THOMAS BAILEY*

A Case Study of Immigrants in the Restaurant Industry

THE RECENT CONGRESSIONAL ACTION on comprehensive im- migration reform highlights the ongoing controversy regarding the labor- market effects of foreign immigration. The enactment of an immigration law surely will not end the debate. So far, available data have not supported definitive analysis of the immigrant impact. Given this lacuna, judgments about the labor-market reactions to immigration restriction depend heavily on the particular characteristics of the immigrant labor force that the analyst chooses to emphasize. Most labor economists focus on low skill levels among many recent immigrants and argue that they are therefore direct substitutes for low-skilled native-born workers. Consequently, they argue, immigration restriction would result in higher earnings and lower unemployment for this group (Chiswick, 1982; Johnson, 1980). MichaeI Piore (1979), however, em- phasizes the immigrants’ lingering orientation to the cultures and economies of their home countries and the resulting differences between the values and expectations of immigrants and those of natives. Due partly to these differences, according to Piore’s argument, the two groups occupy different segments of the labor market. Following this view, a reduction in immigration would not necessarily improve the labor-market status of native workers.

This paper argues that to assess the consequences of immigration restriction, we need a more concrete understanding of the contrasts and similarities among the labor-market roles of immigrants and those of natives and a clearer idea of how those roles interact with the structure of labor and product markets. With such knowledge, better judgments can be made both about which characteristics are most important in determining the impact of im- migration and about the labor-market response to immigration restriction.

*Associate Research Scholar, Conservation of Human Resources, Columbia University. ’The terms immigrant and foreign-born are used interchangeably in this paper. Puerto Ricans are not

included, and where the data allow, Western European (immigrants from France, Germany, the low countries, Scandinavia, Austria, Switzerland, and the British Isles), Canadian, and Soviet immigrants are excluded. While the remaining immigrants are a diverse group, they have in common a transitional experience that they do not share with the native born. Immigrants are in the process of moving from

INDUSTRIAL RELATIONS, Vol. 24, No. 2 (Spring 1985). 01985 by the Regents of the University of California. oO19/8676/85/215/205/$10.00

205

206 / THOMAS BAILEY

These issues are explored through a case study of immigrants and other groups employed in New York City’s restaurant industry.’ This industry is a good subject for analysis because it employs large numbers of the members of the groups with whom immigrants are believed to compete; it serves diverse output markets; and it uses a variety of production processes. Fur- thermore, as a retail industry, it is insulated (although not completely) from foreign or regional competition. Unlike some manufacturing industries, the restaurant industry survives and, indeed, flourishes in areas where immigrants are not available.

The study is based on information collected in open-ended interviews conducted in 1981 with about 90 restaurant owners and managers in New York City3 and supplemented by publicly available data. The analysis shows that important differences in the roles played by each demographic group reduce the direct competition between immigrants and others, partly because substitution among the groups requires shifts in production processes and input sources. Surprisingly, given the newcomers’ low skill levels, a reduction in the immigrant labor supply would be likely to lower, not raise, average restaurant skill and wage levels.

Structural Characteristics of the Restaurant Industry Between 1970 and 1983, restaurant employment in the United

States grew twice as fast as total private-sector employment-112 and 54 per cent, respectively (U.S. Department of Labor, 1971 and 1984, Tables B-2 and C-2). The expansion of the industry’s employment has been fed by the rapid growth of female labor force participation, the bulge in the cohorts of teenagers and young adults in their twenties, and in some areas, by the resurgence of immigration. By 1970, when the foreign-born accounted for 18 per cent of New York City’s population (U.S. Bureau of the Census, 1970c, Table 81), they comprised 40 per cent of the restaurant labor force. Ten per cent of all male immigrant labor-force participants in New York City were employed in restaurants that year.4 The industry is also a major employer of

one culture to another and between economies with large differences in standards of living. Almost all immigrants maintain, at least for a time, an ambivalence with respect to their commitment to the host vs. the home society.

zThe author acknowledges helpful comments from Marcia Freedman, Carmenza Callo, Eli Ginzberg, Thierry Noyelle, Michael Piore, Roger Waldinger, and, particularly, Harry Katz. Financial support for this project was provided by the Revson Foundation and the Sloan Foundation.

”Seventy of the New York City eating-and-drinking places in the sample were chosen at random from a list provided by the New York State Department of Labor. In order to learn more about immigrant- owned restaurants and chain outlets, 21 additional restaurants were chosen that were not on the Department’s list.

‘These figures were calculated by the author from the 1970 Census Public Use micro data tapes.

Immigrants in the Restaurant Industry I 207

teenagers and adult women (20 and older), who accounted for 31 and 43 per cent, respectively, of the industry’s U.S. workers in 1980 (see Table 1).

While the representation of these groups in the industry suggests strong competition among them, the aggregate data obscure the contrasting roles that each plays. A more disaggregated look at the industry’s markets and production processes brings these differences into focus. The industry can be divided into three distinct sectors-the fast-food, the intermediate, and the full-service sectors. Each sector uses different production processes and relies on different worker groups (see Table 2). A fourth sector, consisting of establishments owned by immigrants, also exists. While the production process is similar to that used in the full-service sector, the immigrant sector has unique aspects and plays an important role in differentiating immigrants from the rest of the industry’s labor force.

Thefast-food sector. The fast-food sector is the fastest growing segment of the industry. Between 1967 and 1977, fast-food outlets increased their market share of all eating places from 19 per cent to 37 per cent (U.S. Bureau of the Census, 1967, Table 2; 1977, Table 4). Fast-food establishments owe their success to low prices, fast service, and advertising. Cost savings derive from a limited menu that allows almost complete standardization and from high- volume purchasing, the use of expensive and highly specialized machinery, off-premises food preparation, and simplified work procedures. This production process has obviated the need for skills associated with preparing or serving food and, along with the use of disposable plates and utensils which eliminate dishwashing, has reduced the labor share of fast-food sales to less than 20 per cent. Some fast-food managers interviewed for this study reported labor shares as low as 12 per cent. In comparison, the average labor share for all eating places is 28 per cent (for full-service restaurants it is close to 50 per

TABLE 1

RESTAURANT (SIC 58) DEMOGRAPIIICS, 1980 __

New York SMSAb ____ U.S.’ SIC 58 All industries SIC 58 All industries

Per cent male 1 6 1 9 20-24

16-19 2&24

Male Female

Per cent female

Per cent black

40.4 13.8 7.8

59.6 17.0 12.2 8.1 3.5 4.6

57.4 3.7 7.5

42.6 3.4 6.7 9.6 4.8 4.8

66.3 7.7 9.3

33.7 6.1 6.2

10.3 6.1 4.2

55.1 2.1 5.7

44.9 2.2 5.9

14.9 8.7 6.2

&Data from U.S. Bureau of the Census, 1980a, Tables 287 and 289. ‘Data from U.S. Biireair nf the Census, 198Oc, Tables 228 and 230.

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Zmmigrants in the Restaurant Industry I 209

cent). The fast-food sector represents the extreme of a more general trend in the industry in which employment is shifted to the manufacturing sector for the production of pre-prepared foods and plastic and paper goods, and food-service establishments are limited to a retail function. One of the im- plications of this trend is that it opens employment in the industry to competition from other regions or countries.

The fast-food technology has resulted in production processes that minimize the costs of employee turnover. The elimination of cooking skills and the routinization of managerial procedures reduces problems associated with training and retaining workers as well as managers. Since none of the jobs is specialized, fill-ins can be found easily on short notice among the other employees. In large chains, if the instability is anticipated, the centralized hiring can be adjusted appropriately. According to managers, annual turnover is at least 100 per cent (one district manager of a successful chain reported turnover as high as 500 per cent in some stores).

Moreover, part-time, unstable employment actually has advantages for operators in the sector. The industry has significant seasonal and daily fluc- tuations; with constant turnover, seasonality can be absorbed by slowing or accelerating hiring. The size of the workforce must respond directly to the hourly fluctuations of business since food arrives at the outlet already prepared except for final heating or frying, which must be done immediately before the food is served. Part-timers provide this flexibility. As a result, the majority of the employees in the sector are part-time, short-term workers. For example, a telephone survey of 25 fast-food outlets selected at random &om the Manhattan units of four chains, found that at least 60 per cent of all workers in each of three of the four chains were part-timers with less than one year’s tenure (Bailey, 1983).

