Home > economics, guest post, Uncategorized > The Chef Shortage, Explained

The Chef Shortage, Explained

August 18, 2015

This is a guest post by Sam Kanson-Benanav, a chef who has managed restaurants in Minnesota, Wisconsin, and New York City. He spent two years in the studying global resource marketplaces in the Amazon rainforest, and his favorite food is a french omelet. 

Despite my desperate attempts at a career change, I’ve become fairly inured to the fact I work in one of the most job secure industries in America. And I’m not a tenured professor.

I am a professional restaurant person – cook, manager, server, and bartender (on nights when a bartender doesn’t show up). As a recent Washington Post article highlights: it has become increasingly more difficult for kitchens to staff their teams with proper talent. We could ponder a litany of reasons why talented cooks are not flocking to the kitchens, but if you prefer to stop reading now, just reference Mathbabe’s entirely accurate post on labor shortages.

Or, we could just pay cooks more. As it turns out, money is a very effective motivator, but restaurants employ two cannibalizing labor models based on fundamentally contrasting motivators: tipping and wages. I’ll take these on separately.

Tipping servers suppress wages for the kitchen                 

We already know tipping is a bad system, which bears less correlation to the actual quality of service you receive than to the color or gender of your server. It’s an external rewards based system akin to paying your employees a negligible wage with a constant cash bonus, a historically awful way to run a business.

In other words, restaurant owners are able to pass off the cost of labor for employing servers onto their consumers. That means they factor into their menu prices only the cost of labor for the kitchen, which remains considerable in the labor-intensive low margin restaurant world. Thankfully, we are all alcoholics and willing to pay 400% markups on our beer and only a 30% markup on our burgers. Nevertheless, the math here rarely works in a cook’s favor.

For a restaurant to remain a viable business, a cook (and dishwasher’s) hourly wage must be low, even as bartenders and servers walk away with considerable more cash.

In the event that a restaurant, under this conventional model, would like to raise its prices and better compensate its cooks, it cannot do so without also raising wages for its servers. Every dollar increase in the price of line item on your receipt increases a consumers cost by $1.20 , the server happily pocketing the difference.

Unfair? Yes. Inefficient? Certainly. Is change possible? Probably not.

Let’s assume change is possible

Some restaurants are doing away with this trend, in a worthy campaign to better price the cost of your meal, and compensate cooks more for their work. These restaurants charge a 20% administration fee, which becomes part of their combined revenue—the total pool of cash from which they can pay all their employees at set hourly rates.

That’s different then an automatic service fee you might find at the end of your bill at a higher end restaurant or when dining with a large group. It’s a pre tax charge that repackages the cost of a meal by charging a combined 30% tax on the consumer (8% sales tax on 20% service tax) allowing business owners to allocate funds for labor at their discretion rather than obligate them to give it all to service staff.

Under this model cooks now may make a stunning $15-18 an hour, up from $12-$13, and servers $20-30, which is yes, down from their previous wages. That’s wealth redistribution in the restaurant world! For unscrupulous business owners, it could also incentive further wealth suppression by minimizing the amount a 20% administration fee that is utilized for labor, as busier nights no longer translate into higher tips for the service staff.

I am a progressive minded individual who recognizes the virtue of (sorry server, but let’s face it) fairer wages. Nevertheless, I’m concerned the precedents we’ve set for ourselves will make unilateral redistribution a lofty task.

There is not much incentive for an experienced server to take a considerable pay cut. The outcome is likelier to blur the lines between who is a server and who is a cook, or, a dilution in the level of service generally.

Wage Growth

Indeed wages are rising in the food industry, but at a paltry average of $12.48 an hour, there’s considerable room for growth before cooking becomes a viable career choice for the creative minded and educated talent the industry thirsts for. Celebrity chefs may glamorize the industry, but their presence in the marketplace is more akin to celebrity than chef, and their salaries have little bearing on real wage growth of labor force.

Unlike most other industries, a cook’s best chance and long term financial security is to work their way into ownership. Cooking is not an ideal position to age into: the physicality of the work and hours only become more grueling, and your wages will not increase substantially with time. This all to say – if the restaurant industry wants more cooks, it needs to be willing to pay a higher price upfront for them. This is not just a New York problem complicated by sky high rents. It’s as real in Wisconsin as it is Manhattan.

Ultimately paying cooks more is a question of reconciling two contrasting payment models. That’s a question of redistribution.

But “whoa Sam – you are a not an economist, this is purely speculative!” you say?

Possibly, and so far at least a couple of restaurants have been able to maintain normal operations under these alternative models, but their actions alone are unlikely to fill the labor shortage we see. Whether we are ultimately willing to pay servers less or pay considerably more for our meals remains to be seen, but, for what its worth, I’m currently looking for a serving job and I can tell you a few places I’m not applying to.

