What An Expensive SF Restaurant That Can't Afford Waiters Tells Us About the Future of Higher Ed

Why chronic understaffing is the new normal.

June 28, 2018

The best place to glimpse the future of higher education may be to visit Souvla, a fine-casual Greek restaurant in San Francisco.

Souvla is what the NYTimes calls a hybrid restaurant, a largely self-service high-quality (and relatively high-cost) dining establishment.

The Times reports that,

"The small menu is so appealing and the place itself so charming that you almost forget, as a diner, that you have to do much of the work of dining out yourself. You scout your own table. You fetch and fill your own water glass. And if you’d like another glass of wine, you go back to the counter."

What does the hybrid restaurant of today tell us about college of the future? 

1 - Employees are expensive, and getting more so.

2 - Colleges, restaurants, and everywhere else are choosing to bring costs into line with revenues by reducing the number of employees.

3 - The result is, and will be, less people to do the work.

From the NYTimes article on Souvla it would be easy to conclude that this is only a San Francisco / high housing cost superstar city phenomena.  While it may be true that labor shortages in service industries are particularly acute in urban areas with crazy housing prices, it is also true that understaffing is the new normal.

Any business, service, or operation that requires people to run is increasingly short on people. This is particularly true of higher education.

State legislators and Tesla driving VC’s might have dreams of replacing faculty with adaptive learning platforms. But in the real world, a quality education is built around skilled educators.

Almost everything that happens at a university that is of any value is done by a person. Education is one of those human tasks where labor can’t be substituted by capital.

The hard work of teaching (what faculty do), and of creating an environment conducive to learning (what many staff do), cannot be automated.

Unlike restaurants, where self-service is a reasonable response high labor costs, higher education can’t so easily absorb the loss of people. Learning resists commoditization. Technology can play a complementary role to educators, but will never be a substitute.

What is valued in education, and what people will pay for, will always be relational at its core. The better the educators and the better the people are at creating a high quality learning environment, the more valuable the education will be.

Unlike other goods, educational quality is always measured on a comparative scale, as opposed to an absolute scale. There is no ceiling to educational quality. No point where an education is good enough. The value of an education is always determined by where it falls in relation to other educational options. This means that the cost of quality education will always tend to increase, as the search for comparative quality (or differentiation) is never done.

Unlike restaurants, taking people out of the educational equation will always result in lower levels of comparative quality.

I look forward to the day when the Hosts from Westworld and the Synths from Humans show up to do our higher ed jobs. That day, despite what the robot worrywarts tell us, is still far away. Heck, I’d settle for an AI smart enough to schedule meetings. Microsoft Outlook has been around now for over 25 years, and the software still hasn’t figured out how to coordinate schedules.

For the fancy San Francisco restaurant with no waiters, the problem is not too few available waiters but too few waiters that will accept the wages on offer. If restaurants raised their prices enough to raise wages then we’d have more waiters. The problem is not the supply of waiters, it is the supply of willing low-wage waiters.

For many reasons, however, restaurants don’t raise their prices all that much. The restaurant world is competitive. Raise prices too high, and people will get their food somewhere else. Or they will keep coming, but reduce what they order.

Colleges and universities face the same dilemma. Our person-intensive industry is also highly competitive. Raise prices on tuition and fees to the level necessary to recruit and retain the faculty and staff necessary to provide a high quality learning experience, and you risk pricing out potential students. 

It is depressing that higher ed costs, and student debt, have gone up just as institutional understaffing has become endemic. Go to any campus and you will find that the faculty and staff are stretched.

Faculty loads are increasing. Reliance on adjunct faculty is growing. And the idea of administrative bloat, from what I see, is mostly a myth. The demands on people working at every level of higher ed have outpaced the supply of people available to do the work.

Jobs that were once done by 2 people are now done by 1. There is little redundancy or resiliency in staffing levels should a key employee have to take time off for family or health reasons.

The real future of higher ed will not be an end to colleges and universities, as some predict. Rather, the future of higher ed will be colleges and universities that operate under chronic conditions of understaffing.

The schools will stay.  But increasingly, the people who make the schools run will be scarce. There is not shortage of people who want to work at every level of higher ed.  There is a shortage of dollars to pay for these people.

The larger story of chronic understaffing is one that I think economists are largely missing. There is far too little analysis on the dual realities of stagnant wages and chronically understaffed organizations. Far too little research has been done to understand the costs for everyone in our society of not enough good jobs to go around, and not enough people to do the work. Too few high quality / well-paying jobs, combined with too few workers within firms / organizations, is the central economic conundrum of our time. Economists should get on the case.

Is your school trying to more (and better) work with less people?


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