Thread: Economist Friedman on Undercutting

Starting at 3:50.

"Most employers who discriminate on irrelevant grounds are not expressing their own tastes, they're transmitting the tastes of their customers. An employer who deliberately chooses less productive people or more expensive in place of less productive, because he has tastes in that way is going to be at a competitive disadvantage in the market. His costs will be higher than the other fellow's costs. And as a result, he will tend to be driven out of business.

"If they worked for lower wages and he refuses to hire them... if they're equally competent, then other people will have an incentive to hire them away and pay 'em higher wages unless everyone shares a prejudice, if there's anyone whose unprejudiced they can hire them away, and do a better job.

"Suppose they really aren't as productive. Then whom are you benefiting by forcing him them to pay them the same wages? You're hurting them. You're hurting him. He's gonna be out of business, they're gonna be out of jobs. Now how do we know which are equally competent or not? How do we decide that? ...in a free market, we each make our own judgment and if we don't interfere with it, anybody who lets irrelevant considerations enter in is going to pay for it because he won't be hiring the most efficient, the most competent, the cheapest groups."

[ame=http://www.youtube.com/watch?v=bZA1Q_1t1E0]YouTube - ‪The Male Chauvinist Pig‬‎[/ame]

Without getting into the ethics of undercutting, what about the economics?

To me, this spiel reads that "If a club owner hires bad and cheap dancers, and if the patrons don't know or care about good dancing, then he won't lose money, because he's simply hiring to the taste of his customers and we have no right to get mad. But if a club owner has patrons who understand the difference, then the owner will lose money if he hires both bad and cheap, and bad and expensive. If you're a good dancer working at cheap rates, and if good dancing is the major concern, then you will be headhunted into another business."

Do you think that the major reason that restaurant work pays poorly is simply because the patrons (Westerners, that is) don't know or care about good dancing? And do you agree that it hurts all dancers by insisting on a base pay rate regardless of experience? I'm reminded of the GS article by Orit on the Israeli dance scene where she specifically says that she does not view undercutters as a threat, because they fall off the map quickly.

...I'm not trying to challenge any current wisdom on undercutting, but I think that a PhD with a Nobel Prize is worth considering. I just like listening to Youtube while I do sequin work.

Oooowwww, flame war in the making! I am a one man show in my area when it comes to dance gigs and teaching, but here is my take on the idea of a free market in the area where i do "suffer" from competition.

In my job (real estate sales) we are expressly forbidden by the Sherman anti trust laws from even discussing our commission structure with one another (outside of the office in which we work). If such a conversation begins to takes place, an ethical Realtor is to leave the room or risk revocation of their license by the state that issued it, and maybe face federal charges as well. It would be considered a conspiracy to defraud the public. The old adage that all commissions are negotiable means that, as a trade association of professionals, we cannot conspire to set a fee amoungst ourselves, because that leaves the public at a disadvantage in contracting for services. Individually we may charge what we feel we are worth, but we are open to competition by every cut rate broker in the area. Does the public really see a difference in our services as long as the job gets done? Perhaps only in the midst of a transaction gone bad when the cant get a hold of their agent because he or she is at their "real" day job. After long contemplation of such "unfair" trade practices, I have made peace with the idea that the marketplace will correct itself given enough time. It is up to me to educate the public I serve in regard to the difference between my fee and that of my competitor. You win some, you lose some, but the next time they have a need for my type of service, they may think harder about hiring the guy that will work for food. The free market is like Karma, slow but sure.

Over time I've seen that indeed the undercutters do fall off the map.
Why?
1) If they're really that bad, people won't even want them for free. Seriously. Patrons DO complain about bad dancing.
2) If they're quality- they are investing in their art through education, music, costuming etc. They generally either burn out and decide "it's not worth it" to do all that work for cheap, or raise their rates to a level that supports their higher standards of dance.

Undercutters DO still need exposure to education on RUNNING A BUSINESS.
What Friedman's speech doesn't take into account is that in the regular job market people are not doing it for ego or on the side of a "real job." There is only a certain level people will stoop to (for the most part) when it comes to a "real job."
While we know belly dance is a "real" job and a real business with expenses etc. The undercutters do not.
No one goes into an accounting job or real estate "for tips and hummous."

in the regular job market people are not doing it for ego or on the side of a "real job."