The fast-food sector depends primarily on teenage workers. As the sector itself has increased its share of the food service market, the teenage share of the industry’s employment has also grown. Between 1960 and 1970, the percentage of the industry’s workforce that was younger than 20 years old increased from 11 to 22 per cent and the median age for male workers in the industry fell from 42.0 to 32.7 (U.S. Bureau of the Census, 1960, Table 4; 1970a, Table 32). The trend continued throughout the seventies; by 1980, the teenage share of the industry had risen to 31 per cent, and during that decade the teenage share in the New York SMSA d ~ u b l e d . ~ In the fast-food chains surveyed in Manhattan in 1981, 65 per cent of the nonmanagerial

%Since the definition of the New York SMSA changed between 1970 and 1980, this comparison was made by combining the New York and Nassau-Suffolk and Passaic SMSA’s for 1980 and the New York and Passaic SMSA’s for 1970. (U .S . Bureau of the Census, 1970c, Table 187, and 1980b, Table 230).

210 / THOMAS BAILEY

employees were less than 21 years old, and a national survey conducted in 1982 found that 71 per cent of all fast-food hourly workers were 20 or younger (Charner and Fraser, 1984).

In contrast to the sector’s dependence on youth, fast-food outlets in New York City employed few immigrants, according to representatives of Burger King, McDonald’s, Wendy’s, and Nedick‘s. Given the many similarities between recent immigrants and teenagers, this sharp contrast at first appears surprising. Like teenagers, immigrants often have few skills and therefore have limited alternatives to restaurant jobs. Furthermore, teenagers and many immigrants often have a temporary or short-term employment perspective. For teenagers, restaurant employment is a short-term expedient to be followed by more remunerative activity with higher satisfaction. And for immigrants, as Piore (1979) argues, the continued identification with the sending society and lingering plans to return there tend to minimize the importance of long-term opportunities associated with their jobs as well as the disadvantages inherent in the low- status of restaurant employment.

Despite these similarities, there are important differences between teenage and immigrant workers. First, language deficiency becomes an increasing disadvantage for many immigrants as the relative importance of retail tasks increases. Furthermore, although both groups may share a short-term per- spective on their restaurant employment, the factors that cause that perspective differ and therefore the short-term horizons have different effects on the behavior of members of the two groups. To the extent that a primary purpose of immigration is to generate savings or remittance to be used in the home country, the immigrants’ objectives are to maximize income and minimize consumption, a goal best met by intensive employment and long workweeks. Teenagers, on the other hand, have a temporary perspective because they are engaged concurrently in other, more important activities (e, g., going to school, socializing, participating in sports, etc.). Thus, their objectives are to minimize the time spent at work.

Hours-of-work data reflect these differences. In 1970, 80 per cent of all male foreign-born and only 27 per cent of all 16-to-24 year old native-born restaurant workers in New York City worked at least 40 hours a week.fi Employers also reported that they expected immigrants to have longer tenure and to be absent less often than native-born teenagers, a finding also reported in a study of San Diego restaurants (Nalven and Frederickson, 1981).

This comparison does not control for age because the relevant policy issue concerns the contrast between native-born teenagers and all immigrants, not just teenage immigrants. The data were calculated by the author from the 1970 Census Public Use data tapes.

lmmigrants in the Restaurant Industry I 211

Given these contrasts and the nature of the fast-food production process, the preference for teenage workers becomes clear. The part-time, casual goals of teenagers are a better match than the goals of immigrants for the personnel needs of fast-food restaurants. And as the preferred workers in the sector, teenagers benefited from the sector’s expansion during the seventies. Therefore, in the New York SMSA, despite the increase in the immigrant share of the population, the teenage share of restaurant employment almost doubled over the decade.

