Understanding Tourism's Labor Problem. One Perspective

Issue#8 (758 Words/4 Minutes)

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Understanding Tourism's Labor Problem. One Perspective

What's happened to labor in the tourism and hospitality industry? The size and scope of the challenge are significant, many employees have left the industry, and many are not coming back. By now, many analysts have weighed in on a variety of causes. They included pandemic benefits that were too generous, the same with unemployment benefits; kids were out of school, preventing parents from working, and just as important the availability of remote work. Many executives assumed that workers would come back once these benefits had finished and schools opened up for in-class learning. But that hasn't necessarily been the case.

There is a consensus that the pandemic provided employees with unique opportunities. Many hospitality workers reevaluated their employment situation to consider other career options. Many have decided to make a change to pursue higher-paying, less demanding, and more flexible jobs.

But is this solvable under the current situation? Maybe not. If we look at the issue of labor through the lens of pay and benefits in contrast with the industry's growth, the issue frames differently. Figure 1 below provides an interesting context to consider. According to the Bureau of Labor Statistics, the average hourly earnings for all employees (including supervisory and non-supervisory was $12.52 in 2011. By 2019 before the pandemic, the average had increased to $16.16.

Figure 1: Hourly Hospitality Wage Rates

Source: Bureau of Labor Statistics

It should also be noted, according to the bureau of labor statistics, that the percentage of hospitality employees with health care remained unchanged over the same period, with approximately 34% of industry workers having access to health care. See Figure 2.

Figure 2: Hospitality Employees with Health Care

Source: Bureau of Labor Statistics

It appears that during this almost ten-year time frame, employee earning increased, and the amount of health care remained the same

In contrast, things appear to be different at the corporate level. Figure 3 below shows the Dow Jones Industrial Average Hospitality index. Reflecting stock prices of public traded hospitality companies, this index zooms from 598 to 10,698 during the same time frame -- a nearly 17-fold increase.

Figure 3: Dow Jones Industrial Average Hospitality index

Source: Dow Jones

When we look at the rate of growth between hospitality workers' hourly earnings and the appreciation of the stock price of hospitality companies, it's a significant difference.