The restaurant industry has known the solution for a long time but everyone wants to pretend it would be too difficult.
Stop the tipping guilt trip placed on the public, raise your prices 20%, and pay your employees a livable wage. The public will still show up to eat in your restaurant.
That may be the case for some....but that is not the case for all. For one ancedote, my father in-law runs a restaurant with my aunt in-law (his sister). They are the only workers, and split the profits evenly. They are in the midwest (low taxes), and own the restaurant's property/building. They were able to completely shut down during COVID and restart back up, and have survived several economic downturns.
They are still worried about the long term health of the business because of enternal cost increases (food, supplies, etc.), and are honestly thinking of just shutting down their restaurant and retiring rather than raising prices. They honestly think that if they raise their prices to get the same profit (NOT increase, just to keep it the same!) they have been getting, no one will come anymore because the cost is too much.
They by comparision to a lot of other business are lucky! They don't have to worry about rent at all, and they only have themselves to pay. Both also have other external sources of income (their spouses works), and have absolutely zero debt.
I can't imagine how it is for business that have rent (and possibly rent backpay) and employees they need to pay. I went to Northern VA (Reston) before and after COVID....so see almost all of the local restaurants and a great local grocery store wiped out because the property management were so unforgiving for rent.
I'm sure things are more complicated than you describe, but it seems like they fear increasing prices will lead to closing, and to avoid this they're... just going to close?
There is a certain amount of investment needed to keep going. If you are going to close the restaurant next year you can keep the current tables, otherwise replace them before they get too worn out. Or maybe it is the fry machine at the end of life, replace it for $50,000. If the restaurant continues for a few more years it is worth it, to fix/replace things, but if the restaurant is doomed it is better to cut your loses.
Even in the best of times restaurants are the hardest business to run successfully. These are not the best of times, and (as always) it isn't clear what the future will hold.
McDonald's fryers are generally just standard commercial fryers with preset temperatures and timers. The only custom part is the (separate and standalone) machine that measures out standardized portions of fries into baskets, and while I'm sure they'd call it a trade secret it's really just a big plastic hopper and some sort of weight sensor arrangement.
Perhaps with the entire hood/exhaust and fire suppression system. But not a simple two basket fryer. When I bought mine (new) in 1995, they were roughly $3K. And this had a built-in filtering system.
Actually, to spend $50K on a fryer system is pretty hard:
We've banned this account for repeatedly breaking the site guidelines. Please don't create accounts to do that with—that's against the site guidelines in its own right.
Sorry, should have been more specific! More correctly, they are debating if it's just time to retire now and be grandparents full time rather than risk losing a lot money in the restaurant due to increased prices, then being forced to retire.
I assume "closing down the restaurant and retiring" means they will sell the restaurant (or at least the property), but I am not sure to be honest?
Would raising prices 5 or 10% be so catastrophic to revenue that they couldnt even give it a few weeks? Or are they looking at a 50%+ price increase?
If they want to retire anyways, then good for them. But a lot of businesses have had to raise prices this year, including grocers, which are arguably restaurants only competition. I think folks would understand.
If raising the prices drives away customers, you have now lost a notable value if you try to sell. Brand perception is (almost) everything. Unless you offer something truly unique or exceptional, you're replaceable in just about every market.
There was a local beer taproom/bottle shop that I frequented a lot for years. Even as craft beer became more prominent and there were more local options, I liked it enough to keep going, but fundamentally there came a point where they raised their prices enough that I started going elsewhere, and once I broke that habit there was never a big reason to go back unless I was meeting someone else there once in a while.
In this case, "enough" was in the 20% range, but given what's happened to food prices lately I don't think 5-10% is a realistic number for a restaraunt either.
> If raising the prices drives away customers, you have now lost a notable value if you try to sell. Brand perception is (almost) everything. Unless you offer something truly unique or exceptional, you're replaceable in just about every market.
Agreed in general terms, but who is going to buy a business that cant even cover its costs? It sounds like this business has a negative expected value without raising prices.
Is this inflation creeping up in all the expected places? The value of goods is the same but the value of the USD is lower and thus we must increase costs. I don’t see it impacting brand perception if all prices go up.
>They honestly think that if they raise their prices to get the same profit (NOT increase, just to keep it the same!) they have been getting, no one will come anymore because the cost is too much.
That may be true, but you mentioned they're in the midwest. So am I. I'm in the heavy hitter, Chicago, but I'm from Smalltown, Midwest. I can say that NOTHING is free. Everything is a trade off. All those years of low taxes? Yeah, no one has any money in the midwest. Raising prices may well run people off. They already got the reduced-risk benefit of the midwest for decades, ability to own the building, lower taxes. Having a poorer local clientele was the price for those securities. That was part of the trade off.
You aren't just flat out "getting a better deal" as they probably felt, doing business in the midwest vs coasts. It is absolutely not outright just a "better place to do business". Other than perhaps our environmental stability (the greenhouse effect matters less, no fires, abundant fresh water, no fault lines outside of the St. Louis locale, etc.), those things are starting to matter in a big way, but are of limited benefit to a restaurant.
They already took the benefits from this area. All comes out in the end, but generally the midwest grants you more stability/security, while you end up poorer at retirement than someone that earned more dollars on the coasts. Same end result for them, just like the rest of us.
Sounds like its time for them to raise prices past what they deem to be a reasonable rise. Other restaurants in the area will likely do the same, and not pricing yourself to match can cause a drop in business as people seem to think the more they pay the better the quality (especially when your service or offering is priced on the low end of the market).
You might look at this and say charging $4 for X item is already at the edge of reasonable, but when your neighboring restaurants are already at $6 to $8 there is little reason to offer screaming deals. Its just a sign that its time to reprice to $7 to $8 for your own offerings, providing more profit to interest the dual owners moving forward. Reducing hours would also be a good idea for a owner operated business like this!
timing the market is everything. Consider this the 'first mover disadvantage'. If you price yourself at the higher end of the market before the rest of the market moves, the lower price competitors will absorb your clientele.
In addition, type of food matters a lot. A place that sells 'cheap slop on a plate' has lot less price flexibility than a boutique that sells fancy sushi.
I could get a "burek" (pastry with cheese) for 2eur, it's cheap, it fills you up, and you continue with your day.
Or I could order a pizza delivery... pizza used to be in the 6-8eur range if you lived near the restaurant, so for 12, 13 eur I could get two pizzas delivered to my home.
Then "the plague" came, the local pizzeria was closed, delivery was taken over by "app companies" (wolt here), they charge percentages of the food price + delivery cost, so the price of the pizza has gone up to 9-10eur (to cover the wolt fee), and with the delivery fee, we're talking 20-22eur for two pizzas. After the reopenings, the prices in the restaurant are the same as on wolt + with drinks, we're talking close to 30eur for two pizzas and drink.
If bureks cost 2.5eur or even 3eur (50% higher), they're still "cheap", and people will buy them. With pizza going from 12, 14eur to 20-25eur, I can make a huge amount of very good food at home, and saving 15eur to eat healthier makes it worth it.
TLDR: at some price point (that I currently feel we're at now, with some foods atleast here), it isn't worth it anymore to eat out. Everybody might rise their prices, but less people will eat outside, lowering the overall profits of everyone.
Yes, slovenia, but in other countries it's probably the same, just with different prices, and at some price point, it becomes expensive enough to eat out, that you'd rather choose to cook
I added a small cafe in Aug last year to my existing brewery's taproom because food was required by the state to reopen. I had no prior experience in running a small cafe (we do mostly paninis and similar). My thoughts roughly a year later is that food is one terrible business. We are close to braking even over that time, minus buildout. We have a wonderful staff and have been blessed with no issues in that department. But other problems are always popping up. Such as pork prices have doubled in the last 3 months. Bread went up about 15% and lots of other things change a lot order to order. We can't change our menu every week, so some weeks a sandwich is perfectly priced, while the next its food cost is 40%. Basically there are just so many moving parts, that change so frequently, so much inventory that expires in just a few days (vegs). So little max potential profit. It's usually a goal of 25-30% food cost, 30% labor cost, 40% to overhead and hopefully of that 10-15% profit (Assuming you didn't piss away 20-30% to a delivery service). I have found that being such a small operation we have yet to really hit the 30/30(60%) its more like a 65-80% in ingredients and labor. Which vary wildly from week to week as customer traffic varies. If sales were to triple overnight we could more easily get it lower and into range of the 30/30 or possibly even 25/25. Just because there would be less wasted food, less wasted staff potential, and more room for improvements. Which brings me to the point of this long paragraph. It seems (from my limited experience) like a restaurant that can't get enough sales for its appropriate overhead size, struggles. I am fortunate enough that we make enough coin to live on the rest of the business and don't need the income from the cafe, but it sure is a lot of work for very little reward that I would never want to mindfully walk into.
> They honestly think that if they raise their prices to get the same profit (NOT increase, just to keep it the same!) they have been getting, no one will come anymore because the cost is too much.
This is why hard-enforced industry standards are a good. The situation you describe only exists when the price increase happens for 1 single restaurant and the others stay the same.
However many exist in the region, as long as there's no mandatory system, they're just gonna wait it out, see who gives up first, people stop going there and go other places instead, thus increasing traffic and income without having to raise prices.
This race to the bottom will be won by those who are already the richest and can weather the financial storm the best.
It's a system by which those at the top of the rungs actively prevent anyone from passing them through hard work.
In my experience, raising prices might have a small short-term effect, but if the product is good, sometimes you'll think it was overdue !!!
It has happened to my own fees, and I still should raise them (so I totally understand the fear behind it).
Plus, the United States has significant inflation now, which you aren't used to, but in other countries it's TOTALLY NORMAL to raise prices every year.
Business owners can raise their prices slowly. You know, boil the frog. Surely that prevents the harsh reactions that customers have to suddenly having the price raised?
$9 or $9.50 for a beer is the most you can charge in some places. You'll suddenly put people off if the beer is $10.
What you can do is charge $9 for a 14 oz beer (previously 16 oz), which is roughly like charging $10.28. Can only do that trick once, though. Or you can increase the size to 24 oz and charge $14.
Yeah but $9 for a beer is already insane in most locales. Most bars charge $5-$7, going down to $3ish (or even a dollar) for a cheap beer in a lower-income area. Unless these restaurant owners are already capped out they have a lot of wiggle room
Honestly, as necessary as that is, it’s not a magic solution. People are quitting the restaurant industry in France too, despite having none of the tip silliness.
