San Francisco substitution the rent is too damn high

Restaurateurs who say they can no longer find or afford servers are figuring out how to do without them. And so in this city of staggering wealth, you can eat like a gourmand, with real stemware and ceramic plates. But first you’ll have to go get your own silverware.

…Restaurateurs here have taken a model familiar to taquerias and fast-casual, cafeteria-style places like Sweetgreen and Chipotle Mexican Grill, and pushed it further up the fine-dining food chain. Call it fast-fine, they suggest, or fine-casual. Or counter service “in a full service environment” that includes $11 cocktails and $22 pan-roasted salmon.

By the way, rent is not the only problem:

On July 1, the minimum wage in San Francisco will hit $15 an hour, following incremental raises from $10.74 in 2014. The city also requires employers with at least 20 workers to pay health care costs beyond the mandates of the Affordable Care Act, in addition to paid sick leave and parental leave.

Even the dosa is troubled:

In December, he opened a counter-service version of Dosa in Oakland. The new restaurant serves cardamom- and fenugreek-spiced cocktails. But there’s also a self-service water station, and a busing station for diners inclined to clear their own tables. (If they aren’t, an employee will do the job.)

Here is more from Emily Badger (NYT).  Addendum: Hadur in the comments writes: “Who could have predicted that this would happen in America’s most high-tech city?”

Comments

Who could have predicted that this would happen in America's most high-tech city?

Admittedly, the robot servers can't come fast enough.

But otherwise, the erstwhile migration of all tasks to self-serve? Sure, I get that.

...Could customers arrive with their own robot servers?

Could customers arrive with their own human servers?

Nah, they're too expensive. Besides, have you ever tried syncing a human to the server cloud?

Is there an opportunity here for gig servers? Uber servers? Servers not employed by the restaurant.

I hang out at a restaurant, take your order, convey it to the staff, collect and serve your meal, you tip me accordingly via a phone supported app.

As they say, you’d have to have a heart of stone not to laugh at this.

I blame Trump!

Well, he's a backer of the idea that taxes be cut and the private sector build all infrastructure, so that means the Bay area must wait until Elon Musk has enough time to develop advanced Boring equipment and wealth to fund tunneling the 1000 kilometers from key points into interior vacant land for Tesla buses and skates moving people and cargo vans at 300 kph to now farmland where housing and processing centers will be located.

Going back a century plus when land developers built trolley lines to their projects.

California sprawl was the product of land developer transportation design.

Once the land was all sold, the land developers stopped subsidizing the trolley lines, forcing them on taxpayers who by that time could buy cars, so taxpayers started paying for miles of road to replace each miles of track ripped up.

If Elon delivers the Boring project from O'hare to Block 37 in twice the time and cost, someone is likely to buy a million acres of farm land and fund Boring or competitors to provide access from the land to high density commercial districts.

Of course, once two such projects get completed, a depression will likely follow as trillions in wealth is destroyed bringing down banks and hedge funds dependent on high real estate prices to backup all the debt they bought. California has experienced several big depressions after major transportation projects were completed. Leading to Trump-like figures driving breaks with US history and tradition, first immigration control, Chinese Exclusion act, and then later the mass expulsion of non-white people, many US citizens, to Mexico. Note birth in the US was not required for citizenship because of the terms of the treaty with Mexico which exprioated half of Mexico as US territory and the State of California. Clearly demonstrating Session's view of "no control of borders means no nation". Mexico killed too many illegal immigrants resulting in bleeding heart Americans sending in the US Army to protect illegals in half of Mexico, turning that half of Mexico into an immigrant refugee camp.

And Lincoln signed the law starting the construction of high speed transport to this vast US refugee camp. Even today, Texas pols bill Texas as a great refugee camp. Conservatives loudly call for more refugees to flee to Texas, and Nevada, flee from liberal oppression.

