“Puzder doesn’t seem to want to replace his workers with machines so much as he would like to see an end to government regulations that increase labor costs.”
On Thursday, December 8th, the picture of the cabinet which is being formed by President-elect Donald Trump came into slightly clearer focus with the selection of Andrew Puzder to serve as U.S. Secretary of Labor under Trump, pending approval by the U.S. Senate. Puzder is the CEO of CKE Restaurants, the parent company of fast food chains like Carl’s Jr. and Hardee’s. He would move into a position currently held by Obama appointee Thomas Perez and formerly held during the George W. Bush administration by Elaine Chao, Trump’s choice for U.S. Secretary of Transportation.
This March, The Wall Street Journal published an opinion piece penned by Puzder in which Puzder discussed the growing wave of automation in the restaurant industry being created by technology. In the piece, Puzder argues that government-sanctioned increases in labor costs, both in health care at the federal level and minimum wage laws at the state level, have a significant effect on the restaurant industry “where profit margins are pennies on the dollar and labor makes up about a third of total expenses.” Automation technology in the restaurant industry, such as interactive kiosks that replace waiters by taking customer orders, is both a cost-cutting move and an investment in improved customer service, Puzder argues, citing the speed, accuracy and convenience of such technologies.
Puzder’s Wall Street Journal opinion piece also identified a business model which might become more successful as restaurants compete to succeed despite high labor costs. Specifically, Puzder identified Eatsa, a small fast food chain which offers a highly automated restaurant experience. As Puzder points out, not only is Eatsa’s automat restaurant model is one which has existed since the latest parts of the 19th century but it also reflects trends of job displacement which have played out during the latter half of the 20th century. “As recently as the 1960s, gas-station employees would rush to fill your car’s tank… Telephone operators made your long-distance calls and bank tellers cashed your checks. Those jobs are now either gone or greatly diminished,” Puzder wrote.
The effect of technological innovation and increased automation on U.S. labor has been a topic of hot debate. Last October, the Brookings Institution held a moderated discussion on the rise of robotic tech and its effects on both employment availability and social benefits. In 2015, media outlets were reporting on an unpublished study which found that 47 percent of total U.S. employment would be automated by technology. Given Puzder’s bullishness on automated technologies in the restaurant sector, it’s likely that the Senate could confirm a Secretary of Labor who might advocate for labor policies friendly to business owners and the tech sector.
While there is some truth to the fact that technology is disruptive and often leads to the obviation of certain jobs which used to be handled by humans, new jobs often fill the void, though they do tend to be in vastly different industries. At last October’s Brookings Institution discussion, it was noted that yoga instruction is now a growth industry despite the fact that no actual yoga industry existed a few decades ago. The implication is that as technology takes jobs which leave people without jobs in one industry, new industries develop to offer new jobs. In March 2015, Forbes published an opinion piece written by a political economy editor at the magazine which argued that technological progress has caused abundant job growth since the earliest days of America’s agrarian society “when just about everyone worked whether they wanted to or not — on farms — just to survive.” While new jobs could be created by getting rid of ATMs and cars, the author argues, that kind of job creation does not lead to economic prosperity for a country.
“[Machines are] always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case.” – Andrew Puzder, March 2016 interview with Business Insider
Puzder does not appear to be anti-job or anti-U.S. labor. Rather, he seems to understand certain economic realities, which critics have tried to pass off as bad manners. Some of his business activities further refute the idea that Puzder doesn’t want to further the prospects of American labor. According to an article published this March by The Los Angeles Times, CKE Restaurants offers its employees up to $20,000 over their lifetime as tuition reimbursements for career and job-related education and training programs. Those benefits are only extended to corporate employees, not the vast number of people working in franchised locations of Carl’s Jr. and Hardee’s, but it does suggest that Puzder is aware of the needs of his employees as they face the possibility of having their jobs automated.
Overall, Puzder doesn’t seem to want to replace his workers with machines so much as he would like to see an end to government regulations that increase labor costs. This echoes an anti-regulatory regime that looks to be shaping up with choices like climate change-critic Oklahoma Attorney General Scott Pruitt to head up the U.S. Environmental Protection Agency (EPA) and Obamacare-critic Rep. Tom Price (R-GA) to serve as the U.S. Secretary for Health and Human Services. “Make America Great Again” may have been the slogan which put Trump in position to ascend to the office of President of the United States, but the way that idea is being put into practice echoes slightly a very famous warning given by former-U.S. President Ronald Reagan on the nine most terrifying words in the English language.
One last look at Puzder’s Wall Street Journal op-ed provides another layer of nuance through which to view the appointee’s apparent views on technology and how it can affect labor. Even as he praised decisions by Chili’s, Applebee’s and other restaurant chains to install tablet devices which replace waiters at many locations, he acknowledges that technology has its limitations in such customer service-driven industries as restaurants. “Technology at the counter poses challenges,” Puzder writes. “Some guests find it impersonal or confusing. Customer service is still very important and, for now, having access to a person is important to ensure smooth experiences for everyone. Increased automation also makes it more difficult to build a company culture. There are maintenance costs, and the business has to hire IT professionals to service the technology. The technology can malfunction, spoiling a patron’s visit.”
Chances are good that Puzder, if confirmed, would not pursue policies which simply promote the automation of low-wage jobs. In fact, he seems finely attuned to the fact that government regulations have pushed business executives to look towards machines instead of dealing with the rising costs of having human employees. Ironically, we could be left with a situation in which a labor secretary nominee who many assume prefers machines to humans could actually pursue policies which reduce labor costs and actually slow the pace of automation in restaurants and other industries.