15 ms·

SF is so expensive that waiters can no longer afford to live in the city

79 points by eplanit 8y ago

toomuchtodo 8y ago
TLDR Waiters' pay has not yet risen enough, and meal prices increased accordingly, for them to continue to live in SF. Establishments are reducing staffing instead. SF micro economic disfunction continues. "Analysts are also calling a lack of employees one of the biggest problems in the restaurant industry today." (My note: No lack of employees, just lack of employees willing to work for current pay offered.) EDIT: "The demand for highly skilled help is especially acute in Washington, where a boom in restaurants run by creative chefs is outstripping the region's labor force," The Times wrote. https://www.vox.com/2018/12/12/18136392/dc-initiative-77-repeal-measure https://www.vox.com/2018/12/12/18136392/dc-initiative-77-rep... "A judge just blocked another effort to raise wages for restaurant workers in DC" There is no employee shortage, ever. Just a shortage of businesses owners who are willing to pay market rate for labor.
- mathattack 8y ago
  This is true of every field. SF is unaffordable for teachers and firemen and social workers. The solution is part zoning more housing, and part employers charging and paying more. Does the city really need another stadium? Or would more housing have been better?
- izzydata 8y ago
  While we are on the topic can we work towards eliminating the idea of required tips and it being an expected part of a servers wage? I don't care if the base price of food costs more if it means they have a normal wage. A tip should be an additional non-expected gesture.
  - mal10c 8y ago
    Are tips required? I know they're automatically included for large groups (at least where I live). Which I find annoying as a customer. But actually to your other point. If I'm interested in working as a waiter at some restaurant, but I'm uncomfortable with tips being an expected part of my wage, then why would I either pursue that job, or accept it under those guidelines? Couldn't I work somewhere else instead and get the same amount of money?
    - izzydata 8y ago
      Maybe not "required", but they are highly expected of you and you are only hurting your server if you don't. The expected percentage of your tip somehow keeps going up as well. It's a percentage so this makes little sense to me. The prices are already going up so the tip would also go up as it is a percentage of the base price. Regardless it has gone from an expected 10% 20 years ago to an expected 20% today.
      - mal10c 8y ago
        That's true, it is more expected than not. I feel bad if I leave too low of a tip. Unless the waiter actually did a really bad job, which happens - fortunately not often.
      - lotsofpulp 8y ago
        I recall it being 15% 20 years ago, but yes, I never give more than 15% for regular service since it’s already inflation adjusted.
        logfromblammo 8y ago
        15% for median service. 10% for 1 or more standard deviations below, and 20% for 1 or more standard deviations above. So you pay 15% on 2/3 of your meals, 10% on 1/6, and 20% on 1/6. But the mean is also 15%. Giving 20% to everybody is Lake Wobegon syndrome, where all the servers are above average. If you don't adjust your tip based on the quality of service, you remove the incentive to strive for above-average service. You end up with servers that sit down at your table when taking your order and chitchat with you, instead of just doing their job professionally while you can see or hear them, and bitching about it in private later.
        izzydata 8y ago
        If you go to Chilis or anywhere with those tablets at the table and pay with your card it will auto suggest a 20% tip. I've seen some other places with a different kind of tablet that simply has boxes for different dollar amounts of no tip, but they are typically not places that even have servers. Why would I tip at a retail shop when all I did was grab something off a shelf and bring it to the counter?
  - csa 8y ago
    Great idea. I doubt it will happen. The most likely outcome of this is that prices go up to factor in a 20% “tip”, the owners/managers keep part of it and pay the workers only slightly more. The formerly tipped position will end up making less. Another possible (non-cynical) outcome is that the 20% is spread out to both front and back of the house staff. Again, wait staff make less. If the wait staff stand to make less, they will never stand for changing the system. That’s why I doubt that it will ever change in the US. Is the system reasonable and/or fair? Good question. Whatever the answer, it’s the system we’ve got, and the inertia is real.
  - golergka 8y ago
    You can't just make a central decision about it and pretend that people will follow. How tip works is a custom, and it's a product of tradition, game theory and human psychology. There are no laws that require customers to leave tips.
- seanmcdirmid 8y ago
  It’s more correct to say a shortage of business models that can pay market rate for labor. If the restaurants can’t raise their prices enough to pay market wages, then it’s not like they are unwilling, just unable.
  - lotsofpulp 8y ago
    That seems like a superfluous designation. A business model where you can’t afford the inputs doesn’t seem like much of a business.
    - seanmcdirmid 8y ago
      Its not like these factors stay constant. What made sense five years ago might not make sense today. And as we know restaurants go under and new ones start up all the time. All businesses face the challenge of continuously preserving a balance that (a) allows them to make money and (b) allows them to exist at all.
- vram22 8y ago
  >"A judge just blocked another effort to raise wages for restaurant workers in DC" Are maximum wages (set by law) a thing in the US? I only knew about the minimum wage concept.
  - alistairSH 8y ago
    No, that quote is about raising the minimum wage.
  - jefurii 8y ago
    We need a maximum rent law.
  - chipotle_coyote 8y ago
    No, they're not. The judge blocked the effort to raise minimum wages, IIRC. The OP is basically correct that restaurant owners don't want to raise pay rates to a level that meets a "living wage" standard. They don't want to raise what they charge customers to the point where they could pay those rates, of course--but I'm not sure there's particularly good data to support the assumption that their customers would balk at doing so. These are restaurants with wait staff in high-cost cities, and raising the average ticket price per diner by $2 or $3 may not be enough to dissuade very many diners from choosing that restaurant. (I mean, I'm sure there's somebody out there who'd look at a menu and say, "I'd pay $28 for that flat iron steak, but $30? No deal!", but it seems like it'd be uncommon.)
- twtw 8y ago
  > There is no employee shortage, ever. Just a shortage of businesses owners who are willing to pay market rate for labor. Is the situation the same for housing? Is there never a housing shortage, just a shortage of people who are willing to pay market rate for housing? If not, what are your thoughts on what the difference is?
  - kec 8y ago
    Businesses can always raise prices to cover higher costs. If they can’t, they’re not viable in the first place. Individuals on the other hand can’t generally just will more money into existence to cover higher housing costs.
    - zeveb 8y ago
      > Businesses can always raise prices to cover higher costs. If they can’t, they’re not viable in the first place. Interesting that 'individuals can always ask for a raise to cover higher costs; if they can't, they're not viable in the first place' might be true, but it sure sounds heartless.
      - Spivak 8y ago
