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Why the rise of smart machines could terminate jobs

Published: Wednesday, March 12 2014 12:30 p.m. MDT

One of the industries hardest hit will be restaurants like the Chili's where Prince works. Nearly 12 percent of the country's 115.5 million private-sector employees work in restaurants or other food service jobs, a sector significantly affected by labor inflation, according to a report by Christopher O’Cull, an equity research analyst with KeyBanc Capital Markets Inc. The report points to minimum-wage hikes and health care mandates as two pressures increasing labor costs.

By using computer tablets at tables, the report found, restaurant owners can reduce the labor time of servers by 30 to 40 percent.

“Obviously," O'Cull wrote, "the number of servers employed would fall, but the take-home pay of remaining servers would increase significantly.”

For example, the report found that using tabletop tablets at an average mid-scale, casual dining restaurant chain, could double the maximum number of tables that a server could handle at a time from four to eight. This means the number of servers would drop from seven per shift to only five per shift — saving $30,500 in payroll costs. For the servers who remained, average hourly earnings would increase by almost 50 percent from $19.68 per hour to $29.35 an hour.

In the hustle and bustle of a packed restaurant on a Saturday night, however, it doesn't seem like any servers are going to be let go anytime soon.

Harrisville Chili's manager Benjamin Neilson says the Ziosk tablets are not replacing servers, but creating a better experience for guests. The tablets, he says, eliminate two of the areas that are universally frustrating for customers in a restaurant: trying to get the server's attention in a busy shift to order a dessert or drink and trying to get the bill when they are done. The tablets are there for immediate action on those items.

"There are no plans for replacement," he says, "it is just a helper."

Jobs at risk

The majority (62 percent) of CEOs say they are aware of the accelerating nature of science and technology, according to a study by Gartner, an information technology research and advisory firm based in Stamford, Conn. Yet a majority of CEOs (60 percent) say they do not believe that "within 15 years computers exceeding human intelligence will absorb millions of middle-class jobs."

"CEOs really don't see this smart machine issue as real," says Kenneth Brant, research director for Gartner in Durham, N.C. "They really dismissed it as futuristic fantasy. In past eras, that seemed appropriate, but I don't think we are there now."

The problem, according to Brant, is that to prepare for this future CEOs need to respond now. Gartner's study, which it identifies as "maverick research," looks at the extreme possibilities of current trends, and it isn't pretty.

Through 2023, one-third of highly skilled work by doctors, lawyers, traders and professors will instead be done by smart machines, or by less-skilled workers using computers.

"By 2030," the research says, "90 percent of jobs as we know them today will be replaced by smart machines."

The 2013 study by Frey and Osborne looks at U.S. Department of Labor data to analyze those 47 percent of jobs that may be at risk to computerization.

The most vulnerable of the 702 different jobs Frey and Osborne's study categorized are those "occupations mainly consisting of tasks following well-defined procedures." These high-risk-to-be-eliminated jobs are those in transportation or logistics occupations such as people operating farming tractors, forklifts and mining vehicles.

Also vulnerable are most office and administrative support jobs such as executive secretaries and administrative assistants as well production jobs such as in manufacturing. And say goodbye to a large percentage of telemarketers, title examiners, insurance underwriters, tax preparers, loan officers, tellers, sports officials, legal secretaries, payroll clerks, real estate brokers, cashiers, cooks, ushers, landscaping workers, paralegals, manicurists and a host of other job opportunities.

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