Note, Gov Brown wants to build high speed rail so liberals can get to Nevada, and Elon is giving conservatives what they claim to want, a flood of refugees. Some Nevada natives are beginning to resent being overrun with the flood of refugees Elon has unleashed.

I cant believe I read all that, but one thing i can say, the high speed rail doesn't go to Nevada.

Or anywhere in this country

'you can eat like a gourmand, with real stemware and ceramic plates'

Do gourmets enjoy crystal and porcelain, or would that be covered under stemware and ceramic?

If you include our 9% forced savings then the minimum wage in one of the richest places in the US will be about equal to the minimum wage everywhere in Australia, in nominal terms. This is a country that is significantly less rich than the United states with a per capita GDP that is about 13% lower.

Lots of exceptions in Australia, right?

The only exceptions I can think of are teenagers, apprentices, wage subsidy schemes, backpackers working off the books for under the table payments, unpaid work from family members, and some training schemes.

Which covers 50 - 66% of retail service jobs

https://www.theguardian.com/australia-news/2018/mar/02/who-is-to-blame-for-australias-stalled-wages

"If you include our 9% forced savings then the minimum wage in one of the richest places in the US will be about equal to the minimum wage everywhere in Australia, in nominal terms."

If you are going to include that you would have to add the +7.5% employer FICA contributions.

I got like $13,000 in forced savings in the stock market. How much FICA money do you have?

Way more than that

Waaaaay more than that.

FICA includes Social Security (6.2%), Medicare (1.5%), and another .9% if you earn over 200k.

And then you add in state level requirements.

+ the employer's 6.2%

And I thought Ronald Reagan said there wasn't any. Or they put it in a locked box and lost it or couldn't find the key or something? Glad to hear you still got your dosh.

Yawn. Shalimar (in the tenderloin) has been like this for over 10 years. They seem to do very well.

If you can’t pay a living wage the job should not exist.

Human beings don’t exist to serve their white cis techbro overlords food.

Productivity will rise in response. And the poor will move to somewhere they can afford to live. Sounds good to me.

Productivity will not rise.

Hmmm, effectively if might. How useful is that waiter? Is it worth it to spend 2 minutes trying to get their attention and bring you another spoon or napkin or is getting up and grabbing one off of a rack in 1 minute more efficient.

Is getting rid of sub-optimal practice in this case a rise in productivity? Certainly we would consider it that way if this were a factory floor.

A waiting getting you a fork vs you getting yourself a fork does not represent a rise in productivity, though, does it? It just means the task is transferred from paid to unpaid labor.

Regardless of how the labor is paid, an idle hand was used to perform a useful task. Economic productivity was increased.

smdh

If no money changes hands, it is not economic activity.

Ie, living off the land adds zero to the economy.

Carry for your own children adds zero to the economy.

Leftist economists have called for imputing high wages to unpaid labor to create a new definition of The Wealth of Nations. Ie, a single mother with three kids would have imputed labor production worth $50,000 in Kansas and $250,000 in NYC.

However, given no one will pay, clearly conservative economists would eliminate all childbearing as money losing waste of workers.

"A waiting getting you a fork vs you getting yourself a fork does not represent a rise in productivity, though, does it? It just means the task is transferred from paid to unpaid labor."

I was thinking of the handling costs. The waiter spends a lot of time just moving through the room seeing if someone has a request. Often the request is for something trivial and the overhead compared to the time to complete the task is high.

"And the poor will move to somewhere they can afford to live. Sounds good to me."

Amen to that. Also, we should have, like, open borders.

😂🤣 It is insane, isn't it? We don't have sufficient affordable housing but we should bring in more poor, uneducated, unskilled people with families. Of course, one argument is that we need "cheap" labor, but then the "cheap" labor can't afford the basics, like housing, so we - the people, including the unwilling - buy them section 8 vouchers, give them food stamps (subsidies), free education which requires more schools and thus teachers that also can't afford housing. So then we increase taxes, which the poor don't pay, so that we can pay teachers more so they can afford housing that doesn't exist, all in the most densely populated metro area in California, a state subject to earthquakes and drought.