        That statement only sounds weird because getting a raise without changing jobs is becoming a rarity these days. "If no one will hire you at salary large enough to meet your expenses in $City then you can't afford to live in $City." My skills aren't valuable enough for me to live in say, Manhatten, but I don't think that's outrageous or anything.
      - kec 8y ago
        The difference (and why I don't think your statement is particularly true) is one of control. Businesses can and do continuously adjust pricing to reflect the market, workers cannot.
  - jartelt 8y ago
    There are zoning issues that prevent the market from buildings an adequate amount of housing to keep up with demand. You can't just go turn a single family home in Palo Alto into a small apartment complex. There is not an equivalent quota or limit on the number of employees who can work as waiters.
- epistasis 8y ago
  The shortage, at least in SF, is fundamentally housing. Raising waiter's wages until they can outbid nurses and programmers on apartment rent, and then those professions will flee the city. Housing isn't necessarily inflexible in supply, but policy in California has allowed tiny minorities of people to stop housing from being built, while commercial building continues with little restriction.
- conanbatt 8y ago
  > There is no employee shortage, ever. Just a shortage of businesses owners who are willing to pay market rate for labor. What business owners are willing to pay IS the market rate.
  - FireBeyond 8y ago
    That makes no sense. "We have a perennial shortage of workers. Our pay is fair though." No, a market needs two sides and equilibrium, no different to a business owner having a hard time reselling Apple computers at say 30% over retail. It's not a unilateral decree, fiat. If people are available and not willing to work for you for what you offer, it is inherently NOT the market rate.
    - scarejunba 8y ago
      If a stock has Bid at $1 and Offer at $2, what's the "market price" according to each of you?
      - logfromblammo 8y ago
        Undefined. But somewhere between $1 and $2 would be a decent first guess.
    - conanbatt 8y ago
      The two sides of the equilibrium are the business owner seeing how much he can charge the demand(Customers) and pay for the supply(employees). You can have a demand at a price there is no supply for.
- golergka 8y ago
  > "A judge just blocked another effort to raise wages for restaurant workers in DC" What a dishonest article. It's not an effort to raise wages - it's an effort to raise minimum wage. You may have different opinions about how it will affect actual wages, whether it will actually increase them or not - because being put out of a job is a 0$ wage. But either way, even if you think that raising minimum wage WILL result in higher wages, you still have to admit that these things are still different and require some arguments to link them together. Silently misplacing one for the other, as if this assumption is so self-evident, is nothing but propaganda.
- temporaneously 8y ago
  Restaurants already run on extremely thin margins. Raising waiter's pay would mean raising meal prices, as you say. That raises the cost of living for everyone who eats out. Maybe service staff shouldn't ever eat out, but what happens when the same issue hits grocery store workers, and the stores either raise food costs or shut down? It is not a viable policy to legislate raised wages, and then legislate even higher wages when the cost of living increases in turn. The money actually has to come from somewhere. Businesses will raise prices to the point the market will bear, for both the lower and upper class. This is the fundamental issue with wage hikes. $15 is not more than $10 if everything costs 1.5x more after wage increases. Deregulated markets are able to (and have in the US up to this point) create more material wealth for everyone even as wages stay stagnant in dollar value. The problem is not greedy businesses. They want workers who they can hire for wages they can afford. Due to inflated housing prices, the cost of living is too high for workers to live in the city, and thus the "living wage" is unaffordable for businesses. Why are the housing costs so high? There's a lot of evidence that zoning laws and regulated markets play a large role[0]. [0] https://www.forbes.com/sites/scottbeyer/2016/09/30/the-verdict-is-in-land-use-regulations-increase-housing-costs/#27fd0d9e4162 https://www.forbes.com/sites/scottbeyer/2016/09/30/the-verdi...
deadmetheny 8y ago
This isn't hugely surprising - margins for restaurants are extremely thin, so the eventual end game at this rate is for establishments that are extremely expensive and able to actually pay their workers decently to be the only choice available. Upping the minimum wage for them is really just going to result in speeding up the process (you cannot extract blood from a turnip, after all) and putting more people out of work even faster. Something's gotta give here, and it's unfortunately probably not going to be the people who were living and working in SF before the tech boom.
- mcv 8y ago
  If SF is so ridiculously expensive, it makes every kind of sense for restaurants to raise their prices accordingly. The only reason for restaurants to have paper thin margins is if there are too many of them. That will probably change once their waiting staff disappears.
  - YinglingLight 8y ago
    I'm preeeety sure each and every restaurant owner is keenly aware of how their business will fluctuate if they change prices. This is their livelihood after all.
    - grogenaut 8y ago
      Knowing a few people in the restaurant biz, no, many of them are very bad on the business side and big on the passion side.
      - deadmetheny 8y ago
        I own a foodservice business and it tends to be a mixture of both. You're not going to be able to run an establishment without at least some business acumen, but everyone who's ever worked in the industry is fully aware that the pay is complete shit in terms of effort expended. So, as a result, owners pretty much have to be very passionate about the industry in order to even contemplate opening their own place to begin with - and this is here in the Midwest, God help anyone who wants to open something in a major coastal city.
analognoise 8y ago
So we need some kind of waiter robot, that can take orders, deliver food, wipe down a table, and roll silverware into napkins. This is clearly a better solution than paying a living wage to people. Then we can just detach SF from California, and let it float out to sea.
- latchkey 8y ago
  They kind of already have this. https://cafexapp.com/ https://cafexapp.com/
kevin_b_er 8y ago
Maybe when the landed gentry can no longer get service in public, they'll be willing to see more housing.
- Zelmor 8y ago
  ^ Underrated post.
- conanbatt 8y ago
  The city could start by eliminating the sales tax and pile it on property taxes: it immediately increases worker wages, and lowers the value of properties in one go, affecting mostly those that do not consume in the city at all.
  - ssambros 8y ago
    Prop 13. They can't just increase property taxes.
    - conanbatt 8y ago
      Call it "garbage collection tax". Economically, you can do it.
  - dragonwriter 8y ago
    > The city could start by eliminating the sales tax and pile it on property taxes Yes, sure, all they have to do is secede from California so that they are no longer subject to California’s Constitutional limits on property taxes and they can get right on that.
- closeparen 8y ago
  Sure, as long as it’s set aside for the specific categories of workers they want.
paul_milovanov 8y ago
"No longer"? this didn't exactly happen yesterday; and it's not limited to SF -- Mountain View or Palo Alto are exactly the same.
- stillworks 8y ago
  Anecdata but now seems relevant after reading this. And this is from 2013/2014. I visited SV on business trips and was boarding in downtown San Jose for a week or two on each trip. I was always surprised that the waiting staff would actually stand with me and engage in conversation while I queued up to be seated. Travelling from the U.K. I had never experienced this level of "niceness ?" Later I was educated that they are basically only earning anything meaningful from the tips. The wages were puny and they were increasing their chances of getting relevant tips by being so nice. Things have gotten worse I believe.
  - paul_milovanov 8y ago
    On a side note, were you as a European* stunned and horrified to see the featureless concrete urban sprawl that "Silicon Valley" actually was when you came for the first time? * yes, yes, some people will contest classification of Brits as Europeans
    - stillworks 8y ago
      Well, there's good and bad. I only got to suffer the featureless sprawl during the commute. Whereas I loved the cubicle I got to camp in while I was in that office. Here in the U.K. I have to suffer open plan offices and in the winter months, the beautiful architecture is as good as not there at all.
  - scruple 8y ago
    It's known as tipped wages [0] (or, sometimes waitress wages). [0]: https://en.wikipedia.org/wiki/Tipped_wage https://en.wikipedia.org/wiki/Tipped_wage
    - 8y ago
randyrand 8y ago
I don’t really care where waiters live.... Do others?
- mal10c 8y ago
  Not really. If they want to live in the city and can't afford it on their current pay, then maybe focus on getting a different job. That seems logical to me.
  - loriverkutya 8y ago
    and in the end, who will take your orders in the restaurant?
    - logfromblammo 8y ago
      The app will alert you when your food is ready at the pass-through. TBH, some restaurants can benefit more from this than others. Portillo's strikes me as one that could greatly benefit from more judicious use of automation. By my count, every order is taken at least two times, and recorded at least three times. This has no doubt contributed to my orders being at least 20% wrong every single time I have eaten there. I have no idea how they can stay in business. The payment system has one version of the order. The kitchen system has another version of the order. The bag has yet another shorthand version. Each version is worked by a different employee, but no one ever cross-checks. Madness.
- alistairSH 8y ago
  Yes, in as much as forcing waiters (and presumably other hourly service workers) to commute long distances for work has costs... more traffic, more stress / worse health, family impacts (less time with kids). If you're a strict libertarian, I suppose you could argue they should bootstrap themselves a little harder. But, I'd prefer we make life as easy as possible for as many people as possible. After all, the only reason real estate prices in SF and the surrounding area is so out-of-control is overly strict zoning. Allow more multi-family dwellings, preferably close to places of work, and it's a net positive for society.
linuxftw 8y ago
Less waiters in the city presumably means rising wages for the waiters that are in the city. If wages can't rise enough to have adequate staff, restaurants close. If restaurants close, real estate values decline. If real estate values decline, waiters can afford to live in the city. Unfortunately, subsidized housing and welfare enable businesses to pay less than a living wage. People that are in poverty are kept in poverty, and the businesses have a captive labor force. It's almost like there's a specific cause and effect.
- conanbatt 8y ago
  Not necessarily: prices can rise. I've seen first hand how many things increased prices in the last few years, and is all most likely a consequence of rent. All in all, for a city that has an annual budget of 11 billion dollars, the city is a mess, and times of plenty beget times of crisis. At some point even people with RC will leave the city, and the downturn will not be negotiable.
  - linuxftw 8y ago
    The question is, why is the rent so high? The reasons are purely economic. Arbitrarily low number of housing units available (zoning laws) and subsidized behavior. Rent-Controlled apartments further remove inventory from the marketplace overall, pushing the increased cost onto other renters. Higher taxes for government subsidized transportation (buses, metro, even roads) raises the rent. You're not saving anyone any money by building these things, only moving the cost (for mass transit, people will invariably respond with the immeasurable economic benefits these things provide, but they are mistaken as to whom actually benefits). Democracy at it's finest. I expect the rent and real estate to keep rising perpetually, that's what the voters seem to be demanding, even if indirectly.
    - conanbatt 8y ago
      I think San Francisco is simply explained by the Georgist interpretation of the same city in the 1900's. The city awards landlords with lots of income from corporate and sales taxes, and reduced property taxes. Then piles on rent-control to produce pseudo-landlords. The interests are very misaligned, and thus you get high rents in old buildings, homeless people and a transient-disproportionally foreign- population. But the music stops: at some point the bargaing of a tech-job will not be enogh to keep people in.
darawk 8y ago
So...what? If this is a problem, restaurants will pay their waiters more until they can live in the city. If it's not a problem, they will not.
- tyu1000 8y ago
  I agree. Tipping is now approaching 20-25% in my Canadian city, it's adding on so much cost to going out. It's about time to rationalize this space and get some better models.
  - logfromblammo 8y ago
    You understand that in order for it to be a gratuity, it has to be voluntary, right? I have tipped 15% for median-quality restaurant table service my entire life, and will continue to do so at that rate as long as tipping still exists. It has scaled up with the menu prices, because it is a percentage. If "the tip rate is going up", that is entirely a problem of your own making. You chose to tip more. You can also choose to tip less, or not at all (by going to restaurants with counter service). If you as a worker wish to represent 20% of the cost of my meal off the top, in addition to whatever portion you also may get from the menu list price, you are a growing cost, one that invites cutting. There are vending machines that make entire fresh, oven-baked pizzas now. The robot does not get a tip. The service worker just cleans the thing according to a schedule, and refills the ingredient hoppers. Even McDonald's is installing robotic cashiers. It's easy to find tipping guides written by current or former service workers that self-servingly inflate percentages over the historic tipping rates. But those writing such guides are basically advertising that they are becoming less productive workers. That seems like a dangerous thing to do in a world of cutthroat cost-cutters.
    - nikofeyn 8y ago
      why are you tipping 15% for mediocre service? that just ups expectations and sets the bar low for quality service. of course tipping is a choice but there are social pressures. i prefer to hover around 10% for normal service but you can be made to feel like an asshole around people who default to 15-25% for even poor service, even though i am consistent and will often increase the tip greatly based upon great service. it isn't just an individual decision.
uhtred 8y ago
San Fransisco is the most shocking city I've visited, in the world, in terms of wealth inequality. It felt a few small steps from being a distopia. Homeless people and drug addicts staggering around and shitting in the street a few hundred meters from high end boutiques with armed guards that 99% of the population could never afford to buy anything from.
