Business Leaders Can Defeat the Labor Uprising with AI

It’s hard to believe that businesses that were fortunate enough to survive the pandemic are now facing another calamity. The labor shortage or wage shortage (depending on where you stand) could cripple the economic recovery efforts of the US as we head towards potential runaway inflation. The latest Consumer Price Index (CPI) is at 5 percent with no end to rising prices.

America’s Work Ethic

Do others around the world see Americans as lazy, entitled teenagers pining for a better allowance? As of May 3, the World Health Organization states that the US was leading other countries in vaccination rates, while other countries like India continue to suffer. Talk to business leaders around the globe, and they’ll find it laughable that America is now “held hostage” by low-skilled, low-wage workers.

Frustrated business owners are left to wonder why those sidelined during the pandemic aren’t rushing back to work. We are experiencing something historic that goes beyond “lazy and entitled Americans.” Three factors are driving the labor shortage as census data comes out:

• Declining birth rates - down 4 percent from 2019
• Boomers, up to 40 percent leaving the workforce
• Low labor force participation rate at 61.4%, according to a February report by the Bureau of Labor Statistics.

Covid did not cause the labor shortage; it did, however, accelerate it. There’s no simple one solution answer, such as raising the minimum wage to address these challenges.

It’s Not a Labor Shortage, It’s a Wage Shortage

Solve the labor shortage by raising the minimum wage to $15 per hour. Big corporations like Amazon, Costco, and Best Buy have taken steps to address this. However, most of America’s makeup is the small business owner who may not afford such a drastic increase in wages.

This philosophy (coming from heartfelt intentions) can hurt both the business and the worker. For example, a dishwasher making $10 per hour is now demanding $15 per hour. That’s a 50 percent increase. Being fair and equitable, that business owner will have to offer a 50 percent increase across the board. Now, the kitchen manager making $20 per hour will be asking for the same 50 percent increase at $30 per hour.

Other expenses for the business owner come with a significant wage increase, such as unemployment insurance, taxes, and worker’s comp. Businesses are now raising their prices triggering, massive inflation rates. As prices increase, many of these workers fighting for higher wages may not afford these products or services as the CPI continues to climb.

Bend, Don’t Break: AI-Driven Technologies to the Rescue

As a 50-year-old, I remember the Carter years - parents complaining about inflation and long gas lines. Back then, technological advancements weren’t available to help businesses. Artificial Intelligence, often defined as the ability for a computer to think and act like a human, has been democratized in recent years and can serve as a tool to help companies address acute labor shortages. 

The labor uprising goes beyond just retail and restaurants. While we see AI-driven digital menus like iOrder, the landscape industry innovates with Graze, the AI-driven lawnmower. Both platforms help address the lack of available workers and improve margins decimated by rising labor costs. In 2017, McKinsey released a study that indicated that by 2030, 30 percent of jobs could be automated with intelligent robots. 

Covid unearthed systematic and societal issues with low-skilled, low-wage workers that need to be addressed. In the meantime, businesses will need to look at ways to keep both labor and prices in check- after all, they are the job creators, and these workers on the sidelines will eventually have to pay their bills.