Living Economics

Behind every fast food served, there is fast labor. Labor is fast not only in the speed at which each simple task is performed to robotic perfection. Labor is also fast in the speed at which each worker can be trained to perform the simple tasks. What is more, labor is fast in its turnover. Fast-food workers typically quit or get fired every 3 to 4 months. With only minimum wage and no benefits, there is nothing to hold them back at any one employer.

It is pointless to bemoan the low pay and absence of benefits in most fast-food jobs. The genius of the fast-food business is its ability to tap inexpensive footloose labor that is otherwise totally unemployable. About 2/3 of the nation's fast food workers are under the age of twenty. Except for the fast-food business, who else can offer millions of jobs to teenagers who are only marginally committed to the labor force and value a flexible working schedule? It is no fault of the fast-food industry that some poor adults are compelled for lack of better alternatives to resort to these jobs that have never been designed for them.

The fast-food business is nothing but an extreme evolution of Adam Smith's pin factory. The pin factory illustrates how division of labor increases productivity through accumulation of specific human capital, time-saving repetition of the same tasks, and labor-saving equipment. One by-product of this labor division is standardized output. But this model of efficiency has a built-in limit because it depends on skilled labor that cannot be easily standardized. When workers are not interchangeable, wages and quality become hostages of unrestrained worker expectation. Ultimate efficiency could be achieved only if workers become interchangeable parts. That means workers have to be de-skilled to a level that any new or existing workers can do any job with little training. That is where the fast-food business excels.

To do that, the food preparation process has been divided into very simple repetitive tasks that require little or no training at all. Artificial intelligence has to be built into smart labor-saving machines. All the workers need to do is to attend to the automated machines. But for all that to happen, output has to be more standardized. So there is a virtual circle of increasing standardization. Namely, the more standardized the output, the more standardized the machines can be. And the more standardized the machines, the more interchangeable the workers and the more standardized the output can be. More interchangeable workers, of course, means more abundant source of labor and lower wages. And standardized work process means that the business model can be replicated all over the place.