Snark ahead...You should see some of the overblown personalities that get into real estate! Oh boy, my face on a billboard!

Originally Posted by anala

Snark ahead...You should see some of the overblown personalities that get into real estate! Oh boy, my face on a billboard!

Seriously! Advertising sales is an ego-fest, too. And also, a mega brown-nosing fest.

Some of the characters I dealt with at my last job could have made any Suzy Nippletassels look like a shrinking violet ..c::

Originally Posted by anala

in the regular job market people are not doing it for ego or on the side of a "real job."

Snark ahead...You should see some of the overblown personalities that get into real estate! Oh boy, my face on a billboard!

...the real estate face advertising on grocery store carts always confused (and kind of frightened) me. LOL.

Originally Posted by SatinWorship19

Seriously! Advertising sales is an ego-fest, too. And also, a mega brown-nosing fest.
Some of the characters I dealt with at my last job could have made any Suzy Nippletassels look like a shrinking violet ..c::

Well, yes, there IS ego involved (in every industry, I'm sure)...but a fat commission, bonus or check is ALSO a part of the "prize" in these industries.
That's a far cry from "I get to put on a sparkly costume and they even let me keep the tips."

Originally Posted by SamiraShuruk

That's a far cry from "I get to put on a sparkly costume and they even let me keep the tips."

Yeah....all snark aside, at least even my slimiest, most Eddie Haskell-esque colleagues were able to pay the bills and put food on the table with their earnings. And they didn't swoop into any of my clients' offices and say, "I'll give you ad space if you give me food!"

And while landing a sweet key account is good for the ego, it lacks the sexy cachet of being the house dancer at a restaurant, feeling like a rock star, and getting to wear a sparkly costume every week. ..c::

Plus, sales is a full-time gig and a sole source of income for most people. Belly dancers usually have some other financial cushion to fall back on, whether it's a 9-5er, a trust fund or a generous husband. Otherwise, how would any of these people survive off their meager earnings?

Some thoughts:
My understanding is that good salespeople are sensitive to their customer's business needs, and will not try to sell them stuff they don't need.

I think folks who charge little-to-nothing to dance have not thought through what their customers really need.

This is what I have observed in our area, and it informs our business practice.

1) Dancers are in the entertainment business.
2) Most restaurants that could use entertainment are probably better laid out for music rather than dancing.
3) If the restaurant patrons CAN see you and your dancing is really good, then the restaurant patrons will tend to sit there watching you instead of eating, which will cut into the profits of a venue that relies on a quick turnover of tables, especially if the patrons are not ordering drinks while they watch you.
4) Many restaurants that hire dancers are hoping you will bring an audience with you, rather than to entertain the guests they already have.
5) Most public events are probably better laid out for music rather than dancing (no stage).
6) Public events WITH stages will try to schedule the dancers in between the events and to dance on the ground to hold audience attention while the musicians arrange their instruments on stage. If dancers are on the ground, many audiences will tend to stand up and walk over and form a standing circle so that THEY can see better, the heck with anyone behind them! Therefore, you end up performing for thirty people even if there are hundreds of people in the area.

WHEN we think about proposing a gig to a customer, or accepting one, we try to figure out what THEY need. What they REALLY need. Just because they sell gyros doesn't mean they need a bellydancer! If we can provide equal or better entertainment in the physical venue than a musician can and the customer truly wants us to entertain HIS/HER guests, not to bring our mailing list in through his doors, then there is a possibility that we can both negotiate a decent price and make a happy customer.

However, if a dancer does NOT think through what the customer really needs and expects, then she'll be bouncing from place to place like a ping pong ball, or working for tips if she wants to hold a steady (but unsuitable) venue.

Originally Posted by maurazebra

WHEN we think about proposing a gig to a customer, or accepting one, we try to figure out what THEY need. What they REALLY need. Just because they sell gyros doesn't mean they need a bellydancer! If we can provide equal or better entertainment in the physical venue and the customer truly wants us to entertain HIS/HER guests, not to bring our mailing list in through his doors, then there is a possibility that we can both negotiate a decent price and make a happy customer.

