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This article was a bit scattered over the various sources of issues (high living costs, low labor pool (leading to high salaries and high turnover), reduced hig
by usaar333 8y ago
This article was a bit scattered over the various sources of issues (high living costs, low labor pool (leading to high salaries and high turnover), reduced high-skilled chefs, high taxation, complaints about customer base with some nativism thrown in); figured I'd try simplifying it.
On the labor side, there's enough labor competition to drive salaries of line cooks to $50k/year. That's about $38k post-tax, which even after spending spending $19k/year in rent (split a two bedroom maybe 40 min from downtown) leaves $19k. Not great, but mind you the average line cook in the US is pulling $30k/year pre-tax (24k post-tax) -- the COL difference is pretty much compensated for.
Where things break down badly is with older, more experienced workers that have/might have families (e.g. the cook with 4 kids in the intro paragraph). Space comes at a premium in the Bay Area and if they prefer to not be crammed in to a small place, the salary an experienced worker can make isn't going to cut it to cover the desired marginal living space.
The final piece in the puzzle is that the desired salary multiple of these experienced workers (over entry-level ones) is higher than their productivity gains. That is, if the experienced cook needs twice as much take-home ($110k pre-tax) as the entry-level one (due to family needs), unfortunately, there is insufficient customer demand to pay 2.2x as much for food for this higher quality. (but mind you much more base demand in SF than elsewhere!). Result is that experienced folks move to areas where housing costs (per-sq feet) are lower as a percent of salary.
Net effect might be that the dominant strategy for someone in the restaurant business is to start out in SF but later move to a somewhat lower COL area. With such a strong economic incentive, restaurant composition will likewise follow; city policies, etc. are likely secondary.
- jurassic 8y agoOne of the challenges, I think, is that landlords don't want to rent to you if your salary isn't three times annual rent. I'm not a real estate professional, but I've been told that multiple times when looking for my own apartments. In your example, you have the worker coming out okay or possibly slightly ahead (compared to lower COL areas) by spending half their net on rent. But by this 3x rule the landlords renting a property that costs $19k/yr would want to see an income of at least $57k and the worker wouldn't qualify.
- deleted 8y ago[deleted]
- deleted 8y ago[deleted]
- eli_gottlieb 8y ago>The final piece in the puzzle is that the desired salary multiple of these experienced workers (over entry-level ones) is higher than their productivity gains. That is, if the experienced cook needs twice as much take-home ($110k pre-tax) as the entry-level one (due to family needs), unfortunately, there is insufficient customer demand to pay 2.2x as much for food for this higher quality. (but mind you much more base demand in SF than elsewhere!). Result is that experienced folks move to areas where housing costs (per-sq feet) are lower as a percent of salary. Or, in even shorter terms, high land rents divert value away from skilled workers and towards largely parasitical speculators.
- leereeves 8y ago> Result is that experienced folks move to areas where housing costs (per-sq feet) are lower as a percent of salary. If working class adults with families aren't able to afford to raise a family in San Francisco and therefore move to lower COL areas, what's the future of San Francisco? Where will future inexperienced workers come from if not from today's working class families?