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In-depth: As leisure, hospitality sector bounces back, so does need for workers

Low wages, child care hampering labor force
Unemployment Compensation Pennsylvania
Posted at 1:42 PM, May 14, 2021
and last updated 2021-05-14 14:42:15-04

KANSAS CITY, Mo. — The good news is that more than a half-million jobs have been added in the U.S. leisure and hospitality sector during the last two months.

The bad news is there’s a long way to go in rehiring for the sector — which includes hotel staff, restaurant workers and bartenders — that was the hardest hit by the pandemic recession brought on by COVID-19 emergency orders.

In particular, as restaurants reopen with many people eager to get out of the house for a meal again, some businesses report that finding workers has proven challenging.

“It really is in the leisure and hospitality sector that went down so far,” Mid-American Regional Council’s Director of Research Services Frank Lenk. “Even though they hired hundreds of thousands of workers in the last month or so, it’s just not fast enough to meet the burgeoning demand.”

The entertainment and leisure/hospitality sectors suffered the most in the Kansas City area, accounting for the bulk of the jobs lost during the last 14 months.

Nearly half of arts, entertainment and recreation jobs disappeared amid the pandemic with more than one-third (36.5%) of jobs in the accommodation and food services sector, according to a presentation Lenk prepared last week for the Johnson County Board of County Commissioners.

Most of those job losses were concentrated in accommodation and food services, according to Bureau of Labor Statistics estimates.

The education and health services sector also got battered, especially office workers in medical settings.

Health care and social assistance is the largest job sector in the Kansas City region with roughly 160,000 workers, according to Lenk.

Leisure and hospitality is the fifth-largest job sector with 101,000 regional workers.

The struggles in those job sectors mirror the nationwide trend.

There were more than double the job losses in the U.S. leisure and hospitality sector compared with any other job sector.

There were 31.4% fewer seated diners from online, phone, and walk-in reservations May 7-13 compared to 2019, according to OpenTable.com’s State of the Industry data, but that’s obviously much better than a year ago when all dine-in service was suspended amid emergency health orders.

Unemployment’s role

Some restaurants and small businesses in Kansas City blamed federal unemployment assistance programs for the current labor shortage.

Gov. Mike Parson announced Tuesday that Missouri would end participation in the Pandemic Unemployment Emergency Compensation (PUEC) and Pandemic Unemployment Assistance (PUA) programs next month despite a congressional extension through early September as a way to force more people back into the labor force.

Sen. Josh Hawley, a Missouri Republican, applauded Parson's decision, calling the programs, which were initiated under the Trump administration, "disastrous."

Hawley called extending the payments — which began as part of the CARES Act last spring, were allowed to lapse by Congress during the late summer, were cut in half before being reinstated in December, and were extended for six months under the new American Rescue Plan extended the first time last December — "anti-work" policy.

"It’s helped drive the unemployment rate up in this country, which is amazing," Hawley said Thursday in an interview with 41 Action News. "In the midst of what is turning out to be a very strong economic recovery, Joe Biden is able to raise the unemployment rate."

Some businesses have taken to offering one-time signing bonuses or other incentives to attract workers, but the root of the rehiring problem may run deeper.

“Women are disproportionately in that leisure and hospitality sector and that was hit the hardest, but it also is bouncing back pretty strongly here and nationwide,” Lenk said.

Still, child care costs remain a significant impediment for many mothers who left the workforce and aren’t ready or able to return yet.

“The childcare and the home issues are still there,” Lenk said, noting the closing of schools and day cares in some places combined with the approaching summer break create obstacles to employment. “Those don’t go away right away just because all of a sudden the employer wants the workers back.”

Does federal unemployment assistance play a role? Perhaps for some, but that raises an entirely separate issue with the labor force.

“The level of benefit, the unemployment insurance, probably has retarded some people’s return to work because they’re able to pay their bills where they weren’t when they were working in a low-wage job,” Lenk said. “So, that’s kind of an indictment of the low-wage job workforce and what it takes to make it in America.”

According to a 2017 U.S. Bureau of Labor Statistics analysis, more than three-fifths of all workers paid at or below minimum wage are in the hospitality and leisure sector, “almost entirely in restaurants and other food services.”

Some of those are tipped workers, but the industry may need to raise wages — something that hasn’t significantly happened yet, according to Heidi Shierholz, director of policy at the Economic Policy Institute.

John T. Harvey, a professor of economics at Texas Christian University and Forbes contributor, suggests that the issue of leisure and hospitality wages may actually be "a moral problem, not an economic one."