Insane.

Yep, it’s insane.

Budget surplus - check

Best and brightest around the world want to move here - check

Most dynamic industry in America - check

Diverse and pluralistic society - check

Sure is insane.

By the way when we have a permanent shift in the Overton window due to whiteys dying off, all the “free stuff” will be paid for with federal taxes. And we will get our state and local deductions back within 4 - 6 years tops.

And our mortgage deductions back finally, can’t wait for that one. That’s a fat check I send to Mississippi et al.

So you, in effect, will pay for the free stuff. For our state.

Thanks in advance

Or, at least, receive less largess from our excess wealth.

Of all the BS claims I see made in MR comments, this...

"By the way when we have a permanent shift in the Overton window due to whiteys dying off, all the “free stuff” will be paid for with federal taxes. And we will get our state and local deductions back within 4 - 6 years tops."

...is in need of a Caplanian bet.

"If you can’t pay a living wage the job should not exist."

Not for teens, who are earning pocket money? Not for retirees who are looking to supplement social security and have something to do? Not to interns (who are learning on the job and, until experienced, may be ZMP workers)? Not to the disabled in sheltered workshops? Should volunteer work be outlawed, since it pays $0/hr? What about self-employment -- should the minimum wage be enforced against a mom & pop food truck (should the state be monitoring them to make sure they bring in at least $15 in profits for every hour they put in)?

One of the best cases I've ever read for a low (or no) minimum wage, is this one:

http://www.coyoteblog.com/coyote_blog/2005/03/case_studies_on.html

Especially with "living wage" left undefined.

Is it - as I've seen suggested - "enough to own a home and raise a family on"?

If so, well, the people pushing it as a Minimum Requirement are deluding themselves and pushing for the impossible*.

(* Give us nigh-post-scarcity robot factories and we can talk about Free Incomes For People.

But "all labor must allow a home and family support on one income" is fantasy, and that has never been the case and probably never will be, and trying to force it will - as mentioned above - simply destroy a lot of jobs that cannot ever provide that remuneration.

Not all labor is that valuable per hour. Period. Demanding it be so changes nothing.)

For the $300 billion we just shoveled back at the billionaires so they can purchase more favorable laws for themselves, we could have built 3 million $75k homes and paid for a year of college or trade school for all current students. We also increased the military budget by 7.5 percent absent a popularly supported war with any defined endpoints. It’s all about choosing different priorities.

In the San Francisco metro area, which includes Marin, San Francisco and San Mateo counties, an income of $44,000 or less for a family of four is considered extremely low, while the upper limit for having a very low income is $73,300.
https://www.cnn.com/2018/06/27/us/san-francisco-income-housing/index.html

Given these numbers, how many firms can pay a living wage

"If you can’t pay a living wage the job should not exist."

Why? I have part-time jobs people can do from home, but it's unskilled work and I can't pay a living wage (well technically I do, but a "living wage" actually means some minimum standard of opulence). Still, lots of people want to do the job- in what way would it be better if I could not offer those jobs? I'm not holding a gun to anyone's head asking them to apply.

Perfect. Pay them $0.10/hr. Surely, someone somewhere will take that. This is the unrecognized benefit of having a massive global population of huddled masses yearning to work for free.

Between the Peter Pans of the looney left and libertarians on the autism spectrum it's enough to make a radical centrist go nuts.

Surely a sane solution is at hand.

"Surely some revelation is at hand ... and what rough beast ..."

"Pay them $0.10/hr. Surely, someone somewhere will take that. "

Nope, they wouldn't. Answer my question please.

Personally I truly appreciate it when anyone comes out and says something to the effect of a go/no go based on a "living wage" because it identifies them as an Unserious Person. Since "living wage" has no meaning save for whatever the claimant needs it to mean at the time it's an utterly worthless idea.

"By the way, rent is not the only problem:"

I don't quite understand this comment. $15 per hour is a decent wage almost anywhere. But San Francisco is NiMBY hell. So, maybe not there.

NiMBYism run amok.

"San Francisco Man Has Spent 4 Years and $1 Million Trying to Get Approval to Turn His Own Laundromat Into an Apartment Building"

https://reason.com/blog/2018/02/21/san-francisco-man-has-spent-4-years-1-mi

San Francisco is a wonderful petri-dish of American style progressive socialism.

Economists (and rest of us) should see it as a fascinating and very useful socio-political experiment in the real world 21st Century.

What will 22nd Century economist say about it?

By that time, the academy will have completely ceased production of politically incorrect thought, and 22nd century economists will say what the Party tells them to say. Real economic insight will manifest itself only in subversive private jokes.

We are almost there.

Really? Because last time I looked Team Red held all the levers of federal power, and a big chunk of the states.

Thats some impressive superpower those academics have.

Unfortunately Team Red is adopting the anti-foreign bias on trade previously supported by Team Blue. Also no one on Team Red seems to be willing to risk pushing YIMBY.

Further proof that tech can't create anything that solves actual problems, like food service in restaurants, but instead devotes attention to things that don't solve actual problems. Flying cars, spaceships to Mars, and cryptocurrencies come to mind.

all problems are actual tho. It is better to have a more fulfilling path.

I'm imagining that electronic tills in McDonald's?

It's odd the first time you ecounter the rag-and-bucket you're supposed to wipe your own table down with. But we make do.

In Seattle some places have gone to a 20% Service Charge instead of tipping, and the money goes to all the workers not just the waitron. I like this model. The food was good and reasonably priced. And they did bus the table and bring us drinks.

Does the now-unemployed bus boy make do? Asking for a friend.

Don't worry, Tyler described the solution in 'Average is Over'. Everyone gets a low UBI, lives in ghettos of stacked shipping containers (better than cardboard boxes), eats cheap tacos and beans with spicy chilli peppers, gets free fast internet with porn and games, calms themselves with masturbation. It's going to be a great time to be rich! No need to worry about violent revolution because the poor will be old and pacified.

But then ... Trump!

Now what?

Unemployment is like 1.9%. The unemployed busboy is not unemployed for long. Tell your friend there's never been a better time to look for a job in Seattle.

If 1.9% is like 3.0%. https://ycharts.com/indicators/seattle_wa_unemployment_rate

Plus, this doesn't account for those busboys that left the city.

Or more likely left the labor force altogether.

And as so many busboys are immigrants, maybe some of them went home. In fact that's what the stats show. So why are you people still so mad about everything?

Those dudes work off the books anyway, msg. They're not getting a living wage to begin with. Try again.

...."never been a better time to look for a job in Seattle."

With higher than San francisco , Y-O-Y % increase in Housing costs ( #1 in the nation last 12 months I think) Seattle has its own set of problems.

So you pay 20%, but you put in an order at the counter and nobody brings your food? I happen to think this dining model is a better customer experience in many respects, but I wouldn't expect to pay more for service than in a standard sit down model.

Food runners from the kitchen bring your food. And the guy who would otherwise be a waiter brings you drinks and removes empty plates.

I assume they have done that because people don't understand why they still have to tip when wages have gone from $2.50/hr to $15/hr?

Plus tourists, I guess. They write on the bill that the service charge goes to kitchen staff as well, and provides everyone with health insurance.

I think it's signaling to say "this extra you're paying is 100% because of the City's forcing us to set wages differently".

(And so that they can 100% get more money to pay back-of-house, while also looking cheaper at a glance, because menu prices haven't changed.

Remember per above that while waitstaff could get paid under-minimum-because-tips, nobody else could be - the cook was always making minimum-or-better.

