It’s the Intermediaries

Magnolia Tree, Aubrey Beardsley [source}

Jon Michael Greer writes about what he calls the metastatic growth of intermediation, a phrase that furrowed my brow for a bit until I worked out that he was referring to the process by which supply meets demand within our increasingly dysfunctional economy. Also: what it means for workers and peasants when so many intermediaries insert themselves into that process.

Though it wasn’t among the examples cited, the food service industry was the first to come to mind, because that’s where I spent much of the last 20 years. During that time the giant food service producers began supplying much of what is served out of restaurant kitchens today. (Think your casual-dining restaurant is making that pumpkin ravioli from scratch in its own kitchen this fall? Not likely.)

Also quick to mind: the food delivery services that rocketed to ubiquity during the shut-down period of the pandemic, when nobody could go to restaurants but everybody still wanted to eat food prepared by others.

I was on my last months working in the industry at the time, managing a cafe, and these services were presented as a solution to the problem of continuing to serve customers during the lockdown.

They were not a solution. They were another service attempting to squeeze a few more pennies from an already strapped sector of the economy by inserting themselves into the supply-and-demand equation. Our margins could not accommodate them, and at a cost of 15-20% of a given ticket, I daresay few indie food businesses could.

Yet these delivery companies were everywhere, driven by demand. Many of my friends used them, believing they were helping their local restaurants stay in business. Clearly, more than a few food businesses were saying, “Sure, let’s give that a try.” So where did they find that extra 15-20%?

Understand that the largest cost of running any food-based business is labor, with the price of real estate a distant second. If your landlord won’t give you a break on rent, and you’ve tapped out — or don’t have — a line of credit with your bank — you’re probably going to look for cost savings on the labor side of your profit & loss sheet.

Which means shifts get cut, and work gets redistributed among three servers instead of five, and two cooks instead of four. It means those cooks get pressed into service as dishwashers, and the servers take on the duties of the bussers. It means exhaustion for those who remain, and impoverishment for those who are let go, not to mention poor service and long waits for the diners who come out, leave dissatisfied, and write pissy reviews on Yelp.

Many of those food service workers who were let go would have loved the chance to open their own business, my cafe’s chef among them. Little lunch counters and walk-up food joints, street carts and food trucks, in particular, ought to be relatively inexpensive options that have the added benefit of making for a vibrant food scene in any community. But even these options are not available, due in no small part to the parasitic scourge of intermediation. As JMG writes:

Go to any town in flyover country and walk down the streets, past the empty storefronts where businesses used to flourish. There are millions of people who would love to start their own business, but it’s a losing proposition in an economy in which governments, banks, and property owners demand so large a cut that most small startup businesses can’t break even. 

Once you start looking, you can’t not see it. So much of the vaunted “job creation” in our economy is really the insertion of intermediaries into the supply-and-demand equation. I’m thinking of my farming friends who employ a social media manager to maintain their online presence across the multiple platforms their customers expect to find them. The money to pay that manager is squeezed out of the produce these farmers grow, which is to say, out of their pockets. But without a social media presence, they flounder, and they don’t have time to do it themselves. They’re farmers, they already work 12-hour days.

And so it goes.

Speaking of farmers, and pumpkin ravioli, I am embracing October. I’ve been invited to go apple-picking, so I’m baking Deb’s apple cake this week. Don’t you wish you were my neighbor?

All Harness, No Horse

A little over year ago I wrote about the pressure we were facing in the early days of the pandemic (though we didn’t yet know those were the early days) to get back to normal, That pressure continues, especially in the food service industry, where workers are expected to slip back into the harness as if nothing in the intervening months should have any bearing on their willingness to do so.

I say “their” willingness, because I’m no longer among them. But my radar still pings every time a local food establishment bemoans their inability to hire sufficient staff now that pandemic restrictions have been lifted here.

All Those Harnesses, No Work Horses.

Alas, the pandemic itself has not disappeared. We’re still seeing a rate of infections in the U.S. similar to last summer. You remember last summer. We passed 100,000 U.S. deaths from COVID-19 right around Memorial Day last year. We’re now approaching 600,000. More than 3500 people died this week alone. New infections topped 20,000.

So there’s that.

There’s also something called the sub-minimum wage for tipped workers. Ever heard of it? A surprising number of people haven’t, even though most states allow it. Only Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington do not.

Indiana’s Sub-Minimum Wage

The state of Indiana, along with several other low-wage states, allows restaurant employers to pay tipped workers as little as $2.13 an hour. Which is the Federal sub-minimum rate.

In 2021.

Yes, those employers are required to boost that wage to the Federal minimum of $7.25 if tips are insufficient to reach that level. Though having worked in this industry for many years I can tell you that not all employers follow the law.

Surprise!

Nor do they restrict the job duties of tipped staffers to those tasks in which they are actually able to receive tips. Wait staff is often roped into prep work and cleaning for that $2.13 an hour. And if it’s a slow shift, they might be sent home early, having worked their 90 minutes or whatever for their $3.21 before tips, leaving the remaining staff to do that cleaning and prep work.

Tips Are Not Cash in Hand

But tips are money in the pocket, right?

Nope. Most tips are electronic, which means they’re delivered in the worker’s paycheck, minus all relevant taxes. It’s not like the old days (old, old days!) where you walked out of your shift with a wad of cash to cover the week’s groceries.

And tips depend on tickets.

We don’t have a lot of fine dining here, where a professional waitperson can expect to earn a professional wage. The average ticket in a typical full service restaurant here is less than $50 for a party of two. Sometimes considerably less. A twenty percent tip on that $50 ticket would be $10. If you’re serving to a full house and everyone is ordering big, that might bring you a fair living. But not all diners leave 20%, and very few houses are full right now. They’re certainly not full every night of the week, which means the average hourly wage across a five-shift schedule may not even meet that $7.25 baseline.

A Broken Industry, A Bad Model

The pandemic didn’t break the restaurant industry. It’s been broken for a long time. It’s built on a terrible business model in which customers are expected to subsidize staff pay, with all the bad behavior one might expect as a result.

But the pandemic did hit the restaurant industry particularly hard, first by shutting it down, then by requiring wait staff in particular to be front and center in a fraught re-open, serving a public not always willing, let alone happy, to comply with mask and distancing requirements. As any wait person will tell you, an unhappy diner is not going to tip well.

So it goes.

Then there are are the back-of-house issues to consider, where a slammed night might mean the wait staff gets a nice pay bump, while the kitchen crew who cranked out all those meals is paid the same as if the house were empty. And the crews, some of whom may be (and often are) undocumented and exploited, are unable to ask for a more equitable arrangement because they have no voice.

Restaurant work is hard. It’s stressful. And more than a few of us have decided we’ve had enough. We’ve gone elsewhere. It’s what one does, what one is supposed to do, when work doesn’t work. When there are better – or at least less awful — opportunities elsewhere.

Leave the scolds to whine that no one wants to work those shitty jobs. I mean, seriously. Would you?