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Comment by toomuchtodo | Hacker News Reader

TLDR Waiters' pay has not yet risen enough, and meal prices increased accordingly, for them to continue to live in SF. Establishments are reducing staffing instead. SF micro economic disfunction continues.

"Analysts are also calling a lack of employees one of the biggest problems in the restaurant industry today." (My note: No lack of employees, just lack of employees willing to work for current pay offered.)

EDIT: "The demand for highly skilled help is especially acute in Washington, where a boom in restaurants run by creative chefs is outstripping the region's labor force," The Times wrote.

https://www.vox.com/2018/12/12/18136392/dc-initiative-77-rep...

"A judge just blocked another effort to raise wages for restaurant workers in DC"

There is no employee shortage, ever. Just a shortage of businesses owners who are willing to pay market rate for labor.

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This is true of every field. SF is unaffordable for teachers and firemen and social workers. The solution is part zoning more housing, and part employers charging and paying more.

Does the city really need another stadium? Or would more housing have been better?

While we are on the topic can we work towards eliminating the idea of required tips and it being an expected part of a servers wage? I don't care if the base price of food costs more if it means they have a normal wage.

A tip should be an additional non-expected gesture.

Are tips required? I know they're automatically included for large groups (at least where I live). Which I find annoying as a customer.

But actually to your other point. If I'm interested in working as a waiter at some restaurant, but I'm uncomfortable with tips being an expected part of my wage, then why would I either pursue that job, or accept it under those guidelines? Couldn't I work somewhere else instead and get the same amount of money?

Maybe not "required", but they are highly expected of you and you are only hurting your server if you don't. The expected percentage of your tip somehow keeps going up as well. It's a percentage so this makes little sense to me. The prices are already going up so the tip would also go up as it is a percentage of the base price. Regardless it has gone from an expected 10% 20 years ago to an expected 20% today.

That's true, it is more expected than not. I feel bad if I leave too low of a tip. Unless the waiter actually did a really bad job, which happens - fortunately not often.

I recall it being 15% 20 years ago, but yes, I never give more than 15% for regular service since it’s already inflation adjusted.

15% for median service. 10% for 1 or more standard deviations below, and 20% for 1 or more standard deviations above.

So you pay 15% on 2/3 of your meals, 10% on 1/6, and 20% on 1/6. But the mean is also 15%.

Giving 20% to everybody is Lake Wobegon syndrome, where all the servers are above average. If you don't adjust your tip based on the quality of service, you remove the incentive to strive for above-average service. You end up with servers that sit down at your table when taking your order and chitchat with you, instead of just doing their job professionally while you can see or hear them, and bitching about it in private later.

If you go to Chilis or anywhere with those tablets at the table and pay with your card it will auto suggest a 20% tip.

I've seen some other places with a different kind of tablet that simply has boxes for different dollar amounts of no tip, but they are typically not places that even have servers. Why would I tip at a retail shop when all I did was grab something off a shelf and bring it to the counter?

I’m not sure how old you are or where you’re from, but I haven’t heard of 10% being an acceptable tip since maybe the 80s (70s) anywhere except rural areas.

20 years ago, it was definitely 15% minimum, but somewhere between 15% and 20% was very common (mandatory large party tip was usually 18%).

Regardless, you are correct that the expected percentage has gone up over time, and that a non-tipper or low-tipper is hurting the wait staff when they don’t leave a standard tip.

Great idea. I doubt it will happen.

The most likely outcome of this is that prices go up to factor in a 20% “tip”, the owners/managers keep part of it and pay the workers only slightly more. The formerly tipped position will end up making less.

Another possible (non-cynical) outcome is that the 20% is spread out to both front and back of the house staff. Again, wait staff make less.

If the wait staff stand to make less, they will never stand for changing the system. That’s why I doubt that it will ever change in the US.

Is the system reasonable and/or fair? Good question. Whatever the answer, it’s the system we’ve got, and the inertia is real.

You can't just make a central decision about it and pretend that people will follow. How tip works is a custom, and it's a product of tradition, game theory and human psychology. There are no laws that require customers to leave tips.

The shortage, at least in SF, is fundamentally housing. Raising waiter's wages until they can outbid nurses and programmers on apartment rent, and then those professions will flee the city. Housing isn't necessarily inflexible in supply, but policy in California has allowed tiny minorities of people to stop housing from being built, while commercial building continues with little restriction.

> There is no employee shortage, ever. Just a shortage of businesses owners who are willing to pay market rate for labor.

Is the situation the same for housing? Is there never a housing shortage, just a shortage of people who are willing to pay market rate for housing?

If not, what are your thoughts on what the difference is?

Businesses can always raise prices to cover higher costs. If they can’t, they’re not viable in the first place.