The intermediate sector. This sector, which in the country as a whole accounted for 40 to 45 per cent and in New York City for about 15 per cent of the industry’s sales, is characterized by price, skill, and employment- stability levels that lie between the fast-food and the full-service sectors. Typical intermediate restaurants include coffee shops and steak houses. Two characteristics distinguish this sector. First, unlike the fast-food sector, in- termediate sector restaurants have table or counter service, although it is less formal than the full-service sector. Second, although the menu is more extensive than the fast-food sector, it usually consists of a limited number of easily prepared items. The limited menus, the extensive use of pre-prepared foods, and the informal atmosphere obviate the need for the well-developed cooking and serving skills that predominate in the full-service sector.

Nevertheless, the production process in the intermediate sector is not as resistant to the problems of instability as it is in the fast-food sector. The required skills cannot be learned in a few hours, and the workers are not as interchangeable as fast-food workers. For these reasons, managers in this sector seek workers who are more dependable than teenagers, but who still do not look to the industry for a stable, long-term income adequate to support a family. At least in New York City, few teenagers are employed in this sector. Adult women are the preferred labor force for these restaurants; they account for the large majority of intermediate-sector workers. Even in New York City, women are the primary source of workers in the dining room, where language problems stand in the way of immigrants.

Although many female restaurant workers would move to full-time secure jobs if they had the opportunity, restaurant work does offer advantages to women with outside responsibilities. Part-time hours and dispersed locations facilitate the coordination of work with other activities, whether they be child- or employment-related. Even though women often have long tenure in the restaurant industry, many continue to view their employment as secondary

212 / THOMAS BAILEY

or short-term.’ Thus, while these women workers are more stable than teen- agers, their attachment to the industry often remains tenuous, if not in reality, at least from their own point of view, as well as that of their employers. This mixture of relative stability and continued weak psychological labor-force attachment makes many adult women an attractive labor supply for this sector of the industry.

The full-service sector. The full-service sector, which accounts for about 10 per cent of the sales of eating places in the U.S., is characterized by full table service and by menus and food preparation processes that require developed and versatile cooking skills. For most full-service restaurants, tech- nology and production methods have changed little over the last 20 years. Some labor-saving machines have been developed, but these have not resulted in the qualitative changes in production wrought by the fast-food technology. Full-service restaurants start with raw food which is processed initially by unskilled or semiskilled workers, cooked by skilled workers, and served by waiters and waitresses. For these reasons, the labor share in total sales is at least twice the share for fast-food restaurants.

These restaurants operate best with attached workers in even their unskilled jobs. Although it is easy to find unskilled workers to fill openings, managers avoid the revolving-door employment that is common in the fast-food sector, instead relying on hll-time, long-term workers.8 Hiring and screening workers is time-consuming and risky. Full-service managers must concentrate on the quality of their food and service and do not want to expend effort constantly searching for dishwashers and porters.

Full-service restaurants also have a more rigid job structure than fast-food outlets. Since workers are not interchangeable, it is harder to find a fill-in on short notice, particularly in smaller restaurants, and for even unskilled workers, each restaurant has its unique procedures that must be taught to newcomers. Moreover, part-timers are less useful in the full-service than in the fast-food sector. The unskilled kitchen work can be spread over the work day more easily than in the fast-food sector-simple food preparation tasks

:This paradox is evident among waitresses interviewed by Louise Howe for her book Pink Collar (1977). As one waitress mused, “I guess even though I’ve been doing it so long, I’ve never really identified myself as a waitress. You can be in it for twenty years and still think it’s a temporary thing” (p. 125).

!‘Full-service managers interviewed for this study reported that many of their low-level workers had long tenure. For example, one owner said that not one of the 11 workers in his kitchen had left in the previous three years. Another said that his day-shift turnover was only 5 per cent. According to him, “You couldn’t beat them out with a stick.” Still another said that most of his dishwashers had been there for several years. Only three of 19 full-service managers complained that turnover in their kitchens was high. Even high average turnover rates in the kitchens can obscure underlying stability. For example, a typical pattern is that several workers move through a job in a short period of time until one is found who stays.

Immigrants in the Restaurant Zndustry I 213

can be carried out during off hours, and dirty dishes can be allowed to pile up during the peaks.