- atom-morgan 8y ago
  And yet many from this area are the first to criticize others for inequality and a lack of empathy.
  - afjl 8y ago
    You could say this about literally any city/area.
    - jostmey 8y ago
      Yes, but some cities are worse, much worse, than others. It's like saying nobody is perfect so it's okay to hurt others.
      - afjl 8y ago
        That's fair. The Bay is terrible, I've experienced it firsthand for four years. My point, however, is that high costs of living and poor wages exist regardless of people's "empathy" and awareness of "wealth inequality".
    - atom-morgan 8y ago
      I've lived in Cincinnati and Atlanta. It's nowhere near as bad as what seems to be coming out of the Bay Area.
      - afjl 8y ago
        I live in a suburban oasis in North Orange County, with plenty of "empathy" and awareness for wealth "inequality". Yet, at the most recent city council meeting, there were a large number of residents complaining about the personal cost of opening up supportive housing for homeless people. Not a financial cost, but a personally subjective "cost" of sharing their city with transients. This housing complex includes mental health services and employment services on-site and has support from the local city government. Instead of compromising and considering alternatives, these people advocated for removing the program entirely and passing the buck to the next city. High costs of living exist regardless of "empathy" or awareness of "inequality". The problem is policy, not personality.
niftich 8y ago
Rent, other than the amenities of the dwelling itself, affords access to a location, which is likely far more valuable in the minds of those making the decision than dining out. In addition to the issues with high cost of living that affect other big cities like New York and DC, the restaurant market in the wider Bay is somewhat distorted due to so many firms of high earners offering food on site. This shifts sit-down restaurants further towards the discretionary, incidental end of spending and away from daily needs. Lunch hours typically have a lower proportion of high-income customers than dinner hours, but this decreases their share further. A common solution is to raise dinner prices to be a higher multiplier above lunch prices, but that only makes sense if the pricing won't drive away business to competitors. For most of these restaurants, attrition and consolidation will continue to happen, while a few will try to move further and further upmarket and focus on branding and an intangible experience, to remove themselves from pricing pressure.
tempodox 8y ago
Next startup frenzy: Create waiter-less bars and restaurants.
- codezero 8y ago
  There’s a robot coffee shop outside of my office.
- bliblah 8y ago
  I think it will be more like "New app enables ordinary people to work on demand as waiters, janitors, and baristas in their spare time!"
saalweachter 8y ago
So while housing supply versus demand is what people focus on, the social problem here (people feel like you can only live in SF if you work in tech, and high-paying tech at that) is coming from a weird sort of income inequality. You have both extreme income differences -- an engineer might literally be making 10x what a waiter does -- and also an absurd number of people on the high end. You don't have one or two or a few hundred or a couple thousand people earning an order of magnitude more than the median, you might have a hundred thousand people with incomes an order of magnitude larger than the people below the median. So my question is: is there any research on what we want income distributions to look like? Would these problems be occurring if engineers made 2x, 5x or 1.25x what waiters did? Would they be happening if the number of engineers was less than 5%, 10% or 2% of the city's housing stock? How would the current parameters have to be tweaked before people who weren't earning the top incomes didn't feel like they were being left completely behind?
- solidsnack9000 8y ago
  So while housing supply versus demand is what people focus on, the social problem here (people feel like you can only live in SF if you work in tech, and high-paying tech at that) is coming from a weird sort of income inequality. Can you demonstrate that? San Francisco is more distinct from other municipalities for its poor housing policy, than for the presence and density of highly paid professionals. The rest of your comment flows from this idea, that the presence of certain kind of people and what they make for a living is something under the control of policy makers. This seems like a strange idea in a country with unrestricted freedom of movement and a basically free market economy. It is striking that you are willing to operate with the idea that policy makers could have that kind of power, while not approaching the problem from areas where they so clearly do have power: public transit and housing policy.
  - saalweachter 8y ago
    While I'm generally interested in problem-solving, in this case I'm interested in problem-understanding. Yes, the housing policies are notoriously stupid, but there are parameters underwhich they are inconsequential. What are they? And while San Francisco has put its own delightful spin on it, gentrification is by no means unique to the Bay Area. Neighborhoods shift over time inevitably but sometimes these shifts are sudden and many former and soon to be former residents feel pushed out and left out. What are the parameters for a neighborhood population to turn over without anyone noticing or caring?
jostmey 8y ago
It's not just waiters that can't afford the city. San Francisco could literally price itself out of existence. My previous partner was looking at residency programs. Being a doctor in training is not an attractive proposition in San Francisco, and I believe she is happy that she did not match there. There's a huge fraction of the workforce that cannot afford San Francisco. It has nothing to do with tech. It's the lack of new housing and apartments being constructed that's driving the problem and making everything more expensive there. I don't even want to visit San Francisco again
- dragonwriter 8y ago
  > San Francisco could literally price itself out of existence No, it can't. It's only expensive as long as there are people willing and able to pay the cost. > There's a huge fraction of the workforce that cannot afford San Francisco Yes, and that's why commuting is a thing. > It has nothing to do with tech. It has everything to do with tech. > It's the lack of new housing and apartments being constructed that's driving the problem No, it's that plus the money (largely from tech) chasing what units are available. Supply constraints alone can't control prices. If there's no demand, price is going to be zero (or undefined) however limited supply is, because no one will be buying. San Francisco has high demand (that is, lots of people willing and able to pay much higher than prices than the market price in many other areas) and constrained supply.
  - closeparen 8y ago
    Regarding commuting, replace “San Francisco” by “anything within one hour of San Francisco at commute time.”
Claudus 8y ago
Maybe SF should allow development of more housing to accommodate the increased population, instead of imposing restrictions to preserve their skyline. https://www.bizjournals.com/sanfrancisco/news/2017/02/16/housing-crisis-restrictive-building-laws.html https://www.bizjournals.com/sanfrancisco/news/2017/02/16/hou... Increasing salaries isn’t going to create more housing, it will just drive up prices even more.

