When a Promotion isn’t Worth It

by JT McGee

So, what happens when a promotion isn’t worth it? What if a new job title isn’t worth the money it brings you?

Just the other night I was hanging out with a friend who’s a bartender at a local restaurant. The restaurant certainly isn’t known for its bar, however, the low prices ensure that there is a constant spillover from the family section into the bar.

Therefore, it’s a fairly lucrative position for him – highly-priced “mom” drinks plus a customer that’s willing to tip fairly well make for a good combination.

Anyway, we were discussing the advantages and disadvantages of various positions at the restaurant. This makes for an interesting case because there are no incentives for a promotion. Promotions simply aren’t worth it.

Managers get screwed.

A bartender can expect to make a minimum of $15 per hour, which, when levied against other “college jobs” in a low cost of living place where I live is a fairly decent hourly income. If you work the numbers, it works out to something like $30,000 per year. (50 weeks X 40 hours per week X $15 per hour).

At the bartender level, you’re paid by the hour. There’s no such thing as a salary, obviously.

However, if you “advance” into management, you’re going to earn something like a $35,000 year salary. So, $35,000 for unlimited number of labor hours. And unlimited it is.

From purely anecdotal experience, he claims that managers work at least 60 hours a week. When a new restaurant is opened, and employees are sent away to set the stage for a new location, hours are way in excess of 60 hours per week. One reports working something like 80 hours a week for the first few months, all for $35,000 per year.

Now, there isn’t much that would make someone want to get out of bed every single day for $35,000 per year, especially when you have to deal with employees that won’t show up, skip work because they’re hungover, or who quit a few days in – restaurant turnover is terrible, as anyone knows.

So, if we average it out to 60 hours a week, managers are making significantly less per hour than bartenders for more responsibility. And, frankly, managers are working for income that is taxed. I find it very, very hard to believe that the average server or bartender claims every single dime they make. First because it seems almost impossible, and secondly because it’s not in their interest and tremendously difficult to prove. I can’t be sure – I’ve never worked in food – but something tells me they aren’t claiming all of their income. I just know that “all cash” tends to mean “all sketchy.” The IRS told me so.

What if these incentives are good?

What if paying people less to work in management is actually a good idea?

Look, I don’t know what it takes to run a restaurant or deal with restaurant employees. Someone who thoroughly enjoys telling someone else what to do and who is willing to take a pay cut to do it might be the perfect person to hire.

The only people irrational enough to take a management job in this particular restaurant must be people so power hungry that they’re willing to forgo freedom and a higher per-hour wage just to tell people what to do. In an industry like this, maybe that’s a good thing?

I equate it somewhat to teaching. I’m a believer that there are only two ways to get good teachers: set pay super high (to attract intelligent go-getters) or super low (to attract people that want to be teachers so much that they’re willing to starve to do it.) The restaurant business seems to waddle on that lower extreme.

I don’t really understand it. Most professional jobs provide more income for more work. Restaurants seem to work backwards. More work for less hourly pay, and relatively no change in total compensation.

Is it a cultural difference? Is the culture such that you have to have power-hungry type-A lunatics operate as slave drivers just to get people in? Is it that bad to where you have to have perverse incentives just to get the crazies to show up to work?

I’m not sure.

Anyway, fill me in. If you’ve ever worked at a restaurant, help me understand the culture. Why would any business ever pay someone less for doing more? Does it make sense?

{ 11 comments… read them below or add one }

Mochimac February 26, 2013 at 15:24

Status.

Why do managers at companies take jobs to babysit people for $10K more a year, when you can be the one being babysat for $10K less and not have to work your weekends and nights filling out stupid performance sheets?

Status.

White collar jobs, and saying “I am a manager of a bar/restaurant/whatever” is a lot hotter than saying “I am a bartender/waiter/waitress”.

People love titles. People like a bit more of money to feel like they have power and control, and they feel like they’re one step up on the management ladder.

Reply

PK February 27, 2013 at 10:56

“I manage this chain restaurant!” or

Customer: “Can I talk to a manager?”
Person: “You are.”

Reply

JT McGee March 1, 2013 at 14:15

Makes sense, I suppose. It’s just an interesting way to recruit management, though…pay less?

Reply

krantcents February 26, 2013 at 16:21

There lots of jobs that you take a decrease temporarily to eventually make even more money. Most sales jobs pay well, yet sales management initially are paid less. Waiters can make more than the manger, but do you really want to be a waiter for the rest of your life? I remember a truck driver who was earning more than me at 19 years old when I graduated college. Do I want to be a truck driver at 50 years old. Do you want to be a bartender at 50 or 60 years old. Maybe you want to be the restaurant owner!

Reply

Brick By Brick Investing | Marvin February 26, 2013 at 20:37

Great point! At 22 I wanted to be a bartender making crazy good money but there’s not way I could sustain that career all the way to retirement.

Reply

Mo' Money Mo' Houses February 26, 2013 at 16:34

I worked with a manager at a Blockbuster years ago, and her BF was a server and was then offered a manager position. He ended up passing on it because he did the math and he’d make more in tips so he’d actually be making less money for more responsibility. Ridiculous!

Reply

JT McGee March 1, 2013 at 14:16

That’s exactly the situation my friend was describing. Less money for way more responsibility, and a much greater chance of losing his/her job. Bartenders don’t get fired very often, if ever as long as they play by the rules. Managers are responsible for everyone playing by the rules, including the people they really don’t have much control over.

Reply

Jon February 26, 2013 at 18:21

I don’t understand why they raise the min wage yet waiters make the same 2.35, maybe 3.25 if lucky in some places. Especially when people sometimes don’t tip seems so unfair.

Reply

PK February 27, 2013 at 10:58

Theoretically, the restaurant is supposed to pay the difference between the tips the employee receives and the prevailing minimum wage. In practice? I don’t know how often these conversations happen.

Reply

JT McGee March 1, 2013 at 14:14

Pretty sure 99.999% of food staff make more than minimum wage after tips.

Reply

PK February 27, 2013 at 10:59

“I’m a believer that there are only two ways to get good teachers” – you missed one. One reason we had such good teachers a generation ago was because of the glass ceiling – de facto employment bans where the brightest women were forced into teaching because of stereotypes. I would never advocate bringing it back, but hey, it happened.

Reply

Leave a Comment

*

Previous post:

Next post: