The P.A.

A weekly address from Patrick Adams,
President of St. Louis Community Credit Union

The Digital Divide Must Be Bridged

On March 28th, 2016, posted in: Uncategorized by

restaurant touchscreenThere is a restaurant chain that got its start in San Francisco. It’s called Eatsa. Los Angeles has one as well. This chain, from order to handoff, is almost completely automated. That’s French for “very few employees.” That’s sad if you’re somebody who likes to see the economy humming because people have jobs.  Higher-paying jobs replaced with robotics is nothing new. But when the entry-level workforce is replaced with “bots,” one has to ask — what the heck is going on out there?

 

So I’m thinking out loud here. Why fast food? Let me take a stab at connecting the dots. Generally speaking, consumers love to use automation, technology costs are dropping and labor costs are rising. Let’s play this out. Young people eat fast food, they love technology, and they love for their purchases to be as cheap as possible.  Young is usually synonymous with poor. How else could you explain the success of Jack in the Box tacos, especially with the midnight to 3 a.m. crowd?

 

If using technology to order something was a phobia, it was cured by Amazon and Apple. Technology at the point of sale is prevalent. The younger folks in line at Eatsa probably don’t remember telephone operators or gas station attendants — both replaced. Fast forward to right now. Uber replaces cab dispatchers. Pizza orders made online eliminate someone who needs to answer the phone. Kiosks eliminate ticket agents at airports. The trade-off for great new technology is that job counts are reduced.

 

So we’re fast becoming a world in which the “digital divide” is widening. Those with technical skills make a good living, and those who don’t have those skills are being priced out of even the very lowest wages, i.e., entry level. How does that happen?

 

It probably isn’t a coincidence that San Francisco has unfriendly business-burdening regulations regarding labor. San Fran also has a very high minimum wage. The fact is that San Fran’s modus operandi is happening across many metropolitan areas. The results are that business is looking to keep costs down by hiring less people and replacing them with the cost efficiencies found in technology. Sadly, the economic recovery of recent years hasn’t been for everyone. The poverty rate in San Fran is up from 11.5% to 13.3%. This is called an unintended consequence. It usually is not thought of by decision-makers until it’s too late.

 

If the “City by the Bay” has this problem, it is not alone. Is San Francisco a harbinger of the future? The “digital divide” must be bridged in metropolitan areas across our great country. If jobs are being replaced in the service industry, then let’s get folks trained to make and service the robots that are currently taking those jobs. They’re better jobs anyway.

 

“The rich get richer and the poor get poorer” is not a way for our economy to flourish.

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