It’s just that people are realizing that there are easier minimum wage jobs than working in a kitchen
Sure but this goes beyond restaurants in my opinion. Look at these states that had mass migration of people during the pandemic. You will find the (big) sky-rocketing cost of living where those who are moving in on a whim are also not seeking jobs in the state. However all these businesses need employees to handle the new increase in customers. The employers aren’t raising their wages either, which is also not attracting people to work. When the lower classes are forced to move elsewhere (Outside the cities) then this problem will get worse.
Return to office might have some reverse effect but online remote employees can be one of the biggest generators of this problem.
This is exactly it. This is a second order effect of the pandemic flight, not a "restaurant" thing at all. People facing long term unemployment/underemployment over the past year had huge incentives to "move back home" (or wherever) to places with lower cost of living.
And who feels that pressure the most? Service workers, who had jobs in the cities, sure, but didn't reap any of the economic benefits of all that urban wealth concentration. They're overrepresented in the population who fled, which means their jobs are now underserved.
Long term, this will probably just be viewed as a correction to a few overpopulated urban cores. We'll find equilibrium again, though not at the same state as before.
But regardless, the fix here is the same: pay more for the jobs and you'll find people willing to do them.
They are. It takes time but they are. I work in a business that is having a hard time hiring entry level healthcare workers because Walmart and Amazon warehoueses is now paying $15-20/hr when it was only $12 pre-covid. Walmart and Amazon would only raise wages if they truly had a labor supply issue, which they do, we all do.
I do see a bit of improvement. CVS starts out at $15/hr. I have a feeling that is only in certain zip codes?
Kroger decided to close a store because it didn't want to pay a covid front line temporary increase of $4/hr.
I don't see a big increase in wages, and I work a lot of lousy jobs.
If job conditions were a bit better, a lot of employees will stay at a low paying job because they actually like their fellow employees, and sometimes the job.
I don't know why being nice/respectful is so out of fashion in corporate america?
I grocery shop at Safeway, and The Nugget markets. Safeway employees hate their job. They even have a hard time retaining new immigrants. When I shop at Safeway, I sometimes need to move to another line if I feel the checker is having a bad day. (I overheard an employee state a manager wanted him at a store 70 miles away at 5 am the next day, and he told that manager he didn't have transportation other than the bus. I wanted to grab the phone and lay into that "Manager".)
As opposed to The Nugget, which is notated as one of the best 100 places to work. It's like going back to the fifties. The employees are nice. It might be they hire people whom will have better jobs one day?
Anyways, it's not just about wage. I have had lousy low paid jobs I liked, and well paid union jobs I despise.
> Kroger decided to close a store because it didn't want to pay a covid front line temporary increase of $4/hr.
If you're talking about Seattle, Kroger closed that store because it was underperforming for years, not because of a temporary wage increase that affected every grocery store in the city. Weeks later, they started advertising open positions with wage increases for nearby stores they didn't close...
When it comes to political decisions, firms lie all the time about their motivations. I don't understand how anyone can take what they say at face value, without any means to verify their claims.
The reality is that nobody closes their grocery business because labour costs went up for them and their competitors. Customers still need groceries to live, and you and your competitors just pass the costs directly to them, without any change to profit margins or market share. Closing your grocery over this is as nonsensical as closing your grocery because the spot price of milk went up to $15/gallon.
Kroger also elected to close three locations in Los Angeles rather than hike their employees' pay $5/hr in accordance with a new (temporary) hazard pay during covid.
It gets argued again and again that the profit incentive is necessary for cutting inefficiencies, and looking at it from Kroger's perspective, this appears to be another such example. Yet this is only the case for Kroger - when considered in its full context, as a supplier of necessities for working class folks, it's the total opposite. It's the composition fallacy at work: just because companies with a profit motive evolve to cut inefficiencies wherever possible (such as by externalizing costs) does not mean that society as a whole reaps the same benefits.
> When it comes to political decisions, firms lie all the time about their motivations
Of course they're not going to say "we're closing because we don't want to pay our employees a decent wage", that would be bad optics. You can be pretty sure that if you ask employees at the store, they'll say that whatever the stated reason, the intended message from the parent company is "we ain't gonna pay you more".
I'm curious where in the US are healthcare workers getting less than $15/hr and what kind of work it is. Even the sort of jobs that require no certification, no degree, and no experience seem to pay quite a bit more than that.
We pay CNA's $12/hr in some markets. Their job is like daycare but geriatrics instead of toddlers. It's a lot of hands on service on both ends of the gastrointestinal tract. There are RN's around in fewer numbers that earn more and do the actual clinical parts.
> Based on the May 2017 salary information from the Bureau of Labor Statistics (BLS), orderlies make a median wage of $13.07 an hour or $27,180 a year. Half of orderlies receive more, and half make less. The lowest-paid 10 percent make less than $9.73 an hour or $20,240 a year, while the highest-earning 10 percent get over $19.52 an hour or $40,610 a year. Orderlies employed in psychiatric and substance abuse hospitals are paid the highest average wage of $17.21 an hour or $35,800 a year. Nursing care facilities pay one of the lowest average wages of $12.00 an hour or $24,950 a year.
> Wages often start out low for entry-level orderlies and grow with experience. Some orderlies complete additional training and state requirements to advance to higher paid nursing assistant or registered nursing roles. In July 2018, PayScale.com showed this hourly pay progression by experience for nurse aides, orderlies and attendants:
Often for $15/hr or less (many places will pay EMTs literally minimum wage, and tell their employees, "you can have as much OT as you want").
Part of it is supply and demand. Private EMS is often an in-road or holding pattern to a more "cushy" unionized fire department EMS position (where firefighter paramedics can make into the six digits). So private EMS has little motivation to be competitive - "there's a line of 21 year olds who will happily take your job".
Possibly home-care workers, people who look after invalids with the type of arrangement where they drive to several different houses and provide a couple of hours of care at each. It doesn't require any particular qualification, but it's difficult and draining work that is not usually well-paid.
Walmart and Amazon raising wages allows them to exercise their huge scale to further crush their competitors.
With their huge efficiencies of scale and deep cash reserves, they are better able to offer higher wages than competitors. During the pandemic, both Walmart and Amazon have seen huge growth. They can continue this growth post-pandemic by squeezing their competitors on wages, and eventually emerging with less competitors.
Amazon/Walmart are capable of raising wages to add more/retain employees. Other smaller business aren't able to adjust as quickly, thus the big box stores take on way more workers. If everyone raised wages at the same time (a la minimum wage increase or otherwise), then Amazon nor Walmart would look like that much of a better place to work, eliminating the "boo they're using their huge scale to further crush their competitors."
It isn't hard to start a new business. There are a ton off niches that Walmart and Amazon don't server well. Find one and serve it, then use profits to expand into the much larger (though lower margin!) areas that Walmart or Amazon serve. Good luck - it is not easy to run a business.
lol it’s not hard to start in tech with no regulation no capital or overhead. Real businesses are hard to start and live and die by the cost of financing
If Amazon or Walmart is part of your plan you need a better plan. Try selling oil well drilling supplies in oil country (I have family doing this, and they have cornered thus niche, so don't try that exactly, but it is the type of thing. They make it because they have in stock the special parts needes for that niche and Walmart won't)
everything about that analysis of the situation is backwards.
the problem is the restaurants are seeing fewer customers due to the pandemic so they can't raise wages, while the upper 1/4 or so of the population hasn't been financially impacted by the pandemic and housing and rents have continued to climb. restaurants can't raise prices in this situation and they can't raise wage, which squeezes the workers who are now not putting up with it any more.
return to work means continued increase in housing prices and if restaurants fully open they're going to have to pay more and that means that those wage and rent increases for the businesses will have to get passed on as rising prices.
if there's a switch to remote work then that will make cities more livable again at current wage costs and menu pricing. you lose some disposable income from the seriously high wage earners that have left the city, but they'll mostly take the distortion of the housing market with them while the bulk of the population that makes less than $150k will have more left out of salaries to eat out at the restaurants.
short term the effect of popping housing bubbles would be recessionary, of course, but it'd act more like Volker's popping of the 70s stagflation bubble, give it 5 years and the "new normal" of consistent housing prices would take over.
With the SV housing prices what they are, seems like a hourly worker can't possibly afford a reasonable place to raise a family. Maybe they will end up paying restaurant workers a "hazard" wage and treat it like working on an oil rig. Do a tour of duty for a month at a time, go back to family in a not-insane location.
This was already happening with gig workers. I've met several drivers who were sharing a hotel room with a bunch of friends in SF for a week or two to try to earn as much as possible before returning home.
In france being a waiters is way harder than most others jobs. At most jobs you get to work 35 hours on regular days, with a lot of hollidays and a fixed schedule.
Restaurants have a lot of legal exceptions because you need people to work on sunday, vacations, weird schedules, etc.
So compared to other situations in the same country, it's not a good deal.
>> Restaurants have a lot of legal exceptions because you need people to work on sunday, vacations, weird schedules, etc.
Actually a lot of industries have this problem.
I was a smartphone tech. I repaired phones. You know when a majority of our business was done? On weekends and holidays. Whenever my GF had a national holiday, I had to work because it meant the people who put off fixing their phones will take that day and come it for a repair because it was way more convenient than during or after their working hours.
I also had to work until 7pm every night for the same reason. My owner was banking on people coming home from work and stopping, so we stayed open an extra two hours. Some days I had five people in my office. Other days? Maybe one or two. But those two hours generated a lot more revenue than you probably think over the course of a month.
I agree. It seems that most people's "solutions" to this "problem" are various ways to make people's live more miserable and keep them desperate enough to work shit jobs for low pay. I guess a lot of people are just fine with having a slave class as long as it means they don't have to be inconvenienced in any way.
If this industry literally cannot afford to pay people a living wage, if no one wants to work for them and they can't remain profitable by making working conditions better, then they just shouldn't even exist.
Most eye opening part of the pandemic was the fact that in the US the majority of people dubbed as essential and forced to work were also the people paid the least. Grocery workers standing there with 2 masks on making minimum wage while the rest of us waltz in take what we need and return to the relative safety of our remote work. Then making fast food workers essential instead of paying them unemployment was just taking things to another level of pettiness.
It used to be. When ordering food in a restaurant was a special thing for special occasions. It was expensive to eat out and the workers were compensated for it. Then we got to a place where food was supposed fast, cheap and accessible to everyone at any time. And suddenly you couldn't charge a lot for your food and worker wages stagnated. Sure more people work in the restaurant industry than they ever did before, but that's what happens. Quantity over quality in almost any service industry always means abundance of the service at the expense of the workers. Take a look at the rideshare business.
I mean...to what extent does this correlate with the nationwide stagnation of real wages?
If your average American working a full-time job can't afford to eat out at high enough prices to keep restaurants afloat while paying decent wages, that sounds like a systemic problem—and we already know that one of those exists here.
Once you learn to cook you won't eat at anything less than the most expensive. It is really hard to enjoy a meal when you are thinking "I could have done this better myself at less cost". Chains and fast food just don't provide the quality I demand for the most part, and even the independents are hit and miss.
> Once you learn to cook you won't eat at anything less than the most expensive.
This isn't really true. Restaurants exist to fill a bunch of different needs; experience, novelty, convenience etc. And expense isn't a particularly good predictor of quality.
I do agree that once you can cook well you're much less likely to be happy at an overpriced generic version of something... which is right where fast casual and big chain casual is aimed. But sometimes you go for the company and not the food, etc.
There's a bunch of foods that are a pain to make, or will make your kitchen smell ...
Plus having different plates for everyone is also super convenient
> There's a bunch of foods that are a pain to make
This cuts both ways, some types of pain are easier to take on at home. During service, time and focus are at a premium - which is way almost every place cuts corners on e.g., risotto.
Once you can cook well you learn that cheap is typically bad food. Expensive food can be good or bad, the good is worth it for those other reasons you state.
> Once you can cook well you learn that cheap is typically bad food.
Not really. I had a great tacos the other day from a food truck, and great Ethiopian dinner on the weekend. Both cheap and not something I could reproduce easily or at all.
On the other hand, what you say usually applies to the ragu at a fast-casual.
In this case you're trading out your effort for the cash. I'm happy to trade my money, which I earn much more efficiently at my job than I can save by cooking, for the food so I don't have to put in effort and can enjoy my evening out with friends. I'm also more than happy to pay a couple of dollar premium to eat fast food than try to recreate it on my own while I'm running to work.
I can guarantee you that unless you're an experienced professional chef yourself, restaurants make way better food than you can make at home. They make the same dishes night after night after night for as long as they're working for that restaurant. They have measurements of ingredients, cook time, how to cut everything just right, etc. baked into their muscle memory. They know every little trick and hack to bring out every little bit of flavor, which they've built through years of both experience and being taught on the job by more experienced cooks and chefs.
Time is money, and cooking is a lot of work. We cook a lot, have a kitchen that's better than what the average restaurant has, and have eaten at some of the most prestigious restaurants in the world.
Yet sometimes I crave a fried chicken sandwich and to hell if we're going to spend the time doing that ourselves. Life's too short and that's way too much work.
It’s not fiscally viable closed system. Restaurants operate on tiny margins and come and go as frequently as software startups.
We keep trying to hitch biological necessity to ridiculous memes of social capital accumulation, inventing more abstract and Byzantine math as if literal reality will implode if the rich can’t earn a profit.
Like healthcare, the routine is eating is obviously necessary. Is the industrialization?
If you are a KFC/Burger King/McDonalds franchisee then it seems to work but I have lost count the number of establishments that open/closes in that one spot of our local mall.
Pub/Indian/Pizza/Chinese/Fish & Chips/ - they come and go.
I would draw a further distinction. Some franchise operations (thinking Subway and Little Caesars) don’t really care if you make it: They get their money up front and you have to pay to get out.
McD is more strategic: They want a good business plan, location, etc. and are very picky at the cost of some false negatives.
McDonald's and similar jobs used to be an entry level job for teens and college students. When I was 16 I was happy to work there for minimum wage ($3.35/hr at the time). Nobody other than the mangers did it to support a family. It was never understood to be that kind of job. I don't know how we got to the point where a no-skills-required job that anyone with a pulse can learn to do in a few hours suddenly became required to support a family of four.
> I don't know how we got to the point where a no-skills-required job that anyone with a pulse can learn to do in a few hours suddenly became required to support a family of four.
That's an odd way of looking at it. Surely what happened first isn't that the expectations of fast food jobs changed out of the blue. Could it instead be that other jobs which adults worked to support their families went away?
> Nobody other than the mangers did it to support a family. It was never understood to be that kind of job
Wrong.
"From the beginning, the minimum wage was meant to be a living wage—meaning families could live off of the pay comfortably, rather than struggling paycheck-to-paycheck" https://www.lendio.com/blog/minimum-wage-livable/
You're correct, McDonald's (and plenty of other large employers) probably never thought or cared whether or not their minimum wage jobs were for teenagers or parents with families. To them, it was just the least they were legally allowed to pay, and therefore just a cost to be minimized as much as possible.
1) The idea that McDonald’s used to be primarily staffed with students doesn’t carry water. How would the store run during school hours? Students can’t run a store when they need to be in class, someone else has to do that.
2) Have you actually looked back and compared that salary to the cost of living back then? I think you might be surprised how many people could, and were, supporting a family on a job that “anyone with a pulse” could do.
Spouses who needed to get out of the house while their other half was at work. They loved going to work with the same friends every day, chatting while cleaning up after the lunch shift... There was enough work to not be bored.
There are a lot of people who like having a job, but don't really need the money. Those that need the money move up to management if they can.
> There are a lot of people who like having a job, but don't really need the money.
These people exist, I do not believe that any of them work at fast food restaurants. That’s an incredible amount of stress to put yourself through to “get out of the house” and meet new people.
> Those that need the money move up to management if they can.
I think you’re overestimating the size of management by quite a bit.
Did you read the article? It directly countermands everything you’re saying. I personally can’t figure out why you’d make a claim that’s such transparent nonsense.
> Most people decide fast food management isn't for them, and move elsewhere.
I have personally been in fast food, and I worked my way up to management. If what I say contradicts the article, then my personal experience contradicts the article.
Management is more stressful. That is a different from the line worker who has been working the same position for the last 5 years, with no interest in advancing. I saw several people refuse advancements because they didn't want the stress: they knew how to do their job and it wasn't stressful at all anymore. (they learned to shut off the customer who yells at them while the cook is behind on orders - this coping is an important skill)
> If what I say contradicts the article, then my personal experience contradicts the article.
Then your experience is atypical.
> Management is more stressful.
But you said it wasn't stressful. Which is it?
> they learned to shut off the customer who yells at them while the cook is behind on orders - this coping is an important skill
Uhhh, this is not a good thing. You're describing someone shutting down in the face of excessive stress.
I'd also point out that claiming that it's "not stressful" and being shouted at by customers are mutually exclusive. Being shouted at is a stressful experience, definitionally.
Exactly. There are all kinds of better social outlets if you don’t need money; book clubs, knitting groups, and game nights exist precisely to fill that need. The idea that you’d go work at McDonald’s for funsies rather than out of economic necessity just doesn’t pass the sniff test.
I don't know how we got to the point where a no-skills-required job that anyone with a pulse can learn to do in a few hours suddenly became required to support a family of four.
Deskilling, derisking, outsourcing. Companies used to run their own email, which required a competent mailadmin, nowadays you outsource it to Google or Microsoft.
I don't know where you grew up, but it still looks that way in fairly affluent suburbs. In the city, the fast food workforce is 75% immigrant single mothers.
The minimum wage was set to $3.35/hr in 1981, a time when 22.2% of Americans were employed in manufacturing vs. 10% today. There were many alternatives to working at McDonalds that stopped existing in the US over the last 40 years. The ultimate answer to what Americans would do instead of manufacturing turned out to be restaurant and retail work.
Also, consider the relative increase in housing, education, and medical care over that period of time. The inflation adjusted median home was about $178,000 in 1981, It’s $314,000 now.
The modern service job isn't meant to be sustainable in the first place. It's entirely based around the idea of having surplus labor using it inefficiently.
Any sane economist that has to solve for the constraint "everyone has to provide for themselves" aka the mythical republican "responsibility" would first start by creating enough jobs to reach full employment. When you leave everything up to responsibility you also have the duty to provide everyone with the ability to live up to their responsibility.
Society as a whole doesn't benefit from exploitation or unsustainable businesses.
I think some of this might be down to a lot of pensions being invested in property. It feels a little bit like the dam is bursting in several places at once; I'm not hopeful.
>> people are realizing that there are easier minimum wage jobs than working in a kitchen
A lot of jurisdictions showed them this when they paid almost the the same as their FT take-home pay during Covid. I don't think they've left for something better; I think they're mostly not doing anything.
>It’s just that people are realizing that there are easier minimum wage jobs than working in a kitchen
Exactly, so restaurant owners should raise wages to compensate. There's not a shortage of workers, there's a shortage of owners willing to pay the current market wage.
What we are observing is the Demand Curve shifting left (people less interested in eating out) and the Supply Curve shifting down (the people willing to work in restaurants for any given wage is going down). Remember that supply and demand curves cover all wages/prices and quantities, they are not specific to a certain price/wage or quantity.
This is observed as a shortage - more customers willing to buy a restaurant meal than the restaurants are willing/able to supply at current prices. This must equalize to a new equilibrium with higher prices and fewer restaurants. .
I've over-simplified a lot, but it's pretty much right out of an Econ 101 textbook.
Some of this might be transient - for example the demand curve may shift right again after some time and with COVID well in the past.
The supply curve might shift back up if, for example, government wage supports are reduced.
This isn't entirely correct. Your example refers to two demand-supply pairs, but your analysis equates them. Consumers demanding restaurant meals, and the supply of those meals constitute one pair. Restaurants themselves demanding workers, and workers being reluctant to work for current prices constitute a second demand-supply pair.
For the first pair, since the change in the supply (a shift of the curve itself, not a walk along the curve) of restaurant meals is negligible except in the case of restaurants closing in aggregate, a left and downward shift of the demand curve (as you note) has the net effect of downward pressure on both prices paid and quantities supplied of meals.
The second pair's supply curve itself shifts left and upward (not downward), which results in a net effect of increasing the prices (wages) of restaurant labor, and decreasing the quantity supplied (number of workers).
A similar analysis could be performed from the new state of each pair: the first pair might actually see its supply curve shift left and upward due to these dynamics (restaurants may close in aggregate), causing the quantity of meals supplied to decrease further and prices of meals to rise, possibly though not necessarily up to the level they were before. For the second pair, demand for workers might increase in aggregate, resulting in a right and upward shift in the demand curve, which would further ratchet wages upward (barring another supply curve shift) and would help increase the number of workers to a level closer to what it was before any of these shifts took place.
I don’t think so. Hilton Head Island, SC is a great example of the trend that COVID accelerated.
Hilton Head is a popular vacation destination, but as development started radiating inland towards I95, all of the workers are priced out. The housekeeper at the hotel I stayed at in 2019 commuted 2.5 hours daily, and restaurants started reducing hours due to labor shortages. COVID made it worse, but the problem existed because you can’t work in most places without covering the cost of operating a car.
My understanding this year is that popular restaurants require reservations 60+ days in advance.
There may be some demand shifts at the low end from sit down to fast casual, but those are the places where tipped workers are paid the least. A waiter at a good steakhouse is making a good living, an IHOP waiter makes $10/hr or less.