Individuals on the other hand can’t generally just will more money into existence to cover higher housing costs.

> Businesses can always raise prices to cover higher costs. If they can’t, they’re not viable in the first place.

Interesting that 'individuals can always ask for a raise to cover higher costs; if they can't, they're not viable in the first place' might be true, but it sure sounds heartless.

That statement only sounds weird because getting a raise without changing jobs is becoming a rarity these days.

"If no one will hire you at salary large enough to meet your expenses in $City then you can't afford to live in $City."

My skills aren't valuable enough for me to live in say, Manhatten, but I don't think that's outrageous or anything.

The difference (and why I don't think your statement is particularly true) is one of control. Businesses can and do continuously adjust pricing to reflect the market, workers cannot.

There are zoning issues that prevent the market from buildings an adequate amount of housing to keep up with demand. You can't just go turn a single family home in Palo Alto into a small apartment complex.

There is not an equivalent quota or limit on the number of employees who can work as waiters.

It’s more correct to say a shortage of business models that can pay market rate for labor. If the restaurants can’t raise their prices enough to pay market wages, then it’s not like they are unwilling, just unable.

That seems like a superfluous designation. A business model where you can’t afford the inputs doesn’t seem like much of a business.

Its not like these factors stay constant. What made sense five years ago might not make sense today. And as we know restaurants go under and new ones start up all the time.

All businesses face the challenge of continuously preserving a balance that (a) allows them to make money and (b) allows them to exist at all.

Restaurants already run on extremely thin margins. Raising waiter's pay would mean raising meal prices, as you say. That raises the cost of living for everyone who eats out. Maybe service staff shouldn't ever eat out, but what happens when the same issue hits grocery store workers, and the stores either raise food costs or shut down?

It is not a viable policy to legislate raised wages, and then legislate even higher wages when the cost of living increases in turn. The money actually has to come from somewhere. Businesses will raise prices to the point the market will bear, for both the lower and upper class. This is the fundamental issue with wage hikes. $15 is not more than $10 if everything costs 1.5x more after wage increases. Deregulated markets are able to (and have in the US up to this point) create more material wealth for everyone even as wages stay stagnant in dollar value.

The problem is not greedy businesses. They want workers who they can hire for wages they can afford. Due to inflated housing prices, the cost of living is too high for workers to live in the city, and thus the "living wage" is unaffordable for businesses. Why are the housing costs so high? There's a lot of evidence that zoning laws and regulated markets play a large role[0].

[0] https://www.forbes.com/sites/scottbeyer/2016/09/30/the-verdi...

>"A judge just blocked another effort to raise wages for restaurant workers in DC"

Are maximum wages (set by law) a thing in the US? I only knew about the minimum wage concept.

No, that quote is about raising the minimum wage.

We need a maximum rent law.

No, they're not. The judge blocked the effort to raise minimum wages, IIRC.

The OP is basically correct that restaurant owners don't want to raise pay rates to a level that meets a "living wage" standard. They don't want to raise what they charge customers to the point where they could pay those rates, of course--but I'm not sure there's particularly good data to support the assumption that their customers would balk at doing so. These are restaurants with wait staff in high-cost cities, and raising the average ticket price per diner by $2 or $3 may not be enough to dissuade very many diners from choosing that restaurant. (I mean, I'm sure there's somebody out there who'd look at a menu and say, "I'd pay $28 for that flat iron steak, but $30? No deal!", but it seems like it'd be uncommon.)

> "A judge just blocked another effort to raise wages for restaurant workers in DC"

What a dishonest article. It's not an effort to raise wages - it's an effort to raise minimum wage. You may have different opinions about how it will affect actual wages, whether it will actually increase them or not - because being put out of a job is a 0$ wage.

But either way, even if you think that raising minimum wage WILL result in higher wages, you still have to admit that these things are still different and require some arguments to link them together. Silently misplacing one for the other, as if this assumption is so self-evident, is nothing but propaganda.

> There is no employee shortage, ever. Just a shortage of businesses owners who are willing to pay market rate for labor.

What business owners are willing to pay IS the market rate.

That makes no sense. "We have a perennial shortage of workers. Our pay is fair though."

No, a market needs two sides and equilibrium, no different to a business owner having a hard time reselling Apple computers at say 30% over retail.

It's not a unilateral decree, fiat. If people are available and not willing to work for you for what you offer, it is inherently NOT the market rate.

If a stock has Bid at $1 and Offer at $2, what's the "market price" according to each of you?

Undefined. But somewhere between $1 and $2 would be a decent first guess.

The two sides of the equilibrium are the business owner seeing how much he can charge the demand(Customers) and pay for the supply(employees).

You can have a demand at a price there is no supply for.

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