Although over the last decade there has been a large increase in the number of formally trained cooks in the U.S. (Yarrow, 19841, most workers, especially those who cannot d o r d the expensive tuitions at most cooking schools, must still rely on learning skills on the job. But despite the importance of on-the- job training, there are no stable and recognized structures for on-the-job skill acquisition and advancement, except in a few large restaurants. Small firm size and erratic profits preclude the development of formal training programs, and the managers of these restaurants evinced little interest in devoting time to informal training. Training efforts are limited to teaching workers firm- specific procedures and skills; the acquisition of more general skills is left to the initiative of individuals and the interest that skilled workers may have in teaching. In practice, workers almost always must move among restaurants in order to learn a reasonably wide range of skills (Taylor and Piore, 1968). Acquiring skills is therefore an unorganized and haphazard process and one that depends heavily on luck and personal networks.

Because of the requirements of the production process, teenagers are not used. None of the 19 full-service managers interviewed for this study said that he/she hired teenagers. Immigrants are the preferred workers for the kitchen jobs. Almost all of the unskilled jobs in New York City are held by relatively recent immigrants-Latin Americans, West Indians, Asians, and Middle Easterners. Semiskilled jobs and skilled jobs that do not require formal training are held by many recent immigrants, but also by immigrants from Eastern Europe. With respect to women, although they hold almost 90 per cent of the waiting jobs in the industry (U.S. Bureau of the Census, 1980d, Table 4), the best such jobs are often closed to them. Waiting jobs in the most expensive restaurants in New York traditionally have been held by European and native-born white men. These jobs have only recently, under the threat of litigation, been opened to women. The second rank full-service restaurants do employ waitresses, but managers usually draw these women, as they do many men, from New Yorks pool of underemployed actors and other artists.

The immigrant sector. In New York City, immigrant ownership of restaurants is more important, in relative terms, than immigrant restaurant employment. For example, 60 per cent of the establishments in a 1981 survey of a one-in- fifty sample of restaurants in Manhattan, Brooklyn, and Queens were owned

214 / THOMAS BAILEY

by first-generation immigrants (Western Europeans were not included in this group).

The production process in immigrant restaurants is much like that used in the full-service sector. Some immigrant restaurants have taken advantage of changes in technology, but in even moderate-priced establishments, the large and varied inenus and the relatively light use of pre-prepared foods prevent the elimination of cooking skills (which almost exclusively are learned on the job). In contrast to fast-food managers, immigrant and native-born full-service owners depend on the availability of a supply of restaurant workers, both unskilled and skilled, who are more or less attached to the industry. Never- theless, there are important differences between the immigrant and full- service work processes.

The mobilization of family, ethnic, and social ties within the immigrant community is a fundamental aspect of the functioning of these restaurants. Many, in fact, operate with no paid employees. When workers are needed, restaurateurs in this sector, with some exceptions, hire immigrants exclusively, often from their own home countries. Even when the workforce extends beyond the family to other immigrants, the owners and employees often accept a set of obligations that are characteristic of a family enterprise.

In this sector, immigrants have greater access to managerial and waiting jobs than they do in the full-service sector, where waiting jobs are often filled by young, white, underemployed artists. To the extent that there is movement into managerial positions in the full-service sector, it usually involves promotion of these workers, not immigrant or minority kitchen workers. Therefore, the existence of a significant immigrant sector opens opportunities for immigrants that would be less accessible otherwise.

Immigrant owners also evinced more interest in training than did their native-born counterparts. Almost all of the latter stated that they did not have the time or the incentives to train, except to acquaint workers with the particular routines of the restaurant, while the immigrant owners were more likely to view training as part of their role.'" The experience of workers in the immigrant sector is not always positive, however. Owners are in a position to take advantage of the vulnerability and ignorance of recently arrived coun-

T h e r e were 156 restaurants surveyed in these three boroughs; 92 were owned by first-generation immigrants who were not from Western Europe; 60 of the 92 were owned by Greeks, Italians, and Chinese; 9 were owned by immigrants from Western Europe. A breakdown by price range and nativity of the owner shows that 66 of the immigrant-owned restaurants offered meals at less than $8, while only 31 (out of 64) of those belonging to native-born owners offered meals in this price range.

