I did a column yesterday about cities should re-think liquor license moratorium policies and see bars and restaurants as part of their economic development strategy. The larger point I’d like people to embrace is that it’s worth taking the food (and drink) service sector seriously as a part of the economy.
One reason for that is that the expansion of the division of labor into household tasks is an important driver of well-being for consumers. If we’d never invented mass production of clothing, the need to dedicate a lot of time to home production of apparel would be a big deal for families. It would be crippling to the economic opportunities available to single moms, and it would be deeply enmeshed with the gendered division of labor and constantly cited as a factor that holds married women back in professional settings. But instead of making clothes at home, we buy clothes at the store or on the Internet and we make it in factories.
If it happened to be the case that the most delicious way to eat food prepared was to have a box of it delivered to your house and then you heat it up in the microwave, we’d see a similar trend in food to what we see in clothing. Non-market home production would be increasingly crowded out by professional manufacturing and transportation of goods. But in the real world, heating up boxed food in the microwave is rarely the most delicious way to eat food. So rather than a boom in “food manufacturing” we tend to see an increase in services. For whatever reason, there’s broad cross-ideological bias against services in the United States. But food just happens to be a realm that can be delivered either as manufacturing or as a service, and the service version is better.
On the production side, the food service sector is notorious for relying on a lot of cheap labor. On the other hand, one major virtue of food services is that it offers meaningful career ladders in a way that few other sectors do. Nobody starts out washing the floors at a hospital and ends up being the Chief of Surgery or the CEO. But the President of McDonalds USA started as a crewmember in Detroit. More prosaically, I recently went to a nice Italian restaurant in my neighborhood where the chef/owner was an immigrant from El Salvaor who got his start washing dishes in an Italian restaurant. He moved up to become a line cook then worked at higher and higher levels at fancy Italian restaurants until finally finding himself in a position to open his own place. Which isn’t to say that washing dishes at an Italian restaurant or working on a McDonalds crew is a great job. But, again, upward mobility is at least possible in this sector. You don’t start out as an administrative assistant at Princeton and work your way up to becoming president of the university or getting a tenure track job in the economics department.
Meanwhile, if we made it easier to open bars and restaurants, then restauranteurs would need to hire more waiters and dishwashers and cooks and bartenders and presumably would end up needing to offer higher pay to do so. If the limiting factor of restaurant expansion in your city is licenses or permits rather than available local labor, in effect what you have is a licensing and permitting scheme that’s holding down wages across the board for people who lack formal educational credentials.