  1. August 18, 2015 at 7:25 am

    This seems to be a US-centric analysis. In France, Germany, and Switzerland, service is always included in the customer’s bill, and tips are much smaller than in the US, so servers actually live on their salaries rather than on tips. How does this affect what cooks are paid? And if it’s a better system, what would be the obstacles to switching to such a system in the US?

    Like

  2. CM
    August 18, 2015 at 9:03 am

    Not sure about German restaurants having a service fee, and while a small tip is custom to give it is not really expected. In Italy every customer pays a fee of a few Euros that also covers bread/breadsticks and tip is nonexistent. Honestly, as European, I don’t understand the whole tipping thing. It’s just so discretionary. How are employers and employees supposed to plan on it? Why should I go and eat in a place and tip out of feeling bad because the staff is not paid a fair wage?

    Like

    • August 22, 2015 at 8:32 am

      I’ll assume for the sake of argument that outcomes (the total amount of money in each worker’s hand at the end of the shift) reflect supply and demand. I’ll further assume that the procedures used to calculate the outcomes are a mere formality and the Invisible Hand routes itself around them much as the Internet message traffic supposedly routes itself around censorship and other bugs in the system. Looked at through that particular(ly) biased lens, food service looks to me to be following the same trends as most if not all industries. The jobs that are still in demand are the extrovert jobs. If you’re about my age (and maybe if you’re not, being child-free I wouldn’t know) and took the so-called “ACT” exams you may recall a little human resources-y questionnaire they included in the registration paperwork that scored the respondent’s interest and aptitudes in four broad areas they called (ranked in order of my unfortunate preference): “ideas”, “data”, “things” and “people”. What’s left of the jobs is the “people” jobs, which is why every workforce redevelopment program in the nation is about turning great masses of industrial workers into health care workers. The picture of foodservice minus table service is fast food, but cashiering is of course an extrovert job, or at least a job requiring some communication skills. The picture of foodservice minus customer contact is some hellscape along the lines of Cedexo(sp?) or Aramark.

      Not that kitchen work doesn’t require communication skills, but surely that’s largely communication among colleagues? I don’t know. The original question was something like why is it hard to attract kitchen talent. I don’t know the answer to that question, but I myself haven’t even a scintilla of interest in training in that field, even though I enjoy cooking, because (rightly or wrongly, maybe too much realicrap TV?) I perceive it to be a trade in which hazing is assumed to be the proper personality screening tool, and worker retention operates on the “bull riding” model.

      Like

  3. August 18, 2015 at 9:33 am

    I believe there is a work force who would work in kitchens but the training to work in kitchens is currently filtered through culinary school. The cost of culinary school compares with private college tuition. There is no rational reason to spend money on an education that is not going to give you any sort financial return. Culinary training could be streamlined in ways that opens of the jobs to workers who are searching for jobs but don’t have the skill set to get entry level jobs.

    Like

    • CM
      August 19, 2015 at 3:01 am

      That is what happens in those countries where vocational education is pursued at high school level, obviously for free. It’s a win-win – kids that are less interested in academic pursuits get a general education that is more tailored to their needs, and at the same time they learn a trade, in school and/or as apprentices (depending on the country).

      Like

  4. August 18, 2015 at 9:52 am

    The way things are going in the U.S., it’s more likely that teachers will soon be serving steaming plates of software hash to students and living off tips …

    Like

  5. Min
    August 18, 2015 at 11:26 am

    I used to hang out with people who worked at a sushi restaurant. To my surprise, they pooled all their tips and divided them up equally among all the staff at the end of the day. The boss was not included, OC. Clever people, the Japanese. 🙂

    Like

  6. Abby
    August 19, 2015 at 8:54 am

    I’m a teacher, and I’ve had many colleagues who spend their summers, evenings, and weekends serving or bar tending. So, it seems that many teachers, especially those at the lower ends of the pay scale have to choose whether to spend their time outside the classroom improving their lessons or improving their financial situation.

    Like

  7. Auros
    August 24, 2015 at 4:06 am

    I don’t understand why I need to see a “service charge” on the bill at all. I much prefer the system I’ve seen in other countries where everything, including VAT, is factored into the price on the menu, so I don’t have to do math in my head (or on my phone) to figure out what I’m actually going to pay. 😛

    Like

    • August 24, 2015 at 7:09 am

      I would prefer that type of system, too. If America is immune to that sort of system, it probably has something to do with the Calvinist (in the Coolidge sense) principle that the business of this nation is business. Sales tax as a surcharge is preferable to value-added tax rolled into the price because the business agenda includes having people think of themselves as taxpayers. That’s why there’s so much conservative push to shift tax burden from income taxpayers to sales taxpayers; it’s more “inclusive” in the cynical “dog in the fight” sense. I’m sure that’s always why there’s such a push by mobile phone carriers and other “utility” type business to itemize as many items as possible on the invoice as “government mandated” something or other, be it 911 access or whatever.

      Like

  1. August 22, 2015 at 4:45 pm
Comments are closed.
<span>%d</span> bloggers like this: