The Inevitable Self-Service Unemployment Crisis, Part 2

By Gary Deel, Ph.D., JD
Faculty Director, School of Business, American Public University

(This is the second of a five-part series that will be published on Online Career Tips each Tuesday for the next few weeks.)

In the first article of this series, we discussed the proliferation of self-service technologies and how this trend is accelerating at a blistering pace. But why?

Businesses across all industries are investing in technology to replace people. The reasons are fairly intuitive. People are by far the most expensive component of any business.

So it should be easy to see why reducing staff payroll makes financial sense. But if you haven’t given this topic much thought before, you might not appreciate just how long and robust the list of reasons is for why businesses are trimming their workforce.

Nine Reasons Why Businesses Use Self-Service Technology and Not People

1. Machines do not get paid. This is the most obvious advantage, but it runs deeper than payroll first appears. No pay means no straight pay, no overtime pay, no turnaround pay, no vacation pay, no sick pay, no bonuses or commissions, no 401(k)s, no retirement benefits, no pensions, no Social Security or Medicare contributions, and no payroll taxes.

In fact, if a business lays off significant numbers of employees and replaces them with technology, this usually also means headcount reductions in the Payroll and Human Resources departments that support the workforce. That of course results in further savings. As another ancillary note, eliminating the element of pay also means removing the scrutiny over minimum wage and tip issues.

2. Machines have 24/7 availability. This means businesses need not worry about breaks, lunches, late arrivals, early departures, days off, holidays, sick days, vacations, bereavement leave or any other reason why employees might not be available to do their jobs.

For example, families obviously have children from time to time. And it is fair that employers are required by the Family and Medical Leave Act (FMLA) to allow both mothers and fathers time off to be with their newborn. However, there is no denying that these absences are challenges for companies that never occur with machines.

It’s also worth noting that the human replacement value per device is not 1:1. A single position, staffed every day all day, requires 21 standard human shifts per week (three eight-hour shifts per day times seven days). A full-time employee works five shifts per week, which means that 4.2 employees are needed to cover a single 24/7 position. Therefore, in such a business, a single device actually takes the place of not just one employee, but four to five.

3. Machines do not require hiring or firing, or any management in between. The cost to hire a new employee is often much higher than the employee might think. Expenses include marketing and recruiting, background checks, drug tests, Immigration Reform and Control Act (IRCA) forms, onboarding and orientation costs, and other administrative expenses.

Then come management’s labor hours for scheduling, performance reviews, coaching and disciplinary action if necessary. And if the employee is fired or quits, the process begins all over again. Machines require none of this.

It’s also important to note that since we can effectively build as many self-service machines as we need, there will never be a shortage of “talent.” Recruitment becomes a thing of the past.

4. Machines do not require training. When humans begin a new job or a new position, they usually require a minimum period of training to acclimate them to their job duties, company policies, performance metrics and other expectations. If the employer decides to change policies or procedures, the employees need more training. We are creatures of habit and are often resistant to change. Also, even in the absence of change, we require refresher training because we humans sometimes forget important information that we don’t often use.

A good example would be safety training for accidents or emergencies that rarely happen. Unless there’s a technical failure, machines don’t forget information, no matter how infrequently they use it.

If you doubt this fact, click on any one of the applications that came installed on your computer when you bought it but which you have never used. Unless there is something wrong with your device, it should load and operate perfectly. Repetitious training for technology is a moot point; it is unnecessary.

5. Machines don’t commit theft, sexual harassment or workplace violence. Even mentioning this fact might seem somewhat comical. Of course machines don’t steal, harass or assault people, right? But it’s actually a serious point worthy of consideration in the larger assessment of machine value versus human value.

Unfortunately, these kinds of incidents happen more often than people realize. People steal for the best and worst of reasons. People offend or harass each other sexually; many people find romantic relationships in their workplaces, but sometimes even innocent and consensual dating can ultimately cause serious problems. People also hurt and abuse one another, both verbally and physically.