79 points by eplanit 8y ago

TLDR Waiters' pay has not yet risen enough, and meal prices increased accordingly, for them to continue to live in SF. Establishments are reducing staffing instead. SF micro economic disfunction continues. "Analysts are also calling a lack of employees one of the biggest problems in the restaurant industry today." (My note: No lack of employees, just lack of employees willing to work for current pay offered.) EDIT: "The demand for highly skilled help is especially acute in Washington, where a boom in restaurants run by creative chefs is outstripping the region's labor force," The Times wrote. https://www.vox.com/2018/12/12/18136392/dc-initiative-77-repeal-measure https://www.vox.com/2018/12/12/18136392/dc-initiative-77-rep... "A judge just blocked another effort to raise wages for restaurant workers in DC" There is no employee shortage, ever. Just a shortage of businesses owners who are willing to pay market rate for labor.

mathattack 8y ago
This is true of every field. SF is unaffordable for teachers and firemen and social workers. The solution is part zoning more housing, and part employers charging and paying more. Does the city really need another stadium? Or would more housing have been better?
izzydata 8y ago
While we are on the topic can we work towards eliminating the idea of required tips and it being an expected part of a servers wage? I don't care if the base price of food costs more if it means they have a normal wage. A tip should be an additional non-expected gesture.
- mal10c 8y ago
  Are tips required? I know they're automatically included for large groups (at least where I live). Which I find annoying as a customer. But actually to your other point. If I'm interested in working as a waiter at some restaurant, but I'm uncomfortable with tips being an expected part of my wage, then why would I either pursue that job, or accept it under those guidelines? Couldn't I work somewhere else instead and get the same amount of money?
  - izzydata 8y ago
    Maybe not "required", but they are highly expected of you and you are only hurting your server if you don't. The expected percentage of your tip somehow keeps going up as well. It's a percentage so this makes little sense to me. The prices are already going up so the tip would also go up as it is a percentage of the base price. Regardless it has gone from an expected 10% 20 years ago to an expected 20% today.
    - mal10c 8y ago
      That's true, it is more expected than not. I feel bad if I leave too low of a tip. Unless the waiter actually did a really bad job, which happens - fortunately not often.
    - lotsofpulp 8y ago
      I recall it being 15% 20 years ago, but yes, I never give more than 15% for regular service since it’s already inflation adjusted.
      - logfromblammo 8y ago
        15% for median service. 10% for 1 or more standard deviations below, and 20% for 1 or more standard deviations above. So you pay 15% on 2/3 of your meals, 10% on 1/6, and 20% on 1/6. But the mean is also 15%. Giving 20% to everybody is Lake Wobegon syndrome, where all the servers are above average. If you don't adjust your tip based on the quality of service, you remove the incentive to strive for above-average service. You end up with servers that sit down at your table when taking your order and chitchat with you, instead of just doing their job professionally while you can see or hear them, and bitching about it in private later.
        izzydata 8y ago
        If you go to Chilis or anywhere with those tablets at the table and pay with your card it will auto suggest a 20% tip. I've seen some other places with a different kind of tablet that simply has boxes for different dollar amounts of no tip, but they are typically not places that even have servers. Why would I tip at a retail shop when all I did was grab something off a shelf and bring it to the counter?
- csa 8y ago
  Great idea. I doubt it will happen. The most likely outcome of this is that prices go up to factor in a 20% “tip”, the owners/managers keep part of it and pay the workers only slightly more. The formerly tipped position will end up making less. Another possible (non-cynical) outcome is that the 20% is spread out to both front and back of the house staff. Again, wait staff make less. If the wait staff stand to make less, they will never stand for changing the system. That’s why I doubt that it will ever change in the US. Is the system reasonable and/or fair? Good question. Whatever the answer, it’s the system we’ve got, and the inertia is real.
- golergka 8y ago
  You can't just make a central decision about it and pretend that people will follow. How tip works is a custom, and it's a product of tradition, game theory and human psychology. There are no laws that require customers to leave tips.
seanmcdirmid 8y ago
It’s more correct to say a shortage of business models that can pay market rate for labor. If the restaurants can’t raise their prices enough to pay market wages, then it’s not like they are unwilling, just unable.
- lotsofpulp 8y ago
  That seems like a superfluous designation. A business model where you can’t afford the inputs doesn’t seem like much of a business.
  - seanmcdirmid 8y ago
    Its not like these factors stay constant. What made sense five years ago might not make sense today. And as we know restaurants go under and new ones start up all the time. All businesses face the challenge of continuously preserving a balance that (a) allows them to make money and (b) allows them to exist at all.
vram22 8y ago
>"A judge just blocked another effort to raise wages for restaurant workers in DC" Are maximum wages (set by law) a thing in the US? I only knew about the minimum wage concept.
- alistairSH 8y ago
  No, that quote is about raising the minimum wage.
- jefurii 8y ago
  We need a maximum rent law.
- chipotle_coyote 8y ago
  No, they're not. The judge blocked the effort to raise minimum wages, IIRC. The OP is basically correct that restaurant owners don't want to raise pay rates to a level that meets a "living wage" standard. They don't want to raise what they charge customers to the point where they could pay those rates, of course--but I'm not sure there's particularly good data to support the assumption that their customers would balk at doing so. These are restaurants with wait staff in high-cost cities, and raising the average ticket price per diner by $2 or $3 may not be enough to dissuade very many diners from choosing that restaurant. (I mean, I'm sure there's somebody out there who'd look at a menu and say, "I'd pay $28 for that flat iron steak, but $30? No deal!", but it seems like it'd be uncommon.)
twtw 8y ago
> There is no employee shortage, ever. Just a shortage of businesses owners who are willing to pay market rate for labor. Is the situation the same for housing? Is there never a housing shortage, just a shortage of people who are willing to pay market rate for housing? If not, what are your thoughts on what the difference is?
- kec 8y ago
  Businesses can always raise prices to cover higher costs. If they can’t, they’re not viable in the first place. Individuals on the other hand can’t generally just will more money into existence to cover higher housing costs.
  - zeveb 8y ago
    > Businesses can always raise prices to cover higher costs. If they can’t, they’re not viable in the first place. Interesting that 'individuals can always ask for a raise to cover higher costs; if they can't, they're not viable in the first place' might be true, but it sure sounds heartless.
    - Spivak 8y ago
      That statement only sounds weird because getting a raise without changing jobs is becoming a rarity these days. "If no one will hire you at salary large enough to meet your expenses in $City then you can't afford to live in $City." My skills aren't valuable enough for me to live in say, Manhatten, but I don't think that's outrageous or anything.
    - kec 8y ago
      The difference (and why I don't think your statement is particularly true) is one of control. Businesses can and do continuously adjust pricing to reflect the market, workers cannot.
- jartelt 8y ago
  There are zoning issues that prevent the market from buildings an adequate amount of housing to keep up with demand. You can't just go turn a single family home in Palo Alto into a small apartment complex. There is not an equivalent quota or limit on the number of employees who can work as waiters.
epistasis 8y ago
The shortage, at least in SF, is fundamentally housing. Raising waiter's wages until they can outbid nurses and programmers on apartment rent, and then those professions will flee the city. Housing isn't necessarily inflexible in supply, but policy in California has allowed tiny minorities of people to stop housing from being built, while commercial building continues with little restriction.
conanbatt 8y ago
> There is no employee shortage, ever. Just a shortage of businesses owners who are willing to pay market rate for labor. What business owners are willing to pay IS the market rate.
- FireBeyond 8y ago
  That makes no sense. "We have a perennial shortage of workers. Our pay is fair though." No, a market needs two sides and equilibrium, no different to a business owner having a hard time reselling Apple computers at say 30% over retail. It's not a unilateral decree, fiat. If people are available and not willing to work for you for what you offer, it is inherently NOT the market rate.
  - scarejunba 8y ago
    If a stock has Bid at $1 and Offer at $2, what's the "market price" according to each of you?
    - logfromblammo 8y ago
      Undefined. But somewhere between $1 and $2 would be a decent first guess.
  - conanbatt 8y ago
    The two sides of the equilibrium are the business owner seeing how much he can charge the demand(Customers) and pay for the supply(employees). You can have a demand at a price there is no supply for.
golergka 8y ago
> "A judge just blocked another effort to raise wages for restaurant workers in DC" What a dishonest article. It's not an effort to raise wages - it's an effort to raise minimum wage. You may have different opinions about how it will affect actual wages, whether it will actually increase them or not - because being put out of a job is a 0$ wage. But either way, even if you think that raising minimum wage WILL result in higher wages, you still have to admit that these things are still different and require some arguments to link them together. Silently misplacing one for the other, as if this assumption is so self-evident, is nothing but propaganda.
temporaneously 8y ago
Restaurants already run on extremely thin margins. Raising waiter's pay would mean raising meal prices, as you say. That raises the cost of living for everyone who eats out. Maybe service staff shouldn't ever eat out, but what happens when the same issue hits grocery store workers, and the stores either raise food costs or shut down? It is not a viable policy to legislate raised wages, and then legislate even higher wages when the cost of living increases in turn. The money actually has to come from somewhere. Businesses will raise prices to the point the market will bear, for both the lower and upper class. This is the fundamental issue with wage hikes. $15 is not more than $10 if everything costs 1.5x more after wage increases. Deregulated markets are able to (and have in the US up to this point) create more material wealth for everyone even as wages stay stagnant in dollar value. The problem is not greedy businesses. They want workers who they can hire for wages they can afford. Due to inflated housing prices, the cost of living is too high for workers to live in the city, and thus the "living wage" is unaffordable for businesses. Why are the housing costs so high? There's a lot of evidence that zoning laws and regulated markets play a large role[0]. [0] https://www.forbes.com/sites/scottbeyer/2016/09/30/the-verdict-is-in-land-use-regulations-increase-housing-costs/#27fd0d9e4162 https://www.forbes.com/sites/scottbeyer/2016/09/30/the-verdi...