And they ain't getting much of that 20% fee if it's also paying for health insurance, which is ludicrously expensive, as I understand it.)

What a wonderful world you live in, moo cow. They'll eat you last.

The homeless and unemployed can lineup outside the restaurant and offer their services to entering customers. Or they can just beg on the street.

Unskilled workers need jobs. Some people want part-time jobs. They and employers are willing to agree to compensation that makes both sides happy. Unless the government comes in and declares that such agreements are unlawful.

Markets will adjust. Probably a growing market for takeout and delivery restaurants will fill some gaps. Food trucks can avoid some high rents. Perhaps catering can avoid some of these rules.

I don't like high-end restaurants that often seem overstaffed. I remember the comedian Jackie Mason used to say something like: He had been rich and poor and now that he was rich he could afford to go to very expensive restaurants. He discovered that you pay a lot for ambiance at expensive restaurants but the food is no better than a good cheap restaurant. But who am I to tell you what kind of restaurant to prefer

Sometimes market conditions cause the demise of jobs. Service station attendants, milkmen, etc all provided services that customers increasingly would not pay to have performed. Sales positions in retail disappear as the internet provides more information about goods for sale than most brick and mortar retail outlets. The amount that customers would pay for such services became less than what people would accept to provide such services. Markets are dynamic and changing.

But having the government regulate jobs out of existence seems to create an undue burden that really penalizes unskilled workers. A desire to artificially raise prices may help those few lucky enough to keep their jobs but it harms many who will be unable to find employment.

Eating a Cheestake sandwich in Philly I saw just this. A man who wasn't employed by the restaurant offered to clear the (outdoor) tables for tips. He did it well and the staff clearly knew he was there and everyone seemed okay with the situation.

I think the combination of high tech stuff that works extremely well, and utterly incompetent government and administration at third-world quality levels, is what makes SF great. It's like they're actively trying to produce the backdrop for a cyberpunk story.

See the Silicon Valley engineer have dinner in a restaurant with great food where they can't keep any waiters because of the crazy high minimum wage. Then watch as he steps over human excrement and passed out homeless people to get to his self-driving electric car, which then drives him home (two hours away because nobody can build any housing any closer) over poorly-maintained roads, while he reads his email and listens to music over the 5G network.

Needs more nighttime and neon.

I find it a little ironic that the sector claiming that all the disruption they are causing in traditional industries is justified as it is simply pushing business to the most productive, is the most unproductive with their land use. The artificial constraints of rent control, minimum wage and zoning are simply exacerbating the issues as opposed to solving anything.

It seems that AI should have been able (and rightly should have had the forethought) to model the effects of clustering bunches of high wage individuals together through a worldwide appeal to ambitious folks so they cluster in a tight, but climatically pleasant, environment to live and raise their families; that these families would want a little yard to shoot the soccer ball around, a sidewalk to walk to school, neighborhood eateries to go out and meet up with friends. And that all this stuff takes space, and requires lots of workers of all wage ranges to maintain and facilitate.

This might be saying something about the preferences of the diners also... if you hold egalitarian ideals, maybe you don't mind busing your own table.

Wait, who doesn't believe their ideals are egalitarian?

Depends on what your objectives for the meal out is. If I'm seeking out good food specifically, then I don't really care about the service offering. Some of my best meals have been at places like Hot Doug's in Chicago or Willie Mae's in New Orleans.

But most nights I cook for my family, and usually end up doing the dishes depending how much wrangling my wife has to do to get the kids to get. The constant grind of dealing with those dishes and wipe up wears me thin. Especially when the toddler throws food into every corner of the dining room.

I'm an excellent good cook, and don't live in a place that would be considered a food mecca. So there's very few dining out options in the local area where the food's better than what I make at home. If I go out, it's to take a break from any and all kitchen responsibilities. I just want to pick the food, have it brought to me, have it brought away from me, and not worry about any clean up.

The "Unemployment rate" corresponding to the expansion phase of the business cycle is not mentioned in the text.