Umm....I think I LOVE you, Maura. Seriously! You have really shared some great insights and made me think this week, so thank you for that

I can understand the desire to share our art along as many different platforms as possible, but the point that I bolded is so, so, so true. It's almost like some dancers have this sense of personal entitlement, that every Middle Eastern venue needs a belly dancer because we're the best thing that happened to Middle Eastern dining since tahini. In reality, it's up to a restaurant owner to decide how to make the dining experience more valuable to his patrons. Sometimes, there just isn't a good fit.

Also, dare I say it, belly dancers can be a cheap crowd when dining out. Restaurant owners probably get annoyed when dancers bring an entourage of their friends and students, but all they do is hog tables and order a plate of hummus split between 12 people (or nothing at all). I've been out to watch some of my friends dance, and I'm often the only person who orders a full meal and a glass of wine.

Plus, I also think that restaurant work pays so little because nobody wants to be a "diva" and stick up for a fair and profitable price.

my issue is the idea that the invisible hand will work things out. it's a fallacy that needs to go the way of "sun revolves around the earth" if economics is going to be of any help to the people's QUALITY of life.
that said, im at work and can't watch the clip/research right now, so i'll be back to comment on the specific issue later ^_~

Originally Posted by raqFariha

my issue is the idea that the invisible hand will work things out. it's a fallacy that needs to go the way of "sun revolves around the earth" if economics is going to be of any help to the people's QUALITY of life.

Yeah, some undercutters are tenacious and just plain evil. They never learn. Look at what the poor Sacramento girls have to deal with

Friedman, being a huge fan of Adam Smith, has lots of clips up about the invisible hand. I'm not much of an economics expert so it's interesting to hear bits and pieces about it. I studied philosophy, so I like prodding debates out of people! But he's thoroughly convinced that free market capitalism is what has historically caused the most freedom from poverty.

Originally Posted by SatinWorship19

Yeah, some undercutters are tenacious and just plain evil. They never learn. Look at what the poor Sacramento girls have to deal with

(codename, steal-jobette)

Originally Posted by SatinWorship19

Also, dare I say it, belly dancers can be a cheap crowd when dining out. Restaurant owners probably get annoyed when dancers bring an entourage of their friends and students, but all they do is hog tables and order a plate of hummus split between 12 people (or nothing at all). I've been out to watch some of my friends dance, and I'm often the only person who orders a full meal and a glass of wine.

You MAY say that. And loudly. Supporting a dancer friend does NOT mean showing up and sharing a salad and asking for extra bread sticks. I gave up reserving tables with friends for good the time four people asked me to include them in the reservation and only one of them actually ordered food. I figure they thought that going in a group would camoflague not ordering anything... except most of them didn't... and believe me, the restaurant owner is noticing this!

Just an aside, but I once worked for a newspaper that did trade ad space for food...and paid its writers with gift certificates from the advertisers.

We would have preferred money. ..c::

Bear in mind that the current state of the economy can be at least indirectly attributed to Uncle Milt and his disciples.

They are pursuing an agenda, and it has nothing to do with the common good.

Originally Posted by maurazebra

You MAY say that. And loudly. Supporting a dancer friend does NOT mean showing up and sharing a salad and asking for extra bread sticks.

Seriously.

It's nice to cheer on a friend. We all love that. But if you really want to support a dancer, support the people at her venue, too. Order food, tip the waitstaff well, be courteous and classy.

And if you're a dancer and your cheering squad is lame, say something to them. Tell them that it's not cool to sit at a table for 4 hours and not order food. Otherwise, don't act surprised when they opt for a jazz band instead of a belly dancer. *shrug*

Originally Posted by maurazebra

This is what I have observed in our area, and it informs our business practice.
1) Dancers are in the entertainment business.
2) Most restaurants that could use entertainment are probably better laid out for music rather than dancing.
3) If the restaurant patrons CAN see you and your dancing is really good, then the restaurant patrons will tend to sit there watching you instead of eating, which will cut into the profits of a venue that relies on a quick turnover of tables, especially if the patrons are not ordering drinks while they watch you.
4) Many restaurants that hire dancers are hoping you will bring an audience with you, rather than to entertain the guests they already have.
5) Most public events are probably better laid out for music rather than dancing (no stage).
6) Public events WITH stages will try to schedule the dancers in between the events and to dance on the ground to hold audience attention while the musicians arrange their instruments on stage. If dancers are on the ground, many audiences will tend to stand up and walk over and form a standing circle so that THEY can see better, the heck with anyone behind them! Therefore, you end up performing for thirty people even if there are hundreds of people in the area.