Preventative training, risk management, insurance, auditing and litigation associated with these kinds of incidents come with tremendous costs for employers. Eliminating any possibility of these things happening by opting for self-service machines over people is a substantial benefit for businesses.

6. Machines do not have accidents and do not need insurance. Companies are required by law to subsidize employee health insurance and to purchase workers compensation and general liability insurance packages. Health insurance must be made available to full-time employees, and workers compensation and liability insurance are also required.

If an employee is injured or injures someone else on the job, the treatment and care are financially covered. Premiums for these kinds of insurance are expensive, and claims only add to the costs. But these provisions are entirely unnecessary with machines.

7. Machines do not unionize or blow whistles. It should be noted that we are in no way criticizing unions or whistleblowers; I have written articles on the importance of unions and whistleblowers. However, it cannot be ignored that businesses that are forced to negotiate with unions or defend themselves in court against employment violation claims do so at significant expense.

Nor do machines demand better working conditions. They do not unionize. They do not file wage and hour claims with the U.S. Department of Labor or make discrimination allegations to the Equal Employment Opportunity Commission (EEOC). They don’t sue for wrongful termination or apply for unemployment benefits.

Again, these are all perfectly just causes when humans are legitimately wronged. However, machines aren’t concerned about such things, and this makes them much more attractive “employees” from the perspective of the employer.

8. Machines do not have bad days or bad attitudes. Having discussed most of the tangible and distinct frustrations of managing people, it’s also worth pointing out that technology can remove many of the more nuanced headaches of employment. We all have known that coworker with a bad attitude (if you can’t think of one in your workplace, it might be you). We all have bad days, too.

Self-service machines do not. They don’t get angry, sleepy, impatient, distracted or indifferent. They don’t suffer hurt feelings, stress or anxiety.

They don’t become unmotivated or jaded by circumstances. They don’t argue about policies with which they disagree. They don’t walk off the job. They simply operate as they are programmed to do, performing their tasks the same way each and every time. No “buy-in” is necessary.

And the importance of consistency for customer satisfaction is well-documented. It isn’t a coincidence that every McDonald’s you’ve ever been to in the United States offers the same menu, the same taste, the same environment, in the same-style buildings, with the same golden arches out front.

9. Machines (generally) do not make mistakes based on language barriers or cultural biases. If you’ve ever tried to have a conversation with someone who doesn’t speak the same language, you know how these exchanges can lead to misunderstandings.

Even when parties share a basic language, cultural context can cause confusion. For example, the way English words can mean different things in the United Kingdom than they do in the United States. One language’s idioms are difficult to translate to another language.

These kinds of errors happen all the time and are impossible to prevent. The most talented linguists on Earth might speak perhaps a dozen or so languages fluently. Yet there are literally thousands of different dialects on the planet. And cultural context muddies the water further.

With machines, we have the potential to deploy all of the world’s translation and cultural knowledge in our user interfaces, so that no one need suffer a miscommunication. Just as a website can be instantly translated into another language with the click of the appropriate flag button at a self-service airport kiosk, so too can a customer interface on a website.

The degree of accuracy is simply a matter of time and care spent preparing the translations at the onset. If they are done correctly from the beginning, all devices sharing the same software network will provide seamless translations and interactions with customers from any conceivable corner of the globe.

This is not an exhaustive list of the advantages of self-service technology. Other factors focus less on cost savings and more on performance superiority. For example, studies have shown that self-service technology can be more effective with upselling than a human being. Think about that. This means that not only is technology drastically cheaper than people, but in some contexts it is also better.

But surely this is all just a lot of hyperbole. Everything is going to be OK, right? Unfortunately, no, this isn’t hyperbole and no, everything won’t get better.

In the third part of this series, we will discuss the likely future resulting from this self-service technology implementation, and what it means for society today.

About the Author

Dr. Gary Deel is a Faculty Director with the School of Business at American Military University. He holds a JD in Law and a Ph.D. in Hospitality/Business Management. He teaches human resources and employment law classes for American Military University, the University of Central Florida, Colorado State University and others.