For the Data Geeks

http://www.freddiemac.com/finance/report/20170404_service_works.html

If you don’t have a time machine handy, there’s another trick to living in my parents’ ZIP code. A few years ago, Hall of Fame quarterback Joe Montana purchased a house nearby. So all you have to do is win four Super Bowls, and you can move right in.

Will net migration slowly drain the stock of service workers and middle-income families?

While it is difficult to quantify, it is likely that many lower- and middle-income residents in the San Francisco metro area are “legacies”. They can afford to live in the area either because they settled in the area before it became so expensive, they inherited a house, or family ties have incented them (and family financial assistance has enabled them) to remain in the area.

How will San Francisco react to the likely net loss of lower- and middle-income families over the next few decades? Will city and county governments in the metro area implement programs to subsidize or otherwise sustain housing affordability for lower- and middle-income families? Will wages for lower- and middle-skill jobs be bid up as the pool of these workers shrinks? Will companies leverage technology to economize on the need for these skill sets? Or will the cost of living moderate? Will the adjustments in San Francisco be echoed by similar trends in other high-cost metros? The nature of the Bay Area’s urban ecosystem will be shaped in large part by these adjustments, whatever they turn out to be.

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Seattle has $13.50/hr min wage ($15 starting next year). Service at restaurants is horrible. They cut staffing levels to offset higher wages, so servers have more tables. I’m sure it’s cutting into table turns, so it’ll be interesting what happens longer-term. Restaurants will need to find a way to increase table turns without adding more labor or prices will increase. Then they run the risk of customers staying home instead of dining out.

I suspect chains will have the money to invest in automation and we’ll see mom-and-pop places vanish. They won’t have the money to invest in automation, and people aren’t going to pay higher prices. That’s how Walmart became so huge. Most people went to the cheapest retailer and weren’t willing to pay more to support local businesses.