Where did all the people go? September 2022 DEFINING MARKETHOSPITALITYTHE PG. 6 FUTUREOFEXPERIENCETHEDESIGNINGWORKTHE PG. 17 Inspiring a brighter future, Together.
CONTENTS 04 Where did all the people go? 06 The State of the U.S. MarketEmploymentSectorHospitality 08 Living Wage vs. Minimum Wage 2
EXPERIENCEDESIGNINGTHEWORK OF THE FUTURE PG. 20 16 businessisturnoverEmployeeserious 14 Defining MarketHospitalitythe 23 About the Authors 3
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in hand, it was argued that for some they were earning equal to or even more sitting at home versus going back to work. While this may have been true then, stimulus has long since dried up, leaving the question of what could be the reason now?
What about the working conditions for many of these folks? Is it meaningful work?
Lack of meaningful work
What is the level of well-trained management and supervision they have access to?
Mckinsey
Lack of workplace flexibility
Inadequate compensation
In survey of over 13,000 employees, released some statistics that start to paint a picture of the Top 8 reasons why people are quitting their jobs.
Why are people quitting their jobs?
Uncaring/uninspiring leaders
It certainly begs a question, right? During the pandemic with Government stimulus checks
Most common reasons given for quitting previous job (Apr '21 - Apr '22)
SOURCE: Based on a survey of 13,382 employees in Australia, Canada, India, Singapore, United Kingdom,
Lack of career development/advancement
and United States: McKinsey & Company 2 6 % 2 6 % 2 6 % 2 9 %3 1 % 3 4 %3 6 % 4 1 % 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
a
Do we pay hospitality staff sufficiently or, often, just the minimum wage?
limited success. Despite new hires on the rise and unemployment rates going down, many organizations are still struggling to return staffing to needed levels.
Lack of support for health/wellbeing
The problem for many workers in the hospitality industry is that these issues existed for a long time prior to the pandemic. However, with the advent of COVID these workers began seriously considering alternative employment options. Many have indeed found better alternatives to make ends meet, and do not want to return.
Unreliable/unsupportive colleagues
Although this data was collected across all sectors, some of the themes that are appropriate to the hospitality sectors start to resonate:
W H Y P E O P L E A R E Q U I T T I N G T H E I R J O B S
Unsustainable work expectations
As an entry level worker to the hospitality industry, what real career options actually exist?
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The State of the U.S. Hospitality Sector Employment Market
Although the sector continues its recovery there is an increasing gap between openings and hires. Taking the same reference point being the end of Q1 2012, the Job Openings were 601,000 and in 2022, 1.7M, a three-fold increase.
Since 2012 the U.S. Hospitality & Leisure market has seen a steady rise in the total number of employees employed. At the end of Q1, 2012, there were 13.7M employed in the sector, and by 2019 this was over 16.5M, a rise of nearly 17% over that time, but In Q2, 2020, this number almost halved to 8.7M as the pandemic struck.
SOURCE: U.S. Bureau of Labor & Statistics
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0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 TOTA L E M P LOY E D I N T H E H OS P I TA L I T Y & L E I S U R E S E C TO R
The Minimum Wage is different from a Living Wage.
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But where did all the people go?
Still no affordable childcare options.
Some were eligible for and slipped into retirement, perhaps more than realized.
U.S. immigration policies impacted migrants’ ability to work.
Closer to home, in my local neighborhood restaurant, Gerry used the last 2+ years to finish his degree and become a high school teacher and leaves the hospitality industry for good this week. Touran takes a job as a personal banker having studied and secured his qualifications. Fifteen years of experience between them, new qualifications, new careers, good for them, and who can blame them? Swapping late nights, weekends, surviving on tips to turn the minimum wage into a living wage, these two men are now moving on to salaries and solid career opportunities.
During 2020 the nearlyrateunemploymentsectorjumpedto40%.
That’s just two examples! What other circumstances impacted the apparent lack of willing employees in the hospitality industry?
