Restaurants are figuring out how to do without servers
<i>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.</i><p>If a local government dictates that your base wage rate for a labor-intensive industry has to increase by 40% within less than a 5-year period and, on top of that, further dictates that you as an employer must provide those same employees with above-average health benefits together with paid leave of varying types above and beyond what market norms have been, well, at the end of that process, you are obviously having to pay a hell of a lot more for those employees than you did just a few years back, perhaps as much as 50% more.<p>Real wage increases tie to rising productivity. I well remember representing highly-talented UNIX engineers during the early 1990s who were earning around $60K per year (adjusting for inflation alone, that number would still not be in the six-figure range today). Today, engineers of that caliber easily command six-figure salaries plus great perks. The best of them easily command $250k+ salaries. For employers trying to find such engineers, they have to open their wallets big time and, yet, they do. Why? Because, if you are a Google or a Facebook or a Twitter or an Apple, or any other preeminent company needing the services of such engineers, you are not trying to eliminate those positions simply because they cost a lot more today than they did in the early 1990s. You are desperately trying to <i>add</i> such people to your payroll because of <i>what they can do for you</i>. The changing tech world has magnified the productivity and value of what such engineers can do and therefore the salaries and perks they can command are far higher. But this is <i>market-based</i> and justified because the profits you can earn as an employer are also much higher owing to their work. The engineers of the early 1990s were just as talented as those today but their value was relatively less to employers than is the value of their counterparts today. Their productivity has vastly increased. Hence, so has their compensation.<p>Compare that to what the city officials in San Francisco are doing with waiters and similar restaurant staff. Essentially, they have decreed (in the name of worker protection) that the cost to the employer of such employees shall increase by 50% or more over a short period when nothing whatever has occurred to increase their productivity. I went years working my way through school doing such work and it is very hard work indeed. The people doing it earn every penny. Yet those who did it 5 years ago at considerably less cost to the employer than those who do it today worked just as hard as their counterparts today. If those doing such work today are doing the same work, and their productivity has not materially increased, yet they are getting paid 50% more, something has to give.<p>This article basically dances around the obvious by tying the discussion to the considerable expense of living in SF and to collateral issues affecting the city&#x27;s living environment. In doing so, it does not discuss the obvious: when supply and demand dictates what people will do, and you arbitrarily raise the cost of something, it will affect demand by lessening it.<p>That is why SF restaurants are moving to less labor-dependent models of doing business. Not all will do so but the laws of supply and demand have given them an incentive to do so and it should surprise no one that a good number of them are adapting.<p>Perhaps this is all worth it because those who are now working as waitstaff in SF restaurants are doing much better financially and this is worth the trade off. But no one should pretend that this does not come at a price, perhaps a very high one, for those whose jobs have vanished along with the new business models. (By &quot;new&quot; here, I mean not that no one has had self-serve models before, which they obviously have, but &quot;new&quot; in the sense that restaurants that would before have never considered such models are now adopting them).