At the low end, I think those workers have shifted to curbside retail. I’d guess the average Target has 12-30 more staff to handle curbside orders alone.
I'm not sure a waiter at a good steakhouse is making a good living. It's been a while since I worked food service, so I might be making some poor assumptions, but:
1. Most waiters don't get health benefits
2. Most waiters don't get retirement plans
3. Most waiters are at the whim of the restaurant managers
4. There's only so many tables you can turn in a shift, and tips average under 20%.
5. Most waiters don't get any PTO
Say you have a four-top that has meal service of $120 (booze tips usually go to cocktail waitresses, wine goes to waiter). An average section for a "good" steakhouse will have no more than 5 tables per waiter; otherwise service sucks.
So each table earns the waiter $24 in tips. With 5 tables, that's $120 per turn. High end steakhouses don't turn fast; again, the appeal is having a long, hearty meal. So maybe 2.5 turns on a good night. That would be $300 in tips. But then you have to tip out. Busboy gets $25 (helps you turn faster, helps with some service), dishwasher gets $10 (should get $100), hostess gets $20 (so your section gets sat promptly), and at least $50 for the line cooks who are the real stars. Now you're done to $195. That needs to be reported as income, so it gets held back by mgmt for tax.
You get 3 good shifts a week, and 2 crap shifts. After a week you've made $195x3 plus $125x2 for a grand total (pretax) of $835/week. So your gross is $44K. I'm ignoring the base hourly wage because it's usually nothing.
$44k isn't bad money. It's above the nationwide median, but considering all the downsides, it's not "a good living." If you get sick, tough shit you lose out. If the chef jacks up the menu, you lose out. And it's a young person's gig. People want their waiters to be young and attractive, not balding and showing grey hairs.
Your numbered points stand - no healthcare, no retirement, or other benefits a FAANG employee would have, but your numbers are low for a high end restaurant. A good steakhouse for 4 might cost closer to $500, $800 for just food at the highest end, with booze being another couple hundred on top of that. And then there's the cash aspect of it. Each night's tips are required to be declared to the IRS, and not reporting it would be tax fraud, but the reality is I'm sure not everything gets reported, boosting take home amounts, making the numbers incomparable without further analysis.
I've heard of bartenders making more than $100k/yr, (but still with no benefits).
A "good steakhouse" doesn't charge $200 per customer unless it's selling Kobe/Wagyu. And the percentage of customers buying Wagyu over the $50 ribeye is very small.
Even with the $50 ribeye, that four-top is still generating $200 on food per turn, more than the grandparent's original $120 estimate.
Maybe my view is skewed from seeing prices in expensive cities, but I think the beef alone at a good steakhouse is gonna run you more like $75-$100 per person, and that's not even for the high-end wagyu (which will probably run $150-$250 for most cuts). Then add another $10-$30 per person for appetizers and side dishes, and maybe dessert on top of that.
I feel like it's pretty hard to walk away from a good steakhouse spending less than $80 or so, even if you have nothing to drink. And the more common case is probably quite a bit more than that...
> It's above the nationwide median, but considering all the downsides, it's not "a good living."
I think well educated professionals sometime miss what reality is for millions of people. $44k for a few shifts is better and more reliable income than a retail gig. The similar premium gig for a low skill person is probably a janitor.
For a few shifts? That's five shifts, and usually a good eight hours each. And the income is sporadic; during the offseason (in tourist areas) your income might be halved.
Even with your understated numbers, with everything being as worse as possible, you ended up with a pretty decent wage for 5 evenings of work.
In reality, half of the US population lives in a state with a regular minimum wage for waiters (California, New York, Washington, and a bunch of other states), and the other half averages $5/hr which is $7800/yr if you work 30 hours a week. Also there's cash tips that aren't reported on taxes. And like others have said, you're estimating $30/person at a steakhouse which is TGI Fridays prices.
Put that together, and you're looking at the equivalent of six figures pre-tax for 5 nights of work, with no email at night or on-call. Sounds pretty good to me.
Not reporting tips on taxes only hurts the waitstaff even more. It blocks you from being able to get loans/credit. Reporting them and keeping track of them then paying your taxes at the end of the year is the only way...but of course that assumes the bank doesn't deem your income as "not steady/stable" because of course...it isn't a salary.
In my area some waitstaff also make $3.50/hr because the company assumes they make tips. Some also hold all your credit card tips and give them to you on the paycheck...so it isn't all roses.
"restaurants started reducing hours..."
>> This is EXACTLY what I mean by "supply curve shifting down." Restaurants are not willing to supply the same number of meals/hours to the market at the given price.
"My understanding this year is that popular restaurants require reservations 60+ days in advance."
>> This is what a shortage looks like. Long lines and empty shelves. People who are willing to pay the advertised price, but can't because there isn't anything to buy.
"started reducing hours due to labor shortages."
>> Meaning that there is more demand for labor than supply at the current price (wage). The supply curve for labor moved down, causing a shortage of labor at the current price. That's a 'shortage' as perceived by businesses that don't want to pay the actual market clearing price/wage.
In your example, a labor shortage is leading to a restaurant shortage. In both cases caused by changes in the supply and/or demand curves (down and/or right, respectively).
You could also go farther upstream to the housing market and say that because the supply curve of housing moved down, house prices went up, and that caused labor's supply curve to move down accordingly.
All of these things ultimately mean fewer things and less stuff, at higher prices.
So, I’m from Hilton Head and that is a fairly accurate telling of the issue (though the 2.5 hours commute is a bit uncommon.) They’ve attempted to alleviate it with shuttles from Bluffton and even Northern Beaufort County to little avail.
We have similar issues up in Charleston, with my girlfriend ‘s restaurant in an HCoL (Mt. Pleasant) really struggling to find staff beyond the 16-26 “living with mom & dad” crowd where HCoL is little of a factor.
I would add I have at least a half-dozen friends in BoH that intentionally (an)used our state pay benefits for a free vacation to smoke weed and play X-Box though sadly citing it as their first vacation in a forever. There’s definitely a problem a multi-faceted problem here.
Is it really a shortage? If the preferences of potential restaurant customers simply changes such that they're no longer willing to pay enough for a restaurant meal for the restaurant to stay financially solvent, that's not a shortage. It's only a shortage if something is preventing the market price from changing (in this case, the price of a restaurant meal increasing) or preventing restaurants and customers who are willing to transact from being able to do so. Is that the case here?
"A shortage, in economic terms, is a condition where the quantity demanded is greater than the quantity supplied at the market price." https://www.investopedia.com/terms/s/shortage.asp sounds like it fits the situation to me.
Indeed, investopedia's definition seems to include any time supply is insufficient with no regard for the reason that the market price is not increasing.
This is because the reason is irrelevant to whether there is a shortage or not. A shortage is when at the given price a higher quantity will be demanded than will be supplied.
The normal market solution to a shortage is to raise prices until there is no longer an excess of supply at that higher price
Investopedia’s definition treats the condition where price has not yet aligned to a new equilibrium as equivalent to one where there is a constraint preventing price adjusting to equilibrium. Leaving aside the fairly arbitrary question of whether it is correct to call both conditions “shortages”, it is important to note that they are fundamentally different situations, especially from the perspective of “is a policy change needed to address it and what policy change would that be.”
does it matter if it's a technical shortage or just and observed one?
The only thing preventing restaurants from changing their prices is the 'penguin on an iceberg' issue. You may be correct in raising your prices, but if other restaurants are willing to lose money longer before they raise their prices your business may suffer/fail because of it before the rest of the market changes their prices/wages.
Kinda, but not really. Remember that a shortage is an excess of demand at a given price. Meaning implicitly that, at the margin, prices could go up some small amount and there will still be a queue/line/excess of people willing to pay that marginally higher price.
So as a restaurant, very roughly speaking, you basically can raise prices until the line starts to go away. Unfortunately customers can be very stubborn and would rather wait in a 1hr line somewhere else, or not go out at all, for quite a while before eventually coming around to the new normal and accepting your new, higher price.
And you will still probably end up with fewer restaurants along the way, as those least-profitable and with the shortest lines outside, go away.
Are customers that aware of price increases? Unless you're eating out at the same joint every day, a 10% increase isn't very noticeable. Say you have an item priced at $9.99, bumping it up 10% makes it $10.99.
Restaurant sales are rarely made up of price conscious buyers. Sure there's a limit, but short of the blue light special crowd, most customers are eating out for either variety, social reasons, or being tired of cooking.
Yes. This is exactly the question answered by the concept of supply and demand curves. Of course you can argue about the shape of those curves but their existence is not in doubt.
Supply and demand curves don't address the customer's awareness and perceptions at all price increases. Sure if the price doubles, they'll notice. But a 5-10% increase in something infrequently purchased would not be noticeable to the average consumer. Now if it's something they purchase everyday? They'd notice a penny increase.
> does it matter if it's a technical shortage or just and observed one?
Yes. A so-called “observed shortage” is not a shortage, its just buyers wanting a good without wanting to pay the price it costs to buy in the present market conditions.
A real shortage involves either a constraint which prevents price adjustment to an equilibrium of supply/demand or demand and supply curves shaped in such a way that no equilibrium point exists (which, I guess, is just a very special equilibrium-preventing constraint.)
The solution to an observed shortage of labor is “employers pay more and quit whining”.
The solution (if it is solvable at all) to a real shortage depends on what constraint prevents equilibrium from being reached.
There is a slight distinction here though. I would tend to only describe the situation as a "shortage" if there is insufficient supply to meet demand at the actual price sellers are offering. If restaurants double their prices and thus a lot of people are no longer willing to pay (and are upset), that's not what I would consider a "shortage" (although it might certainly be described as such in headlines or in conversation). In my view that's no more a shortage than the ongoing lack of supply for private jets at the price of $10,000. I'd pay $10,000 for a private jet!
But there can also be a fuzzy area here. There may be situations where most sellers have not raised their prices to respond to decreased supply (for a variety of reasons), and therefore other mechanisms (like who gets in line the earliest) determine who gets to buy. At the same time there may be a small number of sellers who do raise prices (think of the toilet paper hoarders who resell on Craigslist at huge markups). If you consider that higher reseller price to be the "market price" then that wouldn't wouldn't strictly be a shortage, but if you consider the unchanged price to be the market price then that would indeed be a shortage. (In fact, this is why for every natural disaster there are articles with headlines like "Price gouging is actually a good thing; it's the solution to shortages.")
"The solution to an observed shortage of labor is “employers pay more and quit whining”." - Keep in mind that going along with higher prices (wages), there will be a lower quantity (jobs). At least according to your Econ 101 book.
