Where are the Servants?

As Don Bordreaux points out that they probably buy many of these services in the marketplace, rather than employing people to provide those services as rich people used to do.

That’s a function of two things; how efficient and liquid markets now are at providing these services and the significant fixed costs (and legal risks) in being an employer in a modern regulatory environment.

Bottom line, I’m pretty sure one way or another these guys do not mow their own lawns, wash their own cars or clean their own toilets!

I’ve been told that the Gates family has a staff of five, but I don’t think that counts security or transportation staff.

Two strikes me as the likely reason. When really rich people decide they want something that the market doesn’t provide (like a huge health and development charity or a rocket that takes people into low earth orbit) they find it easy to hire a large number of people to do it.

When I was stationed in Thailand back in the 1960s my wife and I had several household servants: driver, wash girl, nanny, etc. They were necessary because we couldn’t otherwise navigate the local society (I would absolutely NEVER drive in Bangkok traffic; I needed a native driver). We swore that even if we ever got rich (we didn’t), we would not have servants in the house. They were too much trouble. The wife of my of my Army officer friends used to line her servants up regularly and say to each, “In the States, I didn’t need you!” Not that it did her much good. She did need them there.

I’m a bit puzzled by your terminology. The labour market is as much a market as the appliance market. Perhaps the main difference is standardisation – if I buy a dishwasher I can get a pretty good idea of the quality by recommendations and reviews of dishwashers, if I own a good dishwasher and I suddenly lose it (say to a home fire), I can buy another of the same brand with reasonable confidence that I’ll get another good quality one. But people differ more, my neighbour might employ a great maid, but her sister might be hopeless, and if I employ a fantastic maid and she quits for whatever reason, I can’t just go out and hire another version of her. (Not that I employ servants, but I have for example noticed far more quality differences between different waiters than between different dishwashers of the same brand.)

I doubt the supply problem – my cousin and her then-boyfriend worked as servants in the UK for a few months with no career consequences, and wound up with some great anecdotes about their employer, although I think it was a case of being more funny after the fact.

I think Peter H. is correct. I expect the billionaires of the world still do have a lot of servants. From cooks, to maids, to drivers. What I expect has changed is the servants quarters. They simply go to their own homes at night now. So, I guess that would imply they are better paid then before.

Peter is correct and its not just billionaires. Take a look at the McCourt divorce disclosures to see what it looks like. Private cooks, personal assistants, daily hair dressers drivers, nannies, house keepers, gift shoppers, designers, consiglieri, publicists, etc. No chamber maids, thankfully.

“mark” has it right.

I’m no billionare, though I have known a few.

But there is a squad of people who maintain my lawn – I don’t call them servants, or retainers, I call them the landscaping company, and I hire them for that specialized task like all the rest of their clients. The “manage the staff” bit that a butler (I think) would have done is dealt with by me hiring the company – that company’s management deals with everybody else.

Likewise the house cleaners (again, a company that specializes in that.)

No so different, the garage I take my cars to for maintence (they give me a ride to my office), my Doctor (who is no retainer but certainly provides personal medical services better than any King of England got until fairly recently.)

I do, in a sense, have “retainers” – but we tend to call them lawyers….

I have an accountant, whom I share with his other clients, but is very much paid to tend to a particular part of my affairs.

Bill Gates has private planes, whose pilots are most likely provided by a service like netjets even if the plane isn’t leased out. So there’s a “family transportation staff” even if none of them see a check signed directly by Bill.

I know people (men) who have, um, relationships with women of a, uh, less than equal (though voluntary on all sides), nature. Would that count?

It’s a transaction cost problem.

Taxation / withholding, labor laws, paperwork, healthcare, etc… It’s all too onerous.

In economies where friction is lower, servants are common. Hong Kong, Middle East, etc.

I’m with Mike on this one.

There is also a risk management issue: servants of old were directly employed by the family for which they worked. Nowadays that would leave the family open to all sorts of potential liabilities that could be expensive even for millionaires.

It is much safer to go the contractor route and to avoid the direct employer/employee relationship wherever possible.

Bryan W: You can get a huge return by hiring a personal assistant if your time is very valuable, but in order to achieve this, your personal assistant must be a highly competent professional administrator, who is able to just know many common sense things, is smart enough to get your explanations very quickly, and to pick up your general needs and desires over time. I know of no truly rich person that is still seriously pursuing a career that does not have such a person working for them.

You don’t even have to be especially rich for it to make sense. One of my local racquetball partners hired someone to do this for him. She works for his company, but also acts as a personal assistant. He’s certainly well off, lives in a nice house, owns a successful small internet business and worked on wall street for a few years before that, but if he’s uber-rich, he doesn’t show it.

The trick is that you can’t hire such a person for minimum wage or even close. A person with the skills to do this, already can command a very good wage in the marketplace in various kinds of high-end customer service, sales or administrative positions.

Peter answers this question correctly. The rich do have these services done, but now, the butler is not necessarily male, and has some title like personal representative, office administrator, executive secretary, or some such. Much of the work is outsourced to various firms who supply the labor, under the direction of said “butler”, rather than a butler directly supervising a giant household staff.

What’s changed is that the middle class happened. Back in the day, you had gentry and nobility (the 1%), and the working class (everybody else). The rich could afford to hire many servants, because most of those servants were living not far above subsistence.

In rich countries today, most of the population lives well above subsistence. Pretty much everyone we don’t call poor is doing better than 98% of people did in the early 1800s by any absolute measure, and something like 1/2 of us are doing very well indeed, surpassing even the richest of the rich in 1800s in our economic resources to do nearly everything *except* holding large estates or hiring servants.

So naturally, some of that 50% demand many of the services previously enjoyed only by the rich, but in small quantities. I don’t want and can’t afford a personal housekeeper, but I’m certainly willing to pay $100/week for someone to come by for a few hours and clean my house. Well, in the market economy, where there’s a money demand that somebody somewhere can figure out how to make a profit from, there’s a supply. So we have housekeeping services, we have lawn services, tree services, personal shoppers, personal trainers, massage therapists, cosmetic consultants, barbers/hairdressers who travel. You name it, there’s a high end service, and it’s being used not just by rich people, but also by upper middle class people.

So the point is, you don’t need to hire a particular person and train them anymore to do things that you only need 1-2 hours a week. And, people with the kind of skill you want as a rich person, aren’t available for the kind of deadweight loss involved in hiring someone full time for a few hours work — there is lots of demand for their services.

M. Sullivan – I in fact hire out basically all of the outsourced services you mention, except personal shopping, because as an eccentric nerd rich guy, I only buy clothes once every two or three years, and am picky about it in weird ways. See #2.

Two more items to add to the thread.

1. My accoutants and lawyers give me a body of advice which can be summed up as “NO EMPLOYEES EVER”. There is a minimum cost associated with having an employee – a minimum (long) list of things one must do and do right to avoid fines, surprize costs, meddling, and sometimes jail. Hiring all services out to companies side steps all of that.

People who already have companies with employees have a much easier time adding a personal assistant using that same infrastructure.

2. A fair part of the current “rich” are folks who are geeks like me, often from modest backgrounds, who made fortunes in the PC revolution (and to a lesser extent the .com bubble.)

There’s a whole host of “fancy services” some of these new rich just don’t care about. Another set that involve human interactions they are uncomfortable with. (Remember, we’re talking programmer geeks here. We can be way stranger than most people realize.)

In short, hiring somebody directly is legally and financially scary, requires out-of-the-ordinary personal interactions, and may have low perceived effective returns.

And the sorts of people one would hire in spite of all of that are expensive (more like $60K+ than $35K in my market.)