T h i s observation is consistent with the conclusions of Wilson and Portes (1981), who found that Cuban immigrants employed in Cuban-owned firms experienced faster earnings growth and greater job satisfaction than similar immigrants employed in secondary-sector firms with native-born owners.

Immigrants in the Restaurant Industry I 215

trymen and the insulated environment of the immigrant firm may slow in- tegration into the mainstream economy.

But even when the treatment of the workforce is not unusually harsh, the labor process in this sector apparently benefits the owners. The use of family labor, the low wages, the long workweeks (six ten-hour days are a common pattern), and the tax and labor standards evasions that are common among these restaurants create advantages in cost and flexibility that allow them to compete successfully in the low-priced segments of the market that are in- creasingly dominated by chains using a different technology. In New York City, almost all cheap, nonchain restaurants are immigrant-owned. l1

Contrasting Roles of Black Men and Immigrants A comparison of the interactions of blacks and immigrants within

the context of the restaurant industry’s distinct sectors reveals important differences between these two groups of workers.

In 1980, over 146,000 black men worked in the industry, accounting for 8.7 per cent of all employed male restaurant workers (U.S. Bureau of the Census, 1980a, Table 126). In contrast to the immigrants’ overrepresentation in the industry both as workers and as entrepreneurs, black men were sig- nificantly underrepresented. For example, in 1980 they represented 15.7 per cent of all of the New York SMSA’s employed male workers, but they accounted for only 9.2 per cent of all the SMSA’s male restaurant workers (U.S. Bureau of the Census, 1980b, Table 228). The underrepresentation of black men was even greater in the country as a whole. Their representation among owners is even weaker. While almost 100 of the 156 units included in the survey of New York City restaurants were owned by immigrants, only 2 were owned by native-born blacks.

One factor that may help explain these differences is that recent immigrants compare low-quality jobs in the U.S. to even worse opportunities at home. For blacks, low-wage restaurant jobs do not benefit from such a comparison. Therefore, at the least, immigrants are willing to take restaurant work at wages well below those that would be acceptable to large numbers of native- born adult black males. But the differences are more than ones of perception; the structure of opportunities that face these two groups makes restaurant employment more attractive to immigrants than to blacks.

”Among the surveyed restaurants, of the 31 nonimmigrant-owned units servings meals for $8 or less, 13 were parts of chains, five were at the upper end of the price range (average checks above $6), and three were owned by semnd-generation immigrants who either had close ties to their immigrant communities or who operated exclusively with family members.

216 / THOMAS BAILEY

First, many common routes of mobility are often closed to first-generation immigrants who arrive with few skills and low levels of education. Language problems, age, and the need for immediate income often foreclose the possibility of using education as a means of upward mobility or as an entry to career employment. Access to primary-sector job ladders is also restricted. Therefore, over even the long-term, immigrants are often limited to opportunities available in the secondary-sector industries in which they are initially employed. Many blacks, on the other hand, find employment in the country’s basic industries. Those who do not are likely to view restaurant jobs with considerably less enthusiasm than do immigrants. l2

Discrimination is another factor that keeps blacks out of the industry, barring them especially from the better waiting and managerial jobs. During field interviews, two managers of full-service restaurants actually stated that they preferred not to hire blacks as waiters because customers complained. Whether this reflects the clients’ or the managers’ perspective, the effect on the employment of black waiters is the same. It is significant that when the supply of European waiters fell during the sixties, New York City’s full-service sector did not hire blacks into these relatively high paying jobs, but used artists and actors instead.

Another important factor has to do with family and ethnic ties in the immigrant community. The immigration process itself selects for individuals who are integrated into social networks. Family reunification is a primary means of obtaining permanent resident status, and friendship and family ties are characteristics that enhance the possibilities of illegal entry or employment. These ties are also resources for capital accumulation, job finding, skill ac- quisition, and business relationships. They are particularly important in the fragmented restaurant industry that lacks organized and predictable structures for skill acquisition and job promotion. Although informal and reciprocal relationships are important among lower class blacks, these ties appear to be weaker among blacks in the labor force (Stack, 1974). The ineffectiveness of informal networks among blacks is demonstrated in their unusual dependence on formal labor market intermediaries for job finding (Osterman, 1980).