> "The solution to an observed shortage of labor is “employers pay more and quit whining”." - Keep in mind that going along with higher prices (wages), there will be a lower quantity (jobs).
No, that would only be true if there was not an observed shortage; that is, if the current market price was clearing the market with no unmet demand at the market clearing price.
An observed shortage that is not a real shortage means that the market price can rise to the point of market equilibrium without reducing quantity traded. In fact with a normal supply curve shape, the minimum price increase to achieve equilibrium will increase the quantity traded compared to the status quo, as quantity supplied will increase with price. Quantity demanded will be lower than in the status quo, but since the “observed shortage” is quantity demanded being above quantity supplied and, therefore, traded at the current price, that reduction is literally just reducing the “observed shortage” to zero, not reducing quantity traded.
I'm no expert in how economists use the term, but I suppose it could certainly be called a shortage if there is some systemic reason why restaurants can't (or at least think they can't) raise prices in the short term. Personally I don't find that likely, at least based in my region where restaurants have indeed raised prices and many seem to be thriving (although many others failed in 2020).
In a normal economy, most restaurants fail for two simple reasons; poor location and undercapitalization. If you sell a good meal, in a good location, people are very tolerant of price. Getting to that point is where 99% of restaurants fail.
That seems to assume that the products are completely interchangeable. Even between restaurant chains I don't think that's true. And independent restaurants are very individual, even unique. Some people like one type of food or dining experience, some another, and they may forego dining out altogether rather than substitute.
It is a shortage until prices rise, quantity demanded goes down, quantity supplied goes up and a new equilibrium is attained. This might take a few minutes, or even milliseconds, or it might take many months, or it might never happen.
I think the market is going to split soon. The lowend local resturant will die because they wont have access to the ecconomyies of scall that will allow them to raise wages and the market wont pay more just for being "local". so small burger joints cafes and such will suffer. the mid to hig end will raise wages and most will survive.
Then those the are unwilling to raise server wages will either die due to lackmof labour or become ghost kitchen fire the serving staff and do take out and delivery exclusively.
I think delivery and take out is going to stick around in a big way. there is less expectation to tip the restaurant when not eating on premises. and it think wage regulation of gig work is coming for the likes of ubereats doordash and grubhub
on the cheap end you will have take home food with no tips and on the high end a living wage will become standard with less pressure to tip
+1, I would have to see evidence that the demand curve has permanently shifted or is generally shifting left. Because it doesn't match with my experience at all, that people love restaurants and have been eagerly waiting out the pandemic so they can go to restaurants again. Restaurants in some areas of the US now are so busy that they stopped takeout service because they have so much inhouse service.
> The supply curve might shift back up if, for example, government wage supports are reduced.
This is the key... the problem isn't really the market... it's the market interference.
First COVID and the "lockdowns" (effective or not)... and then the resulting "free" money that makes it more lucrative to be on unemployment than working a job.
Restaurant work sucks, it's not tipping's fault. I don't work nearly as hard as a software developer compared to when I was a waiter or cook. Software development is lower stress most of the time too.
I knew someone who was mad at their partner because their partner was a software engineer and "didn't work as hard as they do" at a lower skill job, and yet made a lot more money.
I'm not sure where this idea comes from that hard work is as valuable/more valuable than skilled work. But it seems to be a pervasive idea.
Skilled work is not the antonym of hard work. You can work hard doing skilled work.
Knowledge work does look different from physical work, but you can work hard at both; you need to work hard at either to be successful.
As for why hard physical work is so valued - only a century or two past, it was the only practical method to prevent the starvation for yourself and your family. Knowledge work being a viable means of survival (for non-nobles) is pretty new, all things considered.
Even my own parents never really understood how knowledge work could be as valuable as getting out and working with your hands; and they were born in the early/mid 1900's.
> Knowledge work does look different from physical work, but you can work hard at both; you need to work hard at either to be successful.
Classist wage disparity is a real problem in America today. Often knowledge workers who don't work hard earn more than physical workers who do work hard.
> knowledge workers who don't work hard earn more than physical workers who do work hard.
earnings are measured with productivity, and knowledge work has more scaling to their productivity output. You can dig holes really hard, but a hole dug is a hole dug. A line of code written is not just a line of code, as power of compounding output stacks on top of each other.
True, hard work and skilled work are not opposites, but you can work less hard doing skilled work (it's almost the definition of skilled work), and still have a bigger impact than someone working very hard at unskilled work.
I probably should have used the phrase "unskilled work" in my original post, but I was trying to convey the person's frustrations about "hard work." From an outsiders perspective, a skilled knowledge worker doesn't look like they're working very hard, but we know that's not true.
Some "skilled work" intersects with "hard work". There's a ton of work in the construction industry that requires a very high level of specialized knowledge that sometimes takes years of college and practice in their industry to learn, just for example. Even more reason that it's strange that some people find one type of work somehow inherently superior to the other in generalized terms. I tend to think that the skill and care that one puts behind their craft is maybe what should be more important.
I'm not sure I even agree with that "impact" rhetoric. What do most of us do, deliver ads? Host funny pictures? Move electronic money around? Running shops so people on minimum wage can buy products they don't need, packed and delivered by other people on minimum wage?
Those people are only serving us the food we need to live.
There are different hards. I've worked construction: you come home at night tired, but your brain is awake and ready to think (which is why so many veg on the couch - it keeps the brain busy and body resting). In software the hard jobs leave your brain tired, but your body is ready to go - this is a hard place to be in as your brain can't figure out how to get the needed exercise your body wants.
Programming can be copy/paste, but the hard days when you have to figure out how to eliminate some mutex across some threads so the whole performs without a race condition - that will always be hard.
You're equivocating on the meaning of the word "difficulty." It's impossibly difficult for anybody but me to be exactly me, but that doesn't mean it's hard work for me to be me.
I've worked in a factory as a machine operator, and in a company as a programmer, and they're not comparable in either difficulty or compensation.
Anyone can work in a kitchen. It's physically demanding, but the tasks are not that hard and easily picked up without any real education. Sorry that's just the truth. And why we don't have as many programmers as service workers.
I suspect it comes from the “truism” that hard work pays off. It’s understandably frustrating for people when they inevitably realize it’s not as true as we were led to believe. A person can work like a dog their entire life and still be poor.
Skilled work means you're less replaceable.
I've met a lot of assholes in IT who would have been fired if it wasn't for their contribution to the company.
Except the measurement of "skill" that accounts for the income disparity is not so much "lower skill" vs "higher skill" but more "expensive skill" vs "cheap skill". I could spend the same amount of time and effort training in culinary arts and not approach the income I make writing software. That difference isn't "amount of work" or "amount of skill" but just the market price of said skills.
> I knew someone who was mad at their partner because their partner was a software engineer and "didn't work as hard as they do" at a lower skill job, and yet made a lot more money.
Wait until they learn about passive income and proper usage of leverage!
I don't think "hard work" and "skilled work" are useful buckets, there's a lot of overlap.
It really boils down to how much money a business can make from your outputs. A line cook makes the business less money than someone building an AWS service. This is not a law of nature, just the status quo.
I think the difference in leverage between a software eng and a line cook does have a law-of-nature quality to it. Line cook serves dozens a day, software serves minimum 0 and maximum the whole planet a day, and that service could stick around for years without degradation
Skilled, in late antiquity/mediaval times, meant the engineer doing trebuchet, or building ships, or building high quality steel, etc.. et.c.. it was actually hard work.
None of them were things that the ruling class/aristocracy did. They just paid for it (with the levies/taxes they took from their land).
Eventually another higher skilled level arised, as thinkers/scientists became hired by the court of a monarch, or baron.... and being a patron (paying for someone to do poetry, science, etc) was a sign of status.
The skilled workers have always been the middle class. It took the industrial revolution, where they could become rich themselves, and monarchy started becoming irrelevant.
You aren't refuting the class distinction the parent commenter was actually pointing out (serf/peasant class vs merchant/"middle" class). That there exists another distinction between the ruling class and "middle class" in feudal society does not negate the hierarchical relationship between said middle class and the laborer class.
I have spent thousands of hours honing my software craft outside of work/school hours. I guarantee you most folks working those minimum wage jobs are not doing the same in their field. If they were passionate about it (whether front of house or in the kitchen) they would also hone their craft and work their way out of minimum wage.
The problem is that the turnover rate in restaurants is ALREADY very high. Most employees see it as a “stepping stone” while they get their careers on track.
Hi there. I went to a 2 year college, spent hours outside of work reading and working on my craft and was still the highest paid line cook at a multi-million dollar restaurant at a WHOPPING 15 dollars an hour in 2016 in New Jersey.
The industry is terrible. If you didn't work in it, your solutions sound a whole hell of a lot like "bootstraps". I think "there should not be such thing as poverty wages" or "if you can't afford to pay people you can't afford to run your business" are better
> Low wages are the most common reason people cite for leaving food service work. But in one recent survey, more than half of hospitality workers who've quit said no amount of pay would get them to return.
> That's because for many, leaving food service had a lot to do also with its high-stress culture: exhausting work, unreliable hours, no benefits and so many rude customers.
Some folks would say the same thing about software development sucking.
I think it probably depends on which restaurant you work at and on your skill set and ability to thrive in that fast paced environment.
The difference is that software is easier money if you have the knack for that type of work.
But it’s like anything: you have folks who are passionate about cooking but not business savvy. They might be excellent cooks but the potential customers just eat greasy shit and don’t appreciate nuance of vegetables and spices—and so the chefs are at the mercy of substance-less customer demands. How can one be excited about that?
Anyway, I don’t think the folks quitting their jobs fit this category because talented chefs can make a lot more than minimum wage. But it’s still relevant as one must be excited to go to work in the morning.
> I think it probably depends on which restaurant you work at and on your skill set and ability to thrive in that fast paced environment.
Equally true of software development, systems/network administration, etc. It can totally suck, or it can be a source of joy, growth, and profit, all depending on where you're workin' and who for. Some of the best jobs I've had in both industries have been almost like "gettin' paid to play" because the whole crew was doin' stuff they already enjoyed doin' and doin' it for a boss that knew how to motivate in positive ways and how to join in and be part of the fun of it all. That plus a paycheck and benefits? Why would anyone ever want to go back to a shit job after knowing good jobs exist out there.
In the end restaurant work is completely unfulfilling, largely because tons of customers treat you like shit. I've never experienced that as a software engineer. It's not even about the pay.
For me, job stress has little to do with being extremely busy in the moment and a lot to do with thinking about far-flung high-leverage consequences of mistakes (will this system crash in the middle of the night 2 weeks from now, costing tons of money and causing someone to call me in a panic?). With something like being a cook, failure feedback is usually pretty immediate, which IMO is nice for stress levels.
