Over at the Motley Fool someone wrote the following
Another anecdotal confirmation of the job loss trend.
I often park in a large mall lot in Crystal City (Arlington) VA. Starting next week the garage will eliminate all the cashiers and switch to self service. Basically customers will have to take their entry tickets to an ATM like kiosk, pay (presumeably by credit or debit card) and get a pass to exit the garage. I asked one of the cashiers about the change and she confirmed that the garage management company was doing it to save on salaries - a whopping $6 an hour. I didn't ask her about her benefits but I assume nil.
What I find most surprising is the economics of this. On average the cashiers probably handle 2-3 cars per minute. At this rate the salary cost per transaction is probably on the order of $.03-.05. Assuming the average parking fee is somewhere around $5 this would make salary costs no more than about 1% of revenue. I assume the kiosks must cost something to install and maintain the actual savings will be even less.
<rant> How does this make business sense? Is the cost of capital really so low that no worker is too cheap to replace? Not good news for the "service sector" if true. Is there some other factor in play (theft by cashiers maybe) that significantly changes the economics and makes machines preferable to cheap labor? How long before disgruntled former cashiers turned luddite start putting superglue in the kiosks? Is there any rational way to blame the administration / congress for this sort of job destruction (accelerated depreciation distorting investment?) or is it an inevitable trend that we just need to get over and plan for? At least all the cashiers seemed to be immigrants so its not like we are losing any jobs that "americans want". </rant>
My brief response is that I'm glad to see the US is finally catching up with Europe. I haven't paid for parking at a place using a human cashier for the last 5 years - i.e. since I left the backward US. I would guess that the incentive in Europe was greater due to higher wage costs but that now the price has gone down enough that it also makes sense in America.
to expand a bit, the poster asks: How does this make business sense? Is the cost of capital really so low that no worker is too cheap to replace?
The answers are "very easily" and "yes" respectively when applied to non-skilled labour like this. The cost of a human is greater than $6/hour wage cost. I don't know how much greater but there are mandatory employer contributions, administrative overheads, requirements to pay overtime when one employee is sick the fact that you have to have multiple shifts and hence multiple employees for each position and so on. Then there is the problem of dishonest employees, employees making the worng change and so on.
I have no idea what this works out to be or whether the garage in question is open 24 hours a day or just 9am-9pm. Assuming its a 12 hour operation and that costs are about $2.50/hour in addition to the wage that gives us a daily employee cost of $100 (making the sums easier). Which works out at $700/week (more if required to pay overtime for weekends or antisocial hours). You can argue it up or down a bit but it must be in that order of magnitude and I would guess $700/week/employee is at the low end and that it is more likely to be $1000/week than $500/week for a part time garage and roughly double that for a 24 hour operation (although you can reduce numbers of cashiers at night you probably have to pay them more because of the anti-social hours).
Assume each machine costs $10,000 (again a WAG but it must be of that general order of magnitude since the raw hardware is not much different to a cash machine i.e. a low end PC plus modem plus card reader plus tough cabinet) and you need 2 to replace a single employee that is an ROI of 20-30 weeks or ~6 months. In a 24 hour establishment the ROI is half that and if you decide to replace each employee position with a single machine the ROI halves yet again.
There are additional benefits: at Nice Airport (an automated parking place that I am initmately familiar with) the traffic patterns are rather blocky with many people trying to leave 5-10 minutes after a flight lands but none trying to leave 20 minutes later. It takes about 20 seconds to pay the ticket by cash or credit card and there are sufficient pay machines that the queue is rarely larger than 1. This is good from a customer satisfaction point of view since I know of no one who wants hang around at an airport a moment longer than necessary.
If you had human attendants then you would need to have a similar number to replace the machines if you wanted to have the same fast throughput. There are perhaps 10 machines in each terminal (total 20). At €8.3/hour that works out at €200/employee/day (its more but we'll leave it at that for ease of comparison) so 20 employees would work out at €4000/day. If we stick with €10,000 per machine it means that one machine costs approx 2.5 days total wages for the same level of service. In other words 20 machines provides better customer satisfaction for the price of a couple of months salary plus ongoing maintenance of perhaps 10%. It makes sense to have one employee on call for when the machine barfs. It makes no sense to have more than one and that one employee could potentially cover half a dozen nearby parking lots.