1) Yes.
2) Some. The places where I work rearrange tables and clear a space. Mostly this works.
3) Thank goodness our regions are different. Patrons make reservations and SHOW UP to see a dancer (or sometimes a specific dancer). They will order an extra drink or dessert to wait to see a second show. Literally- a good dancer brings in business (not her own posse- paying customers) AND will help the restaurant make more from them. Nice staff members point out the tables which specifically came in for the dancer- so the dancer can make sure they get special attention.
4) This rarely works if they're relying on one dancer to bring in her dancer friends week after week. In some circumstances, like monthly events, dancers can bring in the people and have it work.
5) If they've cleared space for me, I'm good. I love a stage venue for lights and sightlines. I love "dance space" venues for intimacy and connection with the audience.
6) If there's a stage in a venue- I'm on it doing a show. I've never been hired for the "changing the stage equipment interim." However- yes, I bet they would just crowd around.

Originally Posted by maurazebra

WHEN we think about proposing a gig to a customer, or accepting one, we try to figure out what THEY need....However, if a dancer does NOT think through what the customer really needs and expects, then she'll be bouncing from place to place like a ping pong ball, or working for tips if she wants to hold a steady (but unsuitable) venue.

All I can say is "Thank goodness for different regions."

Originally Posted by Margaret

Do you think that the major reason that restaurant work pays poorly is simply because the patrons (Westerners, that is) don't know or care about good dancing?

The only restaurants I've encountered that have mostly non-MidEastern clientele are the Morroccan places, in Cali and Florida.....so to me this isn't part of the equation. It's all about wanting to pay less for more, especially here in LA where it's quite fiercely competitive. The owners and patrons definitely want quality, but they don't want to pay for it, so they set up a situation where several different dance companies share a restaurant or duke it out when the owner gets tired of someone's show. They want a fabulous show, and often won't commit to scheduling one group permanently, so the group is "on call" for the weekend until the owner makes up his mind who he feels like seeing that week......it drives prices way down and makes it near impossible to command a regular schedule and respectable pay.

Not all places are like this, my regular restaurant is completely different. But the situation in LA makes it so I can't ask for more from other venues because I simply won't work, they can get acceptable entertainment for cheap. Subsequently I don't work as much because I won't for the pay they offer. I do cover some gigs that are better, but they aren't consistent. It's infuriating.

Originally Posted by SamiraShuruk

All I can say is "Thank goodness for different regions."

You mean, thank goodness you live in a different region? Well, yes, but is it possible that your excellent skill set skews your perception of the dance world where you are? Well, well, one must bloom where one is planted.

There used to be a very active MED community here in L'ville 30 years ago; lots of teachers, lots of bellygram gigs and festivals; one dancer who was also a college teacher was quoted in a newspaper article as thinking about quitting her day job because she made more teaching and performing dance. Then something happened, I haven't figured out what (I moved here eleven years ago). Five years ago the same person who had once contemplated quitting her day job was recommending professional dancers charge no less than TWENTY-FIVE dollars/set, classes were frequently $6/class, and no one upscale was hiring dancers. Maybe the porn industry moved in big time and 'bellydancing' got caught up in the backlash? Still sorting it out.

Originally Posted by maurazebra

You mean, thank goodness you live in a different region? Well, yes, but is it possible that your excellent skill set skews your perception of the dance world where you are? Well, well, one must bloom where one is planted.

Um...You're right, I guess I mean thank goodness I live in a region 1) where I have amazing teachers that help me bloom and 2) where the soil has been fertilized by our dance predecessors so well that there is a good number of decent paying opportunities around here and we have the chance to work hard for them (We have our fair share of undercutters as well of course).
I'm really sorry your region has changed so much over time. I'd ask her flat out what happened.