I wouldn't be a good cook, but I get what you're saying. I miss the jobs I had when I was young that were just repetitive tasks, once muscle memory was established, you could work a shift and have a fresh mind with no stress as soon as the shift ended. I suppose it would be nice if I had my current income with that type of job but alas it was also very unsatisfying to do for a long period of time and I think I'd feel a bit unaccomplished for doing that job for a career.
Have you ever worked in a kitchen or are you just assuming?
I personally haven't worked in a restaurant, but I see how the staff and chefs are always running around, doing 20 things at once. Stimulants use like cocaine and amphetamine is endemic in the industry as well, probably for that reason.
As a restaurant worker, the pay is usually terrible as well. So while some super rich corporation won't lose millions off of your mistakes, you can lose your job and be forced to live off of your inexistent savings. That sounds very stressful to me.
Your assessment for what constitutes stress seems to be, at best, highly subjective.
I worked in very busy bars for a number of years. It’s hard sometimes back breaking work but it was certainly much more “fun”. Up until the point where you end up working for penny pinching gradgrinds who see your “fun” as an externality to be eliminated. At least as a software developer I’ve a good bit more leverage around matters of occupational convenience.
I cooked in professional kitchens for years before becoming a software engineer.
For me, the cumulative stress of the software industry is a lot higher. I can never quite "turn off" and in the long-run it's a lot harder for me to control my psychological stress, than when I was working in a kitchen.
(And of course these are highly subjective, I'd expect nothing less from a psychological phenomenon. Anecdotes will likely be all over the place.)
Ex-deli/pizza shop worker here, you can leave it all at the store when you leave. Your slicer will not send you a message at 2am that everything is burning.
For some people, server jobs are a between what they're doing. Especially for artists/filmmakers it's money between the gigs that don't pay. I met tons of people as a barista doing exactly that.
Worked through college, and yes conditions need to be better overall. A concern would be if it's now a FT 40h something or other, it squeezes out people who take 6 months making coffee to get to their next acting gig. Also, barista jobs are a dime a dozen once you make some friends. Very easy to get rehired, people talk.
> Stop the tipping guilt trip placed on the public, raise your prices 20%, and pay your employees a livable wage.
FYI, one of the reasons restaurants don't do this is the tax impacts. When someone tips 20%, there is no sales tax assessed on the tip — the full 20% goes to the worker. If you increase prices by 20%, that is subject to a sales tax (roughly 10% where I live), which amounts to a 1%-2% increase in the total price.
On top of that, moving tips to wages results in more income and payroll taxes being taken out (most workers do not fully report all of their tips, which saves them both income and payroll taxes).
It might not seem like a lot — just a couple percent here and there — but restaurants have pretty thin margins.
> most workers do not fully report all of their tips, which saves them both income and payroll taxes
I wonder what percentage of tips are still cash tips, which is the only case where you can get away with that. I imagine the percentage of tips that are on a credit card (or even app like Doordash/Seamless) vs. cash has been increasing over time, but I can't find solid numbers.
Most credit and debit card tips are paid out to servers with cash from the register at the end of the day. The amount of the tips is recorded, but the recipients are not, and taxes are not assessed against the tips. Technically, servers are supposed to declare the cash they receive as income, but it is accepted practice not to do so.
I'm not sure about that. It's been thirty years since I waited tables, but our restaurant required us to turn in tips (they were pooled and distributed to everyone who worked that shift). The withheld taxes on them, and if we skimmed tips and didn't turn them into the pool at the end of our shift, we'd get ratted out by coworkers and fired.
This has been tried many times, you are ignoring the reasons it did not work. The employees hate it because they make less money, forcing the restaurant to go back to tipping. It was effectively a pay cut for employees. It is not wage/revenue neutral because it changes customer behavior.
Generally speaking, Americans are more generous when the money goes to directly to a service person than to a faceless business that sets itself up as a middleman in that relationship.
As a tipped employee, I can tell you this is not exactly the real reason. There are at least two more important:
- Historically (less so now), tips are a tax dodge - they often aren't reported, or greatly under-reported.
- Tips are less egalitarian than wages would be. Nominally, front of house and back of house have similar wages, but front of house gets far more tips. Even in the normal shared-tip-pool model this is true.
Changing this would mean making explicit and obvious things that were previously implicit and looked past: Front-of-house would need/want/demand a far higher hourly wage than what the back-of-house workers would/cloud, and everybody would have to report ALL their income for taxes.
There is also the problem that unprofessional service staff might not try as hard to please the customers, though maybe those get filtered out over time.
I can't articulate the details, down to the last detail, but the worst thing to happen to tipping is the change the IRS made, some years back. If I understand correctly, the IRS always used to estimate tip for a server based on a table's bill. (The custom is 15-20 percent, and I think the IRS used to average lower than that.) But the IRS always used to collect its cut on tips from the server.
The change is that the IRS now holds the restaurant owner accountable for the taxes due on the tip. The result is that instead of the money going to the server directly, it first has to pass through the hands of the business owner. I don't know if this still goes on, but some years back I recall hearing that some restaurant owners would then "distribute" those tips to other members of the staff — the busboys, kitchen help, etc.
Traditionally, waiters always "tipped out" the busboys and bartenders they worked with, on any given shift, and better service (theoretically) promoted more generosity from the waiter. But now that the business owner has his hand in it, the business owner will operate according to his own interests. The waiter is cut out. The waiter has less control, and less direct incentive. The waiter has less of a payoff.
Rumor has it (or, if you will, common sense has it) that some owners abuse their role as middleman.
This isn't an IRS change. It was a public behavior change.
The owners always had to withhold taxes from their wait staff, just as your taxes are withheld by your employer.
The difference is that since almost all tips are now on credit cards, the business owner doesn't need to assume the % sales to withhold, and withholds based on virtually all of their employees tips.
The end result is that the wait staff can't commit tax fraud by not reporting tips. The business owner didn't have to report cash tips, only withhold based on a % of sales. They still withhold on % of sales if actual tips are less than the % of sales.
That is a change. I used to deliver pizza, it was cash or check, I pocketed any tips before I got back to the store, the management never had a clue how much tips I got or did not get. Even with the checks, they just went into a box and were totaled at the end of the day. No way to trace them back to an order.
I don't know if there's been case law behind it, and I certainly wouldn't want to be the one to try it, but I feel like there's a strong argument to be made that tips are gifts from the consumer to the wait staff.
That said, gifts totaling under $15,000 are non-taxable.
> This has been tried many times, you are ignoring the reasons it did not work. The employees hate it because they make less money, forcing the restaurant to go back to tipping.
Yup. A couple of restaurants in the Seattle area tried this. "20% price increase, no more tipping".
Over time, their employees left, saying they were being paid less.
Remember this the next time you hear the "if you tip 15% or less I'm literally paying to serve you!" (which is also BS. The IRS, if you don't disclose tipped income, assesses a standard rate. If you're truly earning less than that in tips, you can document it and pay less. But almost no-one wants to do that because the IRS is behind the times, and almost all servers make more in tips than that standard rate).
That's not a problem with a tipless system, that's a management decision to lower wages. If management simply paid employees what they were netting before, or better, there would be no pay cut and no departures.
I have several good friends that work in this business in Seattle, where several restauranteurs tried the "no tipping" model. Anecdotally, in a popular quintessentially Seattle restaurant, a good front-of-house person may net around $40/hr after tips, some more and some less. I don't have a lot of sample data for the "no tipping" restaurants, but my general impression is that it was on the order of a 10% reduction in pay.
One reason several of them have mentioned is that many customers are happy to regularly tip much more than 20%, and this is often correlated with the highest spending customers. Making it a non-discretionary 20% puts an artificially low cap on how much they earn from the customers that pay the most. At one time some customers would leave extra cash on the table after paying the "no tipping" bill, but no one carries cash anymore.
Places that net $40/hr have enormous difficulty hiring right now. These are not poorly paying jobs but the broader lifestyle is pretty terrible even at good restaurants, made even more terrible because of the employee shortage.
One overlooked issue is that many restaurant workers in the big cities are originally from "flyover country". When the restaurants closed during COVID, a large number went back home. I was talking to a waitress in the middle-of-nowhere Iowa a few months ago and she had just moved back after several years working in New York City restaurants.
One would think a sign out front that said "Now hiring: Wait staff, starting pay @ $40/hr (or even $30/hr)" would have no trouble finding and retaining talent, even in big cities like Seattle.
I don't think I've ever seen a sign advertising anything near that for restaurants.
These are skilled restaurant jobs, they don't advertise with signs. Same reason there isn't a "help wanted" sign for my job. It is a social market. There were shortages already before COVID in Seattle, but now the shortages are extreme. Restaurants are reducing opening hours and days.
I have friends working these jobs. The consistent pattern is that they are only working the minimum number of shifts required to pay their bills, and they live pretty cheaply. You can't staff the restaurants when all of your employees only want to work 1-2 days a week. They could easily work more hours, and did before COVID, but are choosing not to now. And because restaurant work is extremely flexible and available on-demand, it makes their life flexible.
Many people have adapted their lifestyles to having less money and not working, especially with the generous unemployment benefits. Restaurant workers I know fall into that camp. My SO was receiving $75k/year on unemployment during COVID and turned down jobs paying $125k+ because they discovered the unemployment benefit was sufficient for a lifestyle of doing nothing that they were happy with. Not likely to take a job anytime soon either.
As a tangential observation, while I know many people in this position, none of them is doing much with their newfound free time. Just kind of coasting.
> This has been tried many times, you are ignoring the reasons it did not work. The employees hate it because they make less money, forcing the restaurant to go back to tipping.
Isn't the solution obvious? Adjust wages/prices to such a degree that it does fully compensate for the missing tips.
Whilst that might be true for Americans, as a European I find your culture of tipping(as part of a waiter's salary) a negative for everyone but the faceless business. I still tip waiters who do a great job, but don't have to be guilted into thinking they will go hungry if I don't.
Those workers never had a choice. If it "works perfectly" then why do workers that do have a choice consistently choose to work in establishments where tipping is the norm? That's not a very convincing argument.
The bottom line is that it is the workers making the choice you disagree with, in pursuit of their own self-interest. It would be one thing if choosing one policy over the other was revenue-neutral to the restaurants and workers, but empirically that is not the case.
or automate 99% of the business and free these poor souls from a mundane existence. Also, I think we should support them w/ safety net (see basically andrew yang's platform).
I don't see anyone screaming about ditch digging jobs or dishwashers saying we should "save those jobs!" . Backhoes and automatic dishwashers have freed people from meaningless work. We should do the same for everything we can. There's a stereotype of struggling artists working at fast food/coffee shops, imagine how much better human life could be if we freed them to do their real work (the arts).