Finally, the strength of informal networks is closely related to the contrast in the importance of entrepreneurship among the two groups. Because of the absence of black-owned firms, blacks do not benefit from the greater opportunities for acquiring cooking and entrepreneurial skills and the better access to higher-paid dining room and managerial jobs that are available to

‘2Piore (1979) argues that earlier in the century, native-born, rural-to-urban blacks were willing to work in low-status jobs because they too compared them to worse opportunities that they had left behind. He suggests that a fundamental cause of the civil rights movement was the resentment of the children of these migrants, who found themselves confined to low-quality jobs such as those in the restaurant industry.

Immigrants in the Restaurant Industry I 217

the foreign-born in the immigrant-owned sector. Employment as a dishwasher with the aim of moving up to skilled positions or to entrepreneurship is simply not as good an investment in terms of opportunity costs or expected return for black workers as it is for immigrants.

Discussion and Conclusions This analysis has shown that the labor market roles of immigrants,

teenagers, women, and blacks in the restaurant industry are distinct. Each group (with the exception of blacks) dominates the labor force of a separate sector-teenagers in the fast-food sector, adult women in the intermediate sector, and the foreign-born in the immigrant sector. In the full-service sector in New York City, immigrants fill the unskilled and semiskilled kitchen jobs, while white, adult native-born and European men dominate the dining room jobs.

The study has also highlighted weaknesses in the models most commonly used to analyze the labor-market impact of immigration. On the one hand, the static concept of skill level that forms the foundation of the neoclassical analysis of the issue is inadequate for understanding the role of immigrants in this industry and how that role contrasts with those of other groups. On the other hand, Piore’s labor-market segmentation analysis is incomplete. While he dgerentiates the immigrant role from that of primary-sector workers, his framework does not identify the many contrasts among immigrants and other secondary-sector workers, such as the teenagers and adult women who account for the large majority of restaurant workers.

Zmplications of immigration restriction. Given their different roles, direct one-for-one replacement of immigrants by natives on a long-term basis would be a relatively unimportant labor market adjustment. Since each group tends to be most appropriate for a different sector, most replacement of immigrants by natives resulting from immigration restriction would come about through changes in the relative sizes of the industry’s sectors. Full-service restaurants would replace expensive immigrant restaurants, while fast-food outlets and the coffee shops and steak houses of the intermediate sector would replace Greek-owned diners, Italian pizzarias, and modest Chinese restaurants. But since shifts in the relative size of the sectors would involve changes in the sources of capital and in production techniques, and possibly a shift to producing pre-prepared foods and paper products abroad, the labor market impact would be less immediate and of lesser magnitude than direct competition among worker groups.

218 / THOMAS BAILEY

A second aspect of the immigrant labor-market-impact controversy is the effect of immigration restriction on employment upgrading. Opponents of restriction often argue that immigrants take jobs whose low wages and status make them unattractive to natives. According to this view, the immigrants’ willingness to accept such employment is partly a result of comparison to worse jobs at home. Advocates of immigration restriction counter with the claim that by tightening the labor market, reduced immigration would lead to upgraded employment in secondary-sector industries, thereby attracting native-born black men and other workers who now spurn such jobs.

In the restaurant industry, the extent ofupgrading depends on the elasticity of demand for the meals of the various sectors as well as the elasticity of supply of the alternative sources of labor (Bailey, 1983). Our analysis of the structure of the industry suggests that the upgrading effect would be weak. First, immigrant-owned restaurants compete primarily with intermediate- sector establishments that depend on weakly attached workers. Consequently, to the extent that the intermediate sector would be strengthened, the change in production processes would not result in upgrading. And full-service res- taurants that lose a supply of attached immigrant workers either would move towards an intermediate-type production process depending more on pre- prepared foods and less-attached workers or would be replaced by upper- end intermediate restaurants, such as steak houses. Paradoxically, by strengthening the fast-food and intermediate sectors, reducing the supply of immigrants would favor precisely those production processes that depend most on the least skilled and least stable workers, thereby reducing, not increasing, the average wage and skill levels in the industry.