Considering the low unemployment rate, employers should be satisfied to retain a worker by paying only the minimum wage.

Also, there may be too many restaurants, less customers per restaurant is not good for profit https://www.theatlantic.com/business/archive/2017/06/its-the-golden-age-of-restaurants-in-america/530955/

Tyler's answer a year ago to the question: is there a restaurant bubble?

"What’s happening is something that some restaurateurs may not want to hear: Competition in an already-tough business is getting even tougher......they believe that they are different. With some hard work, they’ll be the ones to make it big. The overabundance of young ingenues will continue in perpetuity.

“You have too many people trying, but that’s going to persist more or less forever precisely because the reward is high,” said Cowen. “The world of fancier restaurants” — and casual restaurants, too — “has become more of a winner-take-all world.”

https://marginalrevolution.com/marginalrevolution/2017/07/is-there-a-restaurant-bubble.html

And with the rampant public defecation ( https://www.nbcbayarea.com/investigations/Diseased-Streets-472430013.html ), San Franciscans do have a lot to be proud of. Can't wait for that Kamala Harris presidency!

Aside from the total ridiculousness of the Bay Area, its lack of housing, faux-progressivism, etc... If this is the new reality it makes sense to start rating restaurant customers, akin to how Uber riders are rated by their drivers.

If someone leaves doesn't bus their table, or leaves their area a mess, they'd get a 1-star from the restauranteur. High-rated diners would get special offers and invitations. Low-rated diners would get last priority for service and reservations. Low enough and you might just be refused service.

And of course, if you are a member of a Republican presidential administration, you are automatically 1-star until you find other employment.

It isn’t faux, though. This is what it really looks like.

If they are all about tech in these places, why not more robots, and if not that, how about big, cheap, safe high rises that look good enough for any NIMBY-esqe person to find acceptable to wonderfully provide, inexpensively, homes to throngs of people.

The city also requires employers with at least 20 workers to pay health care costs beyond the mandates of the Affordable Care Act, in addition to paid sick leave and parental leave.

So, basically any medium or larger restaurant, considering the way staffing works?

"Nobody could have seen this coming", except, well, everyone.

I mean, do they think restaurants have the kind of margins that can cover those expenses and not go in the red?

Either prices go up (and people spending all their money on overpriced housing go elsewhere, mostly) or staff gets cut.

Because "go bankrupt" is the other option, in the real world, for basically every restaurant affected.

Interesting to see the real time effect of minimum wage laws. I wonder where those who would have worked for the market wage decided to go? Welfare? Homeless? Regardless, SF is likely to reduce employment of lower paid workers and the kingpins will get to do their own dishes.

in SF 117,000$/year is considered low-income and qualifies for low-income housing subsides. that's 56.25$ an hour. so the real living wage in SF is 56$/hr?

https://www.cnn.com/2018/06/27/us/san-francisco-income-housing/index.html

Yes. And anyone who makes less than that should receive Section 8 housing assistance, food stamps, and Medicaid.

Time to get some tax dollars to the golden state instead of the other way around.

As long as we are capping the populations of our global urban centers, we might as well get on with the process of segregating nationally by income and skill, and in some small way this will probably accelerate that process.

And, when the waiter moves to Phoenix because they couldn't get a job in San Francisco, that probably leads to less misdirected social anger than if the same waiter thinks they had to move because of gentrifying tech workers or greedy landlords.

When an economy is based on limits to the application of capital to its highest use, economic intuition gets flipped upside down. San Francisco should raise the minimum wage to $50. Make room for more tech workers. This would probably have a positive effect on national productivity.

"...we might as well get on with the process of segregating nationally by income and skill."

Haven't we done this for years ?

It amazes me that every comment seems to assume that this goofy NTY story describes San Francisco accurately. Calm down, folks, there are still a few waiters in San Francisco. Not the end of the world yet.

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