anything you do that makes the unit labor costs higher without improving the productivity of the workforce serves to push on this calculation and bring forward the day in which large numbers of waiters and waitresses are replaced by iPads.
That’s not to say the robo-waiters of the future doom us to endless mass unemployment and immiseration. If labor costs related to waiting tables falls, over the long run that’ll mean more and better restaurants with more jobs for people with specialized skills. More sommeliers and more chefs, in other words. Consumers will also buy more things in other sectors of the economy, so there’ll be more jobs for nurses and yoga instructors. On average, replacing labor power with technology makes us better off. But the specific people who are made better-off will be the people with the complementary skills.