deadmetheny 8y ago

This isn't hugely surprising - margins for restaurants are extremely thin, so the eventual end game at this rate is for establishments that are extremely expensive and able to actually pay their workers decently to be the only choice available. Upping the minimum wage for them is really just going to result in speeding up the process (you cannot extract blood from a turnip, after all) and putting more people out of work even faster. Something's gotta give here, and it's unfortunately probably not going to be the people who were living and working in SF before the tech boom.

mcv 8y ago
If SF is so ridiculously expensive, it makes every kind of sense for restaurants to raise their prices accordingly. The only reason for restaurants to have paper thin margins is if there are too many of them. That will probably change once their waiting staff disappears.
- YinglingLight 8y ago
  I'm preeeety sure each and every restaurant owner is keenly aware of how their business will fluctuate if they change prices. This is their livelihood after all.
  - grogenaut 8y ago
    Knowing a few people in the restaurant biz, no, many of them are very bad on the business side and big on the passion side.
    - deadmetheny 8y ago
      I own a foodservice business and it tends to be a mixture of both. You're not going to be able to run an establishment without at least some business acumen, but everyone who's ever worked in the industry is fully aware that the pay is complete shit in terms of effort expended. So, as a result, owners pretty much have to be very passionate about the industry in order to even contemplate opening their own place to begin with - and this is here in the Midwest, God help anyone who wants to open something in a major coastal city.

analognoise 8y ago

So we need some kind of waiter robot, that can take orders, deliver food, wipe down a table, and roll silverware into napkins. This is clearly a better solution than paying a living wage to people. Then we can just detach SF from California, and let it float out to sea.

latchkey 8y ago
They kind of already have this. https://cafexapp.com/ https://cafexapp.com/

kevin_b_er 8y ago

Maybe when the landed gentry can no longer get service in public, they'll be willing to see more housing.