> or automate 99% of the business and free these poor souls from a mundane existence.
I agree on one hand, but there's a lot of hand waving and hopeful/wishful thinking built into that answer.
It's very easy to say, "Do something else," but if it were that easy, it wouldn't be an issue in the first place. And if 20 million food service workers all get CS degrees, guess which will be the next industry with plummeting wages and few job opportunities?
We have more people on earth than ever before, but we also have more automation and less need for those people than ever before. It seems like at some point society is going to have some hard questions to answer about employment, pay, etc.
> guess which will be the next industry with plummeting wages and few job opportunities?
'cept with 20 million CS degrees, the software industry would boom - more code, more customized, bespoke software for every firm, presumably increasing productivity and output and thus, increases wealth.
Not to mention these people may also "stumble" upon something great by being entrepreneurial.
So it'd be strictly better to have 20 million CS degrees holders, vs 20 million hospitality workers.
It’s not socially efficient to spend all our effort trying to automate things. This happens naturally as wages required to hire people for a given task increase and automation gets cheaper. The natural progression of the situation in the article is that wages go up, increasing the viability of automation, so you’ll get your wish (in this context) soon enough.
If we “freed” people from work with welfare, 99.9% of recipients would smoke weed and watch cartoons, not create art. It might still be preferable to having people work low-engagement jobs, but let’s not be too idealistic.
I think that the leverage of automation is so high that we can afford it. Look at how much money the top founders of companies have...
FTR I also think the social safety net should be bare minimum existence, for a single person something like a bunk bed, 3 minimum nutrition meals (simple food like beans, rice etc not steaks...), clothes from a thrift store etc. -- It's more complex when kids are involved because you have to consider that you're essentially growing the future generation so have to consider the repercussions of underinvesting in formation.
This bare minimum would still leave lots to be desired and thusly incentivized (such as money for weed and a tv/netflix) ... But they'd have the time and basic support to do something contributing that only humans can do (at the moment at least) .
If society actively encouraged the creation of more positive ways to contribute positive things, I bet we'd see an "organic" growth in numbers of people choosing to do so.
Example; There've been some pretty positive things happening around community gardens in some places (when they're not being attacked by self-appointed neighborhood Nannies that don't like to see people gathering together around something beneficial).
Example 2; I remember "maker" clubs and similar community groups doin' lots of really fun activities that benefited more than just the group itself (free community virus cleanups, operating system install parties, community LAN parties - everyone's welcome).
I'm sure that if enough positive activities were presented to society as a whole, you'd just naturally find a growing percentage of humanity doin' good things for each other that used to be considered "work" at some point in the past before whatever "safety net" made it unnecessary to do for survival's sake anymore. People might even still do some of those things at a higher level of quality than others and net themselves some personal gain out of it.
Problem is that humans aren't willing to cooperate with one another enough to even approach any sort of Utopian ideal, and they're often too ready to jump at all the reasons such a thing is "impossible" without being willing to even consider any ideas that might lead to it bein' a reality.
You could introduce a negative income tax (to implement UBI) and then increase your tax credits by joining community groups or going to college. Competitive groups could then receive more tax credits based on their ranking.
Instead of career tracks you will be offered volunteer tracks.
However, this is a complex solution to the problem and it is prone to being gutted because it will be seen as socialist and once there is full employment politicians will demand everyone to quit their clubs the same way they demand welfare recipients to quit today.
Yeah, that just took the wind outta my sails. I literally give up trying to restore my hopes for humanity or any sort of better future for myself or anyone else. We're all fucked. I need to just accept that.
When I traveled to Geneva 4 years ago I marveled at the efficiency of every service and labor job I saw. The prevailing wage for a grocery store clerk is ~35 USD per hour in Geneva.
The Restaurant workers had portable credit card stations to ensure they didn't have to run back and forth to a central register. The garbage trucks had automated arms for picking up trash bins. A busy restaurant had ~1/3rd the staff of a similar restaurant in the US. This compares to my condo association which recently hired snow shovelers who don't have a snow blower because they were cheaper than the ones with a snow blower!
There is no employment crises in Switzerland, and by simple inspection I'd believe that the American service/labor sector could absorb the 3-6x improvement in productivity present internationally without an existential crises.
There is already an enormous oversupply of art. The struggling artists' real product is something rarer: authenticity. If they did not struggle then they would not be able to produce it.
This is an interesting take, but most of my favorite artists grew up comfortably middle class, because it gave them the time and space to develop their art, compared to people who had to get jobs as teens or watch their little siblings.
You've got the causality backwards. Authenticity means steering clear of the siren call of mass market appeal. An overwhelming focus on creating things, despite their lack of commercial expedience, is what causes the struggling.
The analog in software is working for a surveillance company versus architecting your software to cut out needless middlemen.
> Which raises the question of why anyone would work, if doing whatever you want and still living a comfortable life was an option.
People with literally billions of dollars of wealth still devote time and energy to earning more. I don't think its a stretch to think that people who merely have enough for tolerable food, clothing, shelter will continue to do so.
But there are very few people with that kind of wealth, because very few people have the innate drive to do what it takes to attain it. Most people don't have that drive. Most people just want a paycheck and a low-risk life.
> Most people don't have that drive. Most people just want a paycheck and a low-risk life.
If I look at the size of the median house, the price of the median car, that doesn't seem true. If most people would be satisfied with a basic income scheme and nothing more, why aren't most middle class people trying to save half their paycheck and retire before 50?
Use free market logic instead of making things up. If a billionaire has enough money to do nothing then why would he do something? It's because the tradeoff is worth it. Business owners have a large stake in their business. They can get billions out of a company.
For a minimum wage worker it is absolutely trivial to see that the tradeoff isn't worth it and subsequently they behave predictably like a lazy person. People acting according to free market logic deserve the stick. Do you see the problem?
> Which raises the question of why anyone would work, if doing whatever you want and still living a comfortable life was an option.
You work to be able to afford nicer clothes, more vidya games, fine whisky, more-comfortable retirement when you do stop working, vacations, better school for your kids, a nicer house with a view, and so on.
The carrot remains the same, the stick is just somewhat smaller.
The pay generally isn’t the issue; especially, tipped positions. It’s the work conditions, treatment by management and customers, the inconsistency in hours, and no benefits. We’re seeing here in Portland that people still don’t want return to restaurants at $15/hr. Restaurants suck to work at.
I think restaurants pull that crap in the US too, by not scheduling enough on the clock hours for cleanup after the store closes. It's why you'll see places lock the doors even 30 min or more before the listed closing time.
When I was young I worked at Dunkin’ Donuts. You’re right that we had 30 mins of cleaning after the store closed. We were paid for it and were never asked to clock out and work for free.
But, sometimes on Friday nights we’d lock the doors 30 minutes early and clean just so we could get to enjoy our weekends 30 minutes sooner.
That was pretty rare unless a manager happened to be there that evening and also wanted to go enjoy their weekend.
I honestly can’t think of anyone I worked with there that would’ve clocked out and worked for free. I think people would’ve quit quickly. There were like 5 other Dunkin franchisees in the county and they’d all hire you on the spot if you’d done the job before.
I worked a few fast food and restaurant jobs 10+ years ago and we were auto clocked out at closing, but were still required to clean up. I never did and I got let go 2 times for not working for free.
Probably depends on how competitive the market is for workers. When I was trying to get a minimum wage job, it took a while to get. Now it's probably relatively easily. In today's market, they wouldn't try that because those people would go to a place that wouldn't do that and implicitly pays more as a result.
A lot of this article is about fast food workers, who don’t get tips.
The answer is automation, logistics and supply chain improvements so you can service more customers with fewer, but more specialized
employees who can be paid a living wage.
The fact that you enjoy that intersection is not an excuse for the terrible pay we give people to do it. If you want premium customer service maybe you should be charged a premium price.
That has not worked out so well in other industries. Immigrant labor is badly abused, perhaps you said this in jest, but I do not think it is something to be taken so lightly. This article from the New Yorker may change your thinking: https://www.newyorker.com/magazine/2017/05/08/exploitation-a...
That's a false dichotomy, because those people can go and do something else.
Even if we make an assumption that it IS a zero sum game (and that there are no other jobs), then we're into a wildly different conversation around how we deal with allocating finite resources in a culture that supports property rights, and no one is going to solve that in a hacker news comment chain.
> That's a false dichotomy, because those people can go and do something else.
That is not automatically guaranteed.
Part of the problem with the Western economies is that the mills/mines/etc. used to employ a LOT of people.
A good example is the Natrona Heights steel plant. It used to employ something like 10,000 people at its height. After automation, it will now employ a couple hundred.
This is why we need to get past the idea that everyone needs to work to earn a living. Why does anyone need to earn the right to live? Our society has enough empty homes to house the homeless, and throws away enough food to feed the hungry. Why are people still homeless and hungry then?
Take your example of the steel plant. Presumably when the 9500 people were laid off, productivity remained the same (or increased) and costs went down. Where did the extra profit go? Was it dispersed among the remaining 500 workers? Was it used to help the displaced workers who devoted years building the steel mill and keeping it running? The very people who designed, forged, and brought on-line the machines which replaced them? No, the upside went to the owners, because they have a slip of paper that says they own the mill.
Our problem is not that we're automating away jobs, it's that the displaced workers don't get to share in the benefits of that automation. Eliminating a job is seen as a disaster, rather than a victory. We should want to eliminate terrible jobs, not keep them around just so someone can stay busy. And I guarantee you, people who don't have to work will find something to do. There's always work to be done, just not all of it is profitable (e.g. raising children, taking care of the elderly, volunteering, open source coding, etc.)
There wasn't extra profit because all the mills automated and they are all competing with each other. If expenses were lower, one would cut prices to gain a market advantage, others would follow until the price reached its floor.
There were plenty of profits to be had. I've lived in steel towns almost my entire adult life, and you can see exactly how that manifested in region. Drive around these towns and you'll see the names of wealthy steel tycoons on roads, parks, schools, and even whole towns. You'll also see stark divides between streets with lavish mansions where management lived, and dilapidated row homes where workers lived. The divide was so deep that workers literally fought and died for better conditions at a time when steel prices and profits were actually increasing (https://en.wikipedia.org/wiki/Homestead_strike).
Ever heard of Carnegie Tech (CMU), the Wharton School, or Swarthmore college? They exist precisely because of the existence of massive profits from steel.
Well, if we have a morality of "work is virtue" then obviously it's best to spread that virtue to the most. If we want to spread wealth to the most to avoid social upheaval in the context of that morality, then more people employed would be better over fewer with a living wage.