Thus, it is unlikely that immigration restriction would have a strong effect on the restaurant employment of black men through increasing the attractiveness of employment in the industry. In any case, as we have seen, if upgrading did occur, it is not obvious that blacks would get the better jobs. For these reasons, it is not surprising that in 1970 there was no discernible relationship between black male employment levels in the industry in sample SMSAs and the availability of an immigrant labor force (Bailey, 1983).

Some caveats are in order. First, the arguments made here must be considered in light of the possibly unique characteristics of the restaurant industry in New York City. Specifically, relative to other cities, New York City has a greater number of expensive full-service restaurants patronized either by the rich or by businessmen on expense accounts. However, the absence of this part of the full-service sector in other cities has little effect on the arguments presented. The employment of women, blacks, and teenagers is not sensitive to the presence of these restaurants, since few are employed in the sector

Inmigrants in the Restaurant Industry J 219

to begin with. At the low end of the industry, there is no reason that the fast-food outlets, the intermediate restaurants, and the immigrant-owned establishments (assuming the presence of immigrants to own and staff these restaurants) would not interact in the same way in other cities. Although it is possible that large, cosmopolitan cities such as New York generate an unusually strong demand for ethnic food, the spread of Chinese, Mexican, and Italian restaurants throughout the country belies the argument that ethnic restaurants lack appeal elsewhere.

Second, the possibility that restaurant labor and output markets have special characteristics (when compared to other industries) must be considered. A strong demand for ethnic foods in New York City and elsewhere may, perhaps, create unusual opportunities for immigrant ownership in the industry. At the low end of the market, though, the demand for the products of immigrant- owned restaurants has as much to do with the price as with the palate. Greek- owned coffee shops which serve primarily hamburgers are illustrative. Although some try to maintain their Greek identity by serving feta cheese in their salads, this ethnic touch hardly accounts for their success. In any case, im- migrants are overrepresented among the self-employed in the production of many goods and services that are associated with no ethnic group. This suggests that the feasibility of immigrant ownership does not depend only on their comparative advantage in producing ethnic products.

To explore further the possible uniqueness of the restaurant industry, it is useful to look more closely at the underlying characteristics of the argument made here. First, the industry’s small establishment size allows opportunities for entrepreneurship; second, restaurants have many unskilled or entry-level jobs; third, parts of the industry are dominated by informal processes for hiring, recruitment, training, and promotion, as opposed to more formal internal labor markets in large firms; fourth, these sectors compete, at least indirectly, with sectors that are dominated by large firms that use more institutionalized and formal personnel policies; and Hth, the industry has several production processes that depend on workers with different levels of commitment to the industry, ranging from the most casual to the most per- manent. It is the combination of these characteristics in this industry that gives scope to the particular roles of the groups that make up the industry’s labor force.

When the argument is broken down in this way, it becomes obvious that there are many industries that share some, if not all of these characteristics. Despite the economic dominance of large corporations, many industries still have low average firm sizes. Moreover, segmentation similar to that found among restaurants can be seen in other industries. The contrast between

220 I THOMAS BAILEY

sectors engaged in prefabrication, renovation, and new commercial and in- dustrial construction is one example; the competition among supermarkets, 24-hour “convenience” stores, and immigrant-owned green grocers in the food retail industry is another; and yet another can be found in a comparison of the sectors in the general merchandising retail industry, including downtown department stores, suburban discount chains, and independently owned dis- count outlets in the inner city. Other examples exist in manufacturing, and in repair, personal, and professional services.

While this does not mean that the argument in this paper can be applied in its entirety to other industries or to the economy as a whole, it does suggest that many of the factors that shape the interactions between immigrants and natives in the restaurant industry are present elsewhere. The restaurant industry may be unusual in the variety of its labor force and work organizations, but the results of this case study suggest that analysis of these issues can significantly improve our understanding of the labor market interactions among immigrants and other low-wage labor force groups.

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