Zelmor 8y ago
^ Underrated post.
conanbatt 8y ago
The city could start by eliminating the sales tax and pile it on property taxes: it immediately increases worker wages, and lowers the value of properties in one go, affecting mostly those that do not consume in the city at all.
- ssambros 8y ago
  Prop 13. They can't just increase property taxes.
  - conanbatt 8y ago
    Call it "garbage collection tax". Economically, you can do it.
- dragonwriter 8y ago
  > The city could start by eliminating the sales tax and pile it on property taxes Yes, sure, all they have to do is secede from California so that they are no longer subject to California’s Constitutional limits on property taxes and they can get right on that.
closeparen 8y ago
Sure, as long as it’s set aside for the specific categories of workers they want.

paul_milovanov 8y ago

"No longer"? this didn't exactly happen yesterday; and it's not limited to SF -- Mountain View or Palo Alto are exactly the same.

stillworks 8y ago
Anecdata but now seems relevant after reading this. And this is from 2013/2014. I visited SV on business trips and was boarding in downtown San Jose for a week or two on each trip. I was always surprised that the waiting staff would actually stand with me and engage in conversation while I queued up to be seated. Travelling from the U.K. I had never experienced this level of "niceness ?" Later I was educated that they are basically only earning anything meaningful from the tips. The wages were puny and they were increasing their chances of getting relevant tips by being so nice. Things have gotten worse I believe.
- paul_milovanov 8y ago
  On a side note, were you as a European* stunned and horrified to see the featureless concrete urban sprawl that "Silicon Valley" actually was when you came for the first time? * yes, yes, some people will contest classification of Brits as Europeans
  - stillworks 8y ago
    Well, there's good and bad. I only got to suffer the featureless sprawl during the commute. Whereas I loved the cubicle I got to camp in while I was in that office. Here in the U.K. I have to suffer open plan offices and in the winter months, the beautiful architecture is as good as not there at all.
- scruple 8y ago
  It's known as tipped wages [0] (or, sometimes waitress wages). [0]: https://en.wikipedia.org/wiki/Tipped_wage https://en.wikipedia.org/wiki/Tipped_wage
  - 8y ago

randyrand 8y ago

I don’t really care where waiters live.... Do others?

mal10c 8y ago
Not really. If they want to live in the city and can't afford it on their current pay, then maybe focus on getting a different job. That seems logical to me.
- loriverkutya 8y ago
  and in the end, who will take your orders in the restaurant?
  - logfromblammo 8y ago
    The app will alert you when your food is ready at the pass-through. TBH, some restaurants can benefit more from this than others. Portillo's strikes me as one that could greatly benefit from more judicious use of automation. By my count, every order is taken at least two times, and recorded at least three times. This has no doubt contributed to my orders being at least 20% wrong every single time I have eaten there. I have no idea how they can stay in business. The payment system has one version of the order. The kitchen system has another version of the order. The bag has yet another shorthand version. Each version is worked by a different employee, but no one ever cross-checks. Madness.
alistairSH 8y ago
Yes, in as much as forcing waiters (and presumably other hourly service workers) to commute long distances for work has costs... more traffic, more stress / worse health, family impacts (less time with kids). If you're a strict libertarian, I suppose you could argue they should bootstrap themselves a little harder. But, I'd prefer we make life as easy as possible for as many people as possible. After all, the only reason real estate prices in SF and the surrounding area is so out-of-control is overly strict zoning. Allow more multi-family dwellings, preferably close to places of work, and it's a net positive for society.

linuxftw 8y ago

Less waiters in the city presumably means rising wages for the waiters that are in the city. If wages can't rise enough to have adequate staff, restaurants close. If restaurants close, real estate values decline. If real estate values decline, waiters can afford to live in the city. Unfortunately, subsidized housing and welfare enable businesses to pay less than a living wage. People that are in poverty are kept in poverty, and the businesses have a captive labor force. It's almost like there's a specific cause and effect.

conanbatt 8y ago
Not necessarily: prices can rise. I've seen first hand how many things increased prices in the last few years, and is all most likely a consequence of rent. All in all, for a city that has an annual budget of 11 billion dollars, the city is a mess, and times of plenty beget times of crisis. At some point even people with RC will leave the city, and the downturn will not be negotiable.
- linuxftw 8y ago
  The question is, why is the rent so high? The reasons are purely economic. Arbitrarily low number of housing units available (zoning laws) and subsidized behavior. Rent-Controlled apartments further remove inventory from the marketplace overall, pushing the increased cost onto other renters. Higher taxes for government subsidized transportation (buses, metro, even roads) raises the rent. You're not saving anyone any money by building these things, only moving the cost (for mass transit, people will invariably respond with the immeasurable economic benefits these things provide, but they are mistaken as to whom actually benefits). Democracy at it's finest. I expect the rent and real estate to keep rising perpetually, that's what the voters seem to be demanding, even if indirectly.
  - conanbatt 8y ago
    I think San Francisco is simply explained by the Georgist interpretation of the same city in the 1900's. The city awards landlords with lots of income from corporate and sales taxes, and reduced property taxes. Then piles on rent-control to produce pseudo-landlords. The interests are very misaligned, and thus you get high rents in old buildings, homeless people and a transient-disproportionally foreign- population. But the music stops: at some point the bargaing of a tech-job will not be enogh to keep people in.

darawk 8y ago

So...what? If this is a problem, restaurants will pay their waiters more until they can live in the city. If it's not a problem, they will not.

tyu1000 8y ago
I agree. Tipping is now approaching 20-25% in my Canadian city, it's adding on so much cost to going out. It's about time to rationalize this space and get some better models.
- logfromblammo 8y ago
  You understand that in order for it to be a gratuity, it has to be voluntary, right? I have tipped 15% for median-quality restaurant table service my entire life, and will continue to do so at that rate as long as tipping still exists. It has scaled up with the menu prices, because it is a percentage. If "the tip rate is going up", that is entirely a problem of your own making. You chose to tip more. You can also choose to tip less, or not at all (by going to restaurants with counter service). If you as a worker wish to represent 20% of the cost of my meal off the top, in addition to whatever portion you also may get from the menu list price, you are a growing cost, one that invites cutting. There are vending machines that make entire fresh, oven-baked pizzas now. The robot does not get a tip. The service worker just cleans the thing according to a schedule, and refills the ingredient hoppers. Even McDonald's is installing robotic cashiers. It's easy to find tipping guides written by current or former service workers that self-servingly inflate percentages over the historic tipping rates. But those writing such guides are basically advertising that they are becoming less productive workers. That seems like a dangerous thing to do in a world of cutthroat cost-cutters.
  - nikofeyn 8y ago
    why are you tipping 15% for mediocre service? that just ups expectations and sets the bar low for quality service. of course tipping is a choice but there are social pressures. i prefer to hover around 10% for normal service but you can be made to feel like an asshole around people who default to 15-25% for even poor service, even though i am consistent and will often increase the tip greatly based upon great service. it isn't just an individual decision.

uhtred 8y ago

San Fransisco is the most shocking city I've visited, in the world, in terms of wealth inequality. It felt a few small steps from being a distopia. Homeless people and drug addicts staggering around and shitting in the street a few hundred meters from high end boutiques with armed guards that 99% of the population could never afford to buy anything from.

atom-morgan 8y ago
And yet many from this area are the first to criticize others for inequality and a lack of empathy.
- afjl 8y ago
  You could say this about literally any city/area.
  - jostmey 8y ago
    Yes, but some cities are worse, much worse, than others. It's like saying nobody is perfect so it's okay to hurt others.
    - afjl 8y ago
      That's fair. The Bay is terrible, I've experienced it firsthand for four years. My point, however, is that high costs of living and poor wages exist regardless of people's "empathy" and awareness of "wealth inequality".
  - atom-morgan 8y ago
    I've lived in Cincinnati and Atlanta. It's nowhere near as bad as what seems to be coming out of the Bay Area.
    - afjl 8y ago
      I live in a suburban oasis in North Orange County, with plenty of "empathy" and awareness for wealth "inequality". Yet, at the most recent city council meeting, there were a large number of residents complaining about the personal cost of opening up supportive housing for homeless people. Not a financial cost, but a personally subjective "cost" of sharing their city with transients. This housing complex includes mental health services and employment services on-site and has support from the local city government. Instead of compromising and considering alternatives, these people advocated for removing the program entirely and passing the buck to the next city. High costs of living exist regardless of "empathy" or awareness of "inequality". The problem is policy, not personality.

niftich 8y ago

Rent, other than the amenities of the dwelling itself, affords access to a location, which is likely far more valuable in the minds of those making the decision than dining out. In addition to the issues with high cost of living that affect other big cities like New York and DC, the restaurant market in the wider Bay is somewhat distorted due to so many firms of high earners offering food on site. This shifts sit-down restaurants further towards the discretionary, incidental end of spending and away from daily needs. Lunch hours typically have a lower proportion of high-income customers than dinner hours, but this decreases their share further. A common solution is to raise dinner prices to be a higher multiplier above lunch prices, but that only makes sense if the pricing won't drive away business to competitors. For most of these restaurants, attrition and consolidation will continue to happen, while a few will try to move further and further upmarket and focus on branding and an intangible experience, to remove themselves from pricing pressure.

tempodox 8y ago

Next startup frenzy: Create waiter-less bars and restaurants.

codezero 8y ago
There’s a robot coffee shop outside of my office.
bliblah 8y ago
I think it will be more like "New app enables ordinary people to work on demand as waiters, janitors, and baristas in their spare time!"

saalweachter 8y ago

So while housing supply versus demand is what people focus on, the social problem here (people feel like you can only live in SF if you work in tech, and high-paying tech at that) is coming from a weird sort of income inequality. You have both extreme income differences -- an engineer might literally be making 10x what a waiter does -- and also an absurd number of people on the high end. You don't have one or two or a few hundred or a couple thousand people earning an order of magnitude more than the median, you might have a hundred thousand people with incomes an order of magnitude larger than the people below the median. So my question is: is there any research on what we want income distributions to look like? Would these problems be occurring if engineers made 2x, 5x or 1.25x what waiters did? Would they be happening if the number of engineers was less than 5%, 10% or 2% of the city's housing stock? How would the current parameters have to be tweaked before people who weren't earning the top incomes didn't feel like they were being left completely behind?

solidsnack9000 8y ago
So while housing supply versus demand is what people focus on, the social problem here (people feel like you can only live in SF if you work in tech, and high-paying tech at that) is coming from a weird sort of income inequality. Can you demonstrate that? San Francisco is more distinct from other municipalities for its poor housing policy, than for the presence and density of highly paid professionals. The rest of your comment flows from this idea, that the presence of certain kind of people and what they make for a living is something under the control of policy makers. This seems like a strange idea in a country with unrestricted freedom of movement and a basically free market economy. It is striking that you are willing to operate with the idea that policy makers could have that kind of power, while not approaching the problem from areas where they so clearly do have power: public transit and housing policy.
- saalweachter 8y ago
  While I'm generally interested in problem-solving, in this case I'm interested in problem-understanding. Yes, the housing policies are notoriously stupid, but there are parameters underwhich they are inconsequential. What are they? And while San Francisco has put its own delightful spin on it, gentrification is by no means unique to the Bay Area. Neighborhoods shift over time inevitably but sometimes these shifts are sudden and many former and soon to be former residents feel pushed out and left out. What are the parameters for a neighborhood population to turn over without anyone noticing or caring?

jostmey 8y ago

It's not just waiters that can't afford the city. San Francisco could literally price itself out of existence. My previous partner was looking at residency programs. Being a doctor in training is not an attractive proposition in San Francisco, and I believe she is happy that she did not match there. There's a huge fraction of the workforce that cannot afford San Francisco. It has nothing to do with tech. It's the lack of new housing and apartments being constructed that's driving the problem and making everything more expensive there. I don't even want to visit San Francisco again

dragonwriter 8y ago
> San Francisco could literally price itself out of existence No, it can't. It's only expensive as long as there are people willing and able to pay the cost. > There's a huge fraction of the workforce that cannot afford San Francisco Yes, and that's why commuting is a thing. > It has nothing to do with tech. It has everything to do with tech. > It's the lack of new housing and apartments being constructed that's driving the problem No, it's that plus the money (largely from tech) chasing what units are available. Supply constraints alone can't control prices. If there's no demand, price is going to be zero (or undefined) however limited supply is, because no one will be buying. San Francisco has high demand (that is, lots of people willing and able to pay much higher than prices than the market price in many other areas) and constrained supply.
- closeparen 8y ago
  Regarding commuting, replace “San Francisco” by “anything within one hour of San Francisco at commute time.”

Claudus 8y ago

Maybe SF should allow development of more housing to accommodate the increased population, instead of imposing restrictions to preserve their skyline. https://www.bizjournals.com/sanfrancisco/news/2017/02/16/housing-crisis-restrictive-building-laws.html https://www.bizjournals.com/sanfrancisco/news/2017/02/16/hou... Increasing salaries isn’t going to create more housing, it will just drive up prices even more.