Of course UBI or other safety net would be a good way to avoid social upheaval as well.
> UBI or other safety net would be a good way to avoid social upheaval as well.
I know it's not an apples to apples comparison with any proposed UBI implementation, but looking at the social upheaval caused by the COVID-19 quarantine and stimulus programs, I'd say cutting a check to people and leaving a void in their life where work used to be is a fertile breeding ground for aimless people who will be easily radicalized. It's not something I ever considered pre-2020 as a big proponent of UBI, but now I feel it's something that has to give us concern.
Automation doesn't cause unemployment or low wages. You can always give all people a living wage. Always and I mean it.
I don't know how to express this but it frustrates me a great deal.
Money is akin to a video game. It's not real. It's just a token that allocates work. It doesn't decide how much work there is. People decide. You can spend the same dollar an infinite amount of time and thereby create an infinite demand for work.
Therefore work becomes a philosophical or an existential problem. We work for our own benefit to satisfy our needs and desires. To do so we have to do "productive" work, meaning work that helps someone else satisfy their needs and desires by proxy. What if you have already done enough to meet the basic needs of everyone? Yes, we are reaching the edge of humanity. The realm of philosophers. Why do we live? To work? We already worked enough to live. Beyond this point all activity including work is meaningless. When you accept that life itself is meaningless then so is the work that you do to sustain yourself.
How have humans dealt with this in the past? They did wholly pointless work. The pyramids weren't built because they were needed, it's because rulers decided to build them. Another way is to simply start a war. Once there is urgency, politicians are ready to spend whatever it takes, no matter how pointless the war. The Chinese just build infrastructure and housing even before there is a need or purpose.
Here, I'll do it. I'll prove that there is no lack of work and it is purely a political problem: Climate change prevention requires the creation of a huge amount of jobs. Yes this one sentence is a bomb. How does more work, research and technological progress make us poorer? It doesn't. The whole climate change denial/skepticism thing can't be explained by economics because we will end up better off by preventing climate change and I am not even talking about the benefit of preventing climate change. Just the benefit of creating more work. The powerful combination of economics and climate should make any capitalist immediately support the effort.
The only people who actually benefit from denying climate change are those directly working in the fossil fuel industry. Germany once gutted 100k jobs in the renewable industry to keep 20k coal jobs alive. It's 100% not about economics.
There are a few exceptions who report it all I'm sure. However a good waiter/waitress can make as much as a good software engineer working less hours. Good is key though, most don't have the personality to rake in the tips. It is a pleasure getting good service where the 25% tip is deserved, it is painful having to give a 10% tip for bad service.
I think another is the response by the service industry to the requirements of the ACA. Everyone I know that works in a restaurant had their hours capped just below the line at which they'd have to be provided health insurance. Now they have multiple jobs. Juggling more than one job is a PITA, but even more so when your schedules are constantly shifting. These folks need full-time work with a predictable schedule, so they can do things like go to the dentist or take their kid to the zoo.
This is happening in more than just the United States... so your theory doesn't hold up. Also, at least near me, people living on tips make REALLY good money. Some make 6 figures. I've talked to some bar workers specifically that are totally against the idea of getting rid of tipping and the wage structure. They make really good.
The pandemic has had me appreciating home cooking more. I still eat out occasionally, but for health reasons, I prefer the home cooked meal. Pandemic lasted long enough to shift my preferences long-term.
Blackstar Co-Op in Austin (https://blackstar.coop/) is a great example imo. The service is great and the missing begging bowl is a great relief. Hopefully there are more examples.
This would have to be put in place at the government level, otherwise it won’t work. A restaurant by me tried it and struggled to keep waitstaff because they can make so much elsewhere..in untaxed cash. If they doubled their prices no one would come
I think realistically it would come down to an increase of 30%. Most of the time, only a small amount of tips show up in taxes and now that it's part of the pay, the employer will also have to pay taxes on the increase.
Seems like an oversimplification to me. If the owners could simply raise prices by 20% and suffer no economic consequences, I have little doubt they would. Thus, I can only surmise that it is not as simple as that.
I know it sounds crazy because we've had them for so long, but maybe it's not sustainable to have so many of them?
In any case, this seems like a great area to let the market figure it out. If restaurants go out of business the owners and employees will find something else to do.
> In any case, this seems like a great area to let the market figure it out. If restaurants go out of business the owners and employees will find something else to do.
I'm not sure more corporate concentration would be a better situation.
Your tone is quasi-facetious, but you do not realize that Taco Bell was the only restaurant to survive the Franchise Wars, so...now all restaurants are Taco Bell.
I don't think my comment implies more corporate concentration.
And even if it does, why should restaurants be held to a higher standard than other sectors? It's fine for Google and Facebook to buy up everything, but restaurants can't consolidate?
I do think that if it's persistently difficult to find workers for non-distortionary reasons, prices will likely increase gradually with whatever attendant effects there are from that.
> If the owners could simply raise prices by 20% and suffer no economic consequences, I have little doubt they would.
If all the restaurants did at the same time, they could. But if only some do, then the restaurants that underpay their workers will have lower prices and outcompete them out of business.
You can look at this an yet another example of the core problem where consumers don't have visibility into the externalities of the purchasing choices. When picking a restaurant, you see the food prices, but you don't see that one restaurant is more expensive because it treats its workers better. That's an encapsulated abstraction. So we choose based on price, which inadvertently incentivizes restaurants to treat employees like crap.
The article says about 5% of workers quit each month. If you raise pay by 20% - then maybe this goes down to 3%? I'm not sure - it obviously doesn't eliminate the problem entirely and either creates the problem of having to raise prices or get by with less staff.
I think people on HN may be forgetting the restaurant industry does not have the same margins as tech ... and close to no one working these jobs (on the employee side) is ever hoping to stay there for decades.
Owners most likely can raise prices 20% right now, but there's no guarantee that restaurant demand will continue to be so high. When demand falls, people will still remember the inflated prices and may choose to not eat there even if prices fall back down again.
I worked in hospitality for 10 years before formally getting into software engineering.
The customers can suck, yes, but more often than not your boss has the same sociopathic qualities of that mythical asshole geninus founder except you're not working at a startup, you have no equity, you're being paid bare bones, and the boss is not a fucking genius.
Thats more a solution for the customer. That comes up a lot, and times and again its pointed out that the employees hate the idea (likely because of survivor bias, where those who are making it in the current system would be worse off in a different one).
Long term it likely would help, but short term it would make it harder, not easier, to get employees.
In no small part because so much of the tip wages are under the table.
Ending tipping needs a top-down enforcement of norms akin to pandemic response measures. The restaurants that try to go it alone confuse and sticker-shock their customers, unfortunately.
I don't see why we need to end tipping. Keep it, and raise wages. I get that it's the flavor of the week for people to rally around, but I don't see a problem. Let's let the market solve the problem. The last thing we need is even more bureaucracy and laws to police something that doesn't need policed.
Guilt trip? I have never felt this ever. I pay a tip proportional to the service. 10% bad, 15% average, 20-25% for very good.
As an American living in Australia, I really do miss tipping. I think that on average the restaurant service here is a lot lower. At most restaurants at the medium level (e.g. $25 hamburgers) you pay in advance, and then a waiter will bring the food to you when its ready. Do you need more water? Get it yourself... Ketchup, you have to ask but it won't be offered. The waiters don't care because they are making good money anyway. The only place you get American style service is at the very high end places.
As an Australian living in America, the expectation that there will be a person to refill your water cup is pretty uncomfortable. The need to tip is a ridiculous abdication of the responsibility for labour laws to ensure staff a living wage. If you don't like the service at a restaurant, don't go! There are other restaurants that will compete for your custom. If no restaurant is sufficiently servile for your tastes, then your expectations are likely out of step with local culture and how it treats people.
Individual service persons should not be held hostage to your interpretation of their service for their wage. If they're routinely underperforming they'll be sacked.
Adding to this what tipping also does is pit the server against the kitchen and sometimes the house itself in establishments that don’t share tips with the kitchen.
Tipping can still take place. It just doesn’t need to be obligatory. It’s the difference between a culture of servitude vs a culture of service.
The waiters "don't care" about what?! Things you expect from another country's customs? That is a strange way of thinking. And complaining about a country because you have to ask for sauce if you want it sounds so.. entitled.
Although I'd never pay $25 for a burger. (Sydney here)
If the biggest downsides to paying workers a living wage you can think of are asking for ketchup and fetching yourself a glass of water at a midrange restaurant... I think that's a fine tradeoff.
I've always found service in restaurants in the US makes me rather uncomfortable - I don't want people acting so servile.
I remember being particularly unhappy about being served breakfast in Houston while I was there for a conference and being referred to as "sir" - I almost asked the waitress to stop but I realised that would probably cause even more problems so I stayed quiet.
So I would reject the idea that the service in US restaurants is somehow fundamentally "better" than elsewhere - it's just different and some of us actually regard that style of service as a negative.
Genuine Q: is $25 a lot for a burger in a restaurant (including tax, like in Australia)? I ask because I see burgers in mid range restaurants for $14-$20 here in NYC, and then there's the 8.825% tax. 25 AUD is ~ $18 USD, which seems about right.
Grilld is a popular mid-range burger chain and their burgers range from AUD $9 to $16.90 (USD $6.60 to $12.40). All advertised retail prices in Australia include 10% GST (good and services tax).
At a more formal restaurant you will likely find a AUD $25 burger but that's about the top end for burger prices.
I was thinking more along the lines of a non-chain establishment like a restaurant, since that's the impression I got from the ancestor comment - they're referring to table service. A burger chain like Shakeshack has burgers in the range of $6-11, pre-tax.
Grilld does do a limited table service. You order at a counter (or on your phone) but orders will be bought to your table. The wait staff will check up on you but if you don't want that there's a stick on each table that you flip over.
How expensive are they over there then? I feel restaurants aren't best for everyday meals, but rather once a week/month social events with friends/SO. That makes price definitely less important for me.
Also, I consequently completely avoid chain restaurants. I haven't entered McDonald's since 2008 or so.
People become servers because of the tips not in spite of them 9/10 times. Of the servers I've known every single one chose serving because it beat the hell out of the other available low-requirement options they had. Complaining about tipping is easily one of the most counter productive forms of woke culture I encounter on a regular basis.
Suppose I don't care about the workers and I just want the actual price I'm going to pay printed on the menu, with no additional charges and fees at the end? Does that make me "woke"?
Very few people do that. Tip amount barely changes based on how good the service is. Most people that tip well are basically always going to tip well, which does not reward good service.
Stop the tipping guilt trip placed on the public, raise your prices 20%, and pay your employees a livable wage. The public will still show up to eat in your restaurant.