Wouldn’t it be great if you could see the future? Well, San Francisco—the “Left Coast”—has a long history of progressive policymaking, and if a law passes here, the chances improve that it could be coming to a city near you very soon. Take, for example, last month’s federally mandated 70-cent increase to the minimum wage. We can take a look at how increasing the minimum wage has or has not improved the lives of families in the Golden Gate City over the past few years as a road map for what to expect from the recent federal hike.
For the record, I’m a chef. Restaurants are a melting pot of America’s workforce. We hire all kinds of people: serious professionals, art students, musicians, ex-cons, the learning impaired and even, once upon a time, teenagers.
Serving on the advisory board of the San Francisco Unified School District’s Academy for Hospitality and Tourism, I’ve helped develop business-minded curricula, offered internships at my restaurant, and talked to students about what it is that chefs and restaurateurs do. One thing that strikes me in every class at every high school where I’ve spoken is that none of these students has ever had a summer job.
These are not rich kids. They are working-and middle-class students of all races, colors and creeds. But they have one thing in common: They can’t find a job. Why? Would you hire a teenager at $12 an hour? Well, with the city’s $9.79 an hour mandated wage plus huge payroll taxes, that’s how much it costs to hire a 16-year-old kid looking for his or her first job experience.
National statistics show this is more than a San Francisco problem. While the unemployment rate nationwide hovers around 10 percent, the rate for teens has skyrocketed to 24 percent. The news for black teens is even worse: 37.9 percent and rising.
What does this mean for our schools, our communities, our businesses and the next generation of professionals? Let me give you an example playing out at restaurants across San Francisco. When I get 17-or 18-year-old interns—students from colleges and culinary institutes—I have to explain to them the basics of holding a job. We’re talking simple ABC’s here—like if they decide to “no-show” and “no-call,” they’re fired.
An entire generation of young Americans is graduating or leaving high school with no understanding of employment, making them largely unemployable.
In addition to pricing teens out of the entry-level workforce, minimum-wage increases crush economic growth in a community. Just because the government tells us to pay more doesn’t mean we can afford it. In San Francisco, I pay nearly as much per hour as restaurateurs in New York, Boston and Chicago pay, combined. And that’s before tips.
Contrary to what the politicians pushing these increases would like you to believe, my wait-staff was not living in poverty before the last wage hike. Many are homeowners. One owns three. In San Francisco, the second-most expensive city in America, the average home costs just under $700,000.
Unfortunately for me, the business owner and employer, while wages have increased relative to other cities, my prices have stayed the same. How do I survive in this business-crushing environment?
Business owners have two main options: increase revenue or cut costs. In San Francisco, there are too many great restaurants to allow you to just raise your prices.
Most people cut, and they don’t cut the waiters, because waiters sell. We cut the bus boys, the cooks and the specialty jobs, like pastry chef, chocolatier, sommelier, butcher and baker—things that can be bought for less than they can be made in-house.
In the last several years we have seen top chefs open second, third and fourth restaurants that are all QSR’s: quick-service restaurants that require a fraction of the workers, none of the specialists and no waiters. With less service you can make more money on fewer sales.
The irony here is that in the most food-obsessed city in the country, we’re killing the full-service restaurants and the high-quality career opportunities they support in favor of pizzerias, taquerias, sandwich shops and hot-dog stands that offer only entry-level positions with less opportunity for career growth, higher skills or specialization.
Also, while we’re laying off more and more workers in an already struggling economy, we’re cutting our sales tax revenue and payroll tax revenue, and therefore running out of money to pay for unemployment.
So, if you were wondering how the latest federal minimum-wage hike will affect your town, just take a look at California’s economy. We’ve served as the guinea pig on a wide array of policy experiments through the years. Don’t say you haven’t been warned.
Daniel Scherotter is the chef and owner of Palio d’Asti Restaurant in San Francisco. He is currently the president of the Golden Gate Restaurant Association.