Just like Gerry and Touran, many have retooled and found alternative careers.
Many left expensive metros to go back to their home towns, relocated for cheaper housing or returned to their parents homes.
But even at living wage levels it’s impossible to comprehend survivability at those rates – housing costs, healthcare, cost of living, and now inflation, tending for yourself as an individual and families trying their best to survive.
According to the U.S Bureau of Labor & Statistics, today, some 15.5 million people are employed in the Hospitality & Leisure sector of which 13.5 million are production and andRetirementInsuranceBenefits&breakdownTheearningsaverageemployeesnon-supervisorywithantotalhourlyof$17.70.chartshowstheforWagesSalaries($14.29),($3.51),($0.71),($0.19),PaidLeave($0.53) PER HOUR PaRetirementidLeave
Living Wage vs. Minimum Wage
Thirty U.S. states currently have a minimum wage above the federal minimum. The District of Columbia has the highest minimum wage, at $15.20. Wyoming and Georgia tie for the lowest minimum wage at $5.15. Meanwhile, the living wage for an individual in Washington DC is still just $20.80 an hour, and for an individual in Georgia, around $15.99.
Hourly Compensation
The U.S. Congress established the minimum wage in 1938 to provide a living wage. However, because policy has not kept pace with inflation, the federal minimum wage fails to provide a minimum standard of living in many areas.
$14.29 $3.41 $0.19$0.71 $0.53 TOTAL COMPENSATION
SOURCE: U.S. Bureau of Labor & Statistics
According to the World Population Review, 2022, the living wage should not be confused with the minimum wage, which is the minimum an employer, by law, can pay an employee for an hour of labor. In contrast, a living wage is determined by the costs of covering basic needs in a particular area.
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Currently, the federal minimum wage is $7.25 an hour. A full-time worker making the minimum wage would earn $15,000 a year, just slightly above the $13,590 poverty guideline for individuals. For workers providing for family members, earnings from a full-time, minimum wage job would fall below the federal poverty line.
WORKED (BASED ON $17.70 PER. HOUR) Production and Non-Supervisory Employees Wage s & Salaries Insu rance
That’s correct. Less than a third of Hospitality workers have access
Access to Employee Benefits
to healthcare, just 43% get paid vacation, and only half benefit from paid sick leave. Even when vacation days are offered, the mean number of days are just 6 days after 1 year’s service and rising to 12 days after 20 years of service. 9
Beyond the cash coming in to pay the household bills and feed families, what about the other factors associated with life in the United States as a hospitality worker. Healthcare, benefits, retirement planning, paid vacation? The table below shows what access to some of these fundamental benefits are available to hospitality workers in the Unites States.
BENEFIT ACCESS Healthcare 32% Paid Vacation 43% Paid Sick Leave 50% SOURCE: U.S. Bureau of Labor & Statistics
The global hospitality market grew from $3,952.87 billion in 2021 to $4,548.42 billion in 2022 at a compound annual growth rate (CAGR) of 15.1%.
The hospitality market is expected to reach $6,715.27 billion in 2026 at a CAGR of 10.2%.
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–The Business Research Company
In the U.S. they say that 7 out of every 10 adults have worked in the hospitality industry at some point or another, meaning that today 231 million Americans have worked, work, or will work in the hospitality industry in their lifetimes.
The U.S. Hospitality market represents an estimated one fifth of the global market, with less than one twelfth of the global population demonstrating the emphasis and importance of hospitality in the United States.
HospitalityGlobal Market$4.5T Global Market by 2026$6.7T Hospitality Jobs Worldwide212M Growth Rate to 202610.2% The MarketHospitalityisa VERY BIG market.11
According to the U.S. 2021, 919,936
Department of Labor & Statistics, as at Q4
there were
Constantly managing the balance between customers and revenue while balancing these costs is essential. But at the same time, without great people, great food, and great service, then we will achieve nothing but adding to the already industry renowned business failure rates.
Private Industry, Leisure & Hospitality establishments in the U.S. with a further 7,000 across Local, State, and Federal Government, employing 16 million people. SOURCE: InsiderMonkey March 2021; Market Size in Trillions TOP 10 BIGGEST INDUSTRIES IN THE WORLD 1. Financial Services $22.5T 2. Construction $12.5T 3. Commercial Real Estate $9.6T 4. E-Commerce $9.09T 5. Life & Health insurance $8.45T 6. Information Technology $5.0T 7. Food Manufacturing & Distribution Industry $5.0T 8. Oil & Gas $4.6T 9. Automobile Manufacturing $3.0T 10. Telecommunications $1.74T 12
This Top 10 from the InsiderMonkey 2022 report doesn’t even call out the hospitality and service industry which includes food retail, restaurants, hotels, leisure, foodservice, and if it did, today it would be just behind the Oil & Gas Industry at #9 on the world’s biggest industries list.
Despite its powerhouse status in terms of size and spread, for those of us who grew up in the hospitality industry, we understand its fragility too. The industry has the highest business failure rates of any industry. Complexity, high labor, high product costs and slim margins makes survival in this sector difficult.
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Away from Home markets: work, education, healthcare, leisure, and retail.
Pandemic: The Hospitality Industry was the worst hit!
HOSPITALITYMARKETFOODSERVICE HOTELS TRAVELRESORTS&&TOURISM FINANCE & REAL ESTATE SPORTSLEISURE,&EVENTSSUPPORTSERVICES
SUPPORT SERVICES: consulting, training, human resources related to the industry.
And if that wasn’t bad enough, hospitality workers mortality rate was 5X higher than other industries!
Defining the HospitalityFOODSERVICE:Market
The hospitality market consists of sales of accommodation and food services and related goods by a variety of entities from sole traders to local, regional, national, and global corporations that provide customers with lodgings, prepared meals, snacks, and beverages for immediate consumption. The market covers accommodations and food services because the two activities are often provided in the same establishment.
With all its frailty, it is recognized as a tough industry already with single digit, often wafer-thin margins. Add to that a global pandemic, the customer base disappearing overnight, and for those not quick enough to embrace other operating models like food delivery platforms resulted in a slew of closures right across the industry, many of them permanent never to open their doors again.
HOTELS & RESORTS: Including management companies, rooms, food, and beverage.
TRAVEL & TOURISM: including agencies and tour operators, airlines, and cruise ships.
FINANCE & REAL ESTATE: property owners and landlords leasing to the industry.
LEISURE, SPORTS & EVENTS: entertainment, stadiums, public places, museums, events.
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The University of South Florida (USF) discovered associations between COVID-19 mortality rates and socioeconomic position, gender, ethnicity, and race, including in the service and hospitality industries.
The study analyzed nearly 70,000 adults, ages 25 to 64, who died from COVID-19. They found 68% of COVID-19 deaths the first year of the pandemic were low paid labor, service, and retail workers that as part of their jobs required on-site attendance and prolonged close contact with others.
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reveal a person’s level of education is strongly associated with occupation segregation – with the majority of low educated adults employed in workingclass jobs across all gender, race, and ethnicity groups in the United States. Historically, data shows the working-class experiences disproportionate exposure risks and increased burden of disease.
Professor Jason Salemi launched a national investigation into COVID-19 deaths in 2020 with data released by the U.S. National Center for Health Statistics.
Using one’s level of education as a measure of socioeconomic, in tandem, the team categorized each person’s risk by their level of Theeducation.findings
Elevated infection risks are amplified across multiple social environmental scales for working-class adults, especially when compared to high-risk workers who are more likely to have fewer exposure risks, options to work remotely, paid sick leave and better access to quality health care.
COVID-19 proved no different. Salemi and the team confirmed hazardous conditions of work, like working in close proximity with others, were primary drivers of disparities in COVID-19 mortality rates.
The degree to which it takes a toll on communities is very unevenly distributed and we wanted to call attention to that issue, – Prof. Jason Salemi
It’s not just about keeping the doors open but attracting quality workers who can contribute to and enhance the overall proposition to the consumer – everyone has a role to play.
How does the hospitality sector compete for talent?
Without food and people, the hospitality industry has nothing. Notwithstanding the issues around food security, sustainability, ethical sourcing of food and the headwinds of inflation, what about people?
There are various metrics associated with the cost of employee turnover, and 33% is one of the more conservative assessments of what employee turnover costs businesses in terms of lost continuity and knowledge, cost of hiring and replacement, and retraining and getting new employees up to speed.
Historically, many hourly workers fell into hospitality as typically there were more openings in this sector. Additionally, this is a sector with notoriously high staff turnover, often resulting in a higher number of vacancies, and a high demand for willing workers. However, since the pandemic the level of need has increased significantly over the past three years.
Employee Turnover is Serious Business
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The fact of the matter is it is good business to reduce turnover, have happier, more engaged, loyal, and longer-term staff than to have a revolving door that not only impacts your business performance but in the case of hospitality and service, impacts your customers too.
Median income and the percentage of workers that le each year 2017 201 201 2020 2021
g p y g p
On average, 13% percent of workers changed occupations between 2020 and 2021. Thirteen percent also switched occupations between 2019 and 2020. (This is a different measure than quit rates that capture people who quit a job but stay in an occupation, like a nurse who switches hospitals or a bartender who switches bars.)
On average, 13% percent of workers changed occupations bet ween 2020 and 2021.
Occupations that offer lower wages or require less experience and training underwent the most changes during the past few years. For example, workers who prepare and serve food have had high job rates switching in every year between 2017 and 2021. (USAFacts.Org)
USA FACTS: Which Americans are leaving their occupations?
The Annual Social and Economic Supplement of the Current Population Survey asks participants their main jobs the previous year, their current jobs, and their employment status.
Thir teen percent also switched occupations bet ween 2019 and 2020. (This is a different measure than quit rates that capture people who quit a job but stay in an occupation, like a nurse who switches hospitals or a bar tender who switches
The Annual Social and Economic Supplement of the Current Population Sur vey asks par ticipants their main jobs the previous year, their current jobs, and their employment status.
bars.) $0 $50K $100K $150K $200K 0% 10% 20% 30% 40% 50% MEDIAN INCOME % LEAVING OCCUPATION Waiters/Waitresses Bartenders Judicial Workers Physicians/ RSurgeons egistered Nurses PERCENT LEAVING OCCUPATION 2021 Waiters/Waitresses0%10%20%30%40%50% MEDIAN INCOME $0 $50K $100K $150K $200K NursesRegistered SurgeonsPhysicians/ Bartenders
Census Bureau 17
The rate at which Americans leave their careers varies by occupation and industry, and has changed over the last several years. Higher-paying occupations have fewer workers leave each year. year
SOURCE: US
Source: US Census Bureau
STUDENTS LEAVING EDUCATION
Pay, hours, but most importantly training, defined career paths, and promotional opportunities.
Highly trained, highly experienced, many looking for flexibility, additional income, and a sense of purpose and value.
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BACK TO THE WORKFORCE
One thing is for sure – attracting and retaining talent to the hospitality industry isn’t going to get easier on its own. We have to create tong term strategies and make long term investments in order to thrive into the future.
Existing students in education need additional income. What are your strategies around reaching this potential workforce, attracting them, incentivizing them to work?
What other opportunities come to mind that might help to attract a greater audience of qualified and willing workers to your business – hiring those with disabilities, rehabilitating offenders?
RETURNING PARENTS
With the cost of childcare so high it’s a challenge to attract parents back to the workforce. Explore creative ways including smarter scheduling, and maybe opportunities to support childcare costs.
What is your strategy around attracting talent from college?
Its just time that the hospitality industry has to do more to attract and retain the best talent. But also looking at different employee groups to attract them into the ATTRACTINGworkplace.RETIREES
STUDENTS IN EDUCATION
It’s true, technology and innovation can certainly help alleviate some of the pressure but remember, the hospitality industry is about people - technology and innovation cannot completely replace the wonder of human contact, can they?
Then layer above all that the ability to aggregate data of all kinds onto your device, see performance in real time, insights, visibility, monitor performance, standards, and make decisions based on business needs in the moment.
Technology and Innovation
The use of robotics is on the rise from autonomous vacuum cleaners to table side waiters, to room porters, baristas, pizza, salad, and burger makers from scratch. The world of robotics is advancing quickly to make up for short labor supply.
ROBOTICS
Tech Enabled Recruiting
Employment applications that go beyond paper or web-based to text-to-apply can make it easier to attract talent to complete the application process. Also beware the impact of Applicant Tracking Systems (or ATS) that pre-screen candidates. These are proving to disqualify applicants who could be an asset to your business because of missing keywords, vernacular, or formatting.
ACCESS ANYWHERE
See more than ever before. Utilizing computer vision, IoT devices, greater real time data into your dispersed operations to gain insights that can help you manage your business more efficiently.
INTELLIGENT VISION
ARTIFICIAL INTELLIGENCE
The use of Artificial intelligence that helps you become smarter, more predictive, plan future inventory requirements, predict customer flow, scheduling and more.
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- Simon Elliot, 4xi
The reality is that these challenges, although somewhat exaggerated in the Hospitality Industry, exist in all industries and across all continents. Long, unsociable hours, weekends, high stress, low pay, and a lack of employee care existed prior to COVID and like so many examples, COVID has been an accelerator of these issues and the down time allowed many workers to reflect on alternatives.
Corporate Real Estate practitioners often talk about the already built environment as being the issue, but the reality is it will take centuries to rebuild and replace the physical space. The core of the issue is really about understanding your workforce, what they want, what will make their lives better, easier, to bring their authentic self to work, and designing the work experience around the people – the Human Experience (HX) approach.
All employers and organizations need to step back and reimagine the work experience, no matter where people may be. In the hospitality sector however, it’s all about the physical space because that’s where the rubber hits the road, or in this context, where the food is preparedprepared, and customers are served.
Designing the Work Experience of the future is a Business Imperative
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Intentional scheduling, open up more flexible hours to attract a wider group of employees. Morning shifts, afternoon shifts, 3 day working weeks.
It’s fundamental. Take a stance, be proud about it, communicate it to your customers that you’re fulfilling your commitment to your staff.
Depending on where your business is located, the commute may be a barrier. From car-pooling to organized transportation, to stipends will all help.
1 . 2 . 3 . 4 .
How do your staff take a break, and where? How can you make the breakroom environment a pleasant place and an oasis to refresh and reinvigorate?
With less than 50% of the industry offering these fundamental benefits to workers, see the difference in your hiring and retention efforts.
.
A place to chill
.
Be clear, open, map out what a career looks like in your business from entry-level all the way up. What are the expectations, milestones, succession plans?
So, if rebuilding our establishments is not an option, what are the practical things that we can do to improve our work experience and in turn attract and retain employees. Here are just some ideas for you to consider:
More flexible hours
Paid Vacation, and Paid Sick Leave
Career progression
To ensure they’re giving the best supervision and support to your team – listening, learning, talking, and helping them be the best they possibly can be.
Move beyond the minimum or even the living wage
7. 21
Commuter assistance
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Invest in your Management Team
Provide your team with intentional training that improves their performance and gives them transferable experience, skills, and qualifications.
Although it can be a significant cost to a business, providing healthcare benefits is a major attractor and retainer of talent.
This applies in all markets, and beyond anything else, it’s just the right thing to do, and its good for business.
You must create a compelling reason for someone to want to work for you and to keep coming back each day - how easy can you make it to apply, are you giving your team a path to growth, and are you invested in their growth and success? This is how you set yourself apart as an employer of choice. -Tony Johnson, 4xi
Lead with Dignity & Respect
Health, Wellness, and Wellbeing
Invest in Training
Offer Healthcare Benefits
Talking through this dilemma with a CEO of a publicly traded grocery chain, 350+ stores, 23 states, and over 35,000 employees, he reminded me of the basics - leading with dignity and respect for our people goes a long way. Its not just about the terms and the package, although that certainly helps, treating people well is the foundation of a happy, engaged, and motivated workforce.
8 . 9 . 10 .
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How do you plan to tackle the Great Resignation?
How do you care for your employees? Health, wellness, and wellbeing of your staff should be as important to you as it is to them.
It’s hard to imagine that guests in a Michelin starred restaurant would object to better working conditions for the staff, but it doesn’t end there either – the same applies to the vast majority of customers out there – they yearn for a deliciously great consumer experience, served by happy, motivated, and engaged staff.
There are many sub-sectors in the Hospitality Industry, and although there certainly isn’t one silver bullet to tackle these issues, a big part of this is around educating our customers.
Chief Experience Officer (CXO)
Contact Us to learn more: hello@4xiconsulting.com
NO PART OF THIS PUBLICATION MAY BE REPRODUCED WITHOUT THE EXPRESS WRITTEN CONSENT OF THE PUBLISHER.
Simon Elliot is Managing Partner and co-founder of boutique consulting and advisory firm, 4xi Global Consulting. He is the Chair of WORKTECH Academy for North America, a Fellow of the Institute of Directors (London) and considered a global thought leader in the future of work and how we’ll work tomorrow.
Barbara Boden
Tony Johnson is 4xi’s Chief Experience Officer and leads the Evolving Experiences© practice. He is a globally recognized thought leader, keynote speaker, author, and strategist when it comes to Employee (EX) and Customer Experience (CX).
Simon Elliot Managing Partner & Co-Founder
This publication was published by 4xi Consulting. For more information about 4xi Consulting, please visit us at www.4xiconsulting.com, email us at Allhello@4xiconsulting.com.rightsreserved2022©
4xi is a boutique advisory and consulting firm focused on the Human Experience (HX) in the Away from Home markets – people at work, in education, at rest, and at leisure. 4xi is a unique collective of senior industry leaders from both the client-side and operator-side of the business supporting Client Organizations, Service Providers, Innovators, and Accelerators transforming their experience offering and making a greater impact through a people-first approach to service and business.
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If you have an unanswered question, or you want to deep dive and research a specific topic, market, or business opportunity, 4xi has a range of solutions including data ingestion, analysis, and reporting. From analyzing your global property portfolio across different metro markets, labor data and statistics, cost of living, and cost of hiring, and such things as retail food pricing indices, 4xi are able to meet your needs.
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Now based in the San Francisco Bay Area, Simon has lived, worked, and traveled globally having visited 6 or the 7 continents and led business and projects in the UK, Northern Europe, Australasia, Asia, South, and North America.
4xi Global Consulting & Solutions
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Managing Partner & Co-Founder
Tony lives in Orlando, where he hosts his awardwinning podcast, and prior to 4xi, he was Customer Experience Officer at global food and facilities giant Aramark.
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About the Authors:
Tony Johnson Leadership Advisory Council Chief Experience Officer (CXO)
DinaMARKETINGO’Reilly
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Managing Partner & Co-Founder
Data, Research & Reports
4xi Global Consulting & Solutions is a boutique advisory firm focused on a people-first approach to changing experiences for GOOD. Whether for people at work, in education, at rest, or at leisure, 4xi leverages the tenets of a hospitality focus to drive impact, facilitate change, and make a real difference. SPx: Strategic Consulting & Special Projects | HQ: Fractional Expertise On-Demand | Design4Life©: Environmental & Experiential Design | Evolving Experiences©: EX and CX | Sustainability Simplified© | TRUE NORTH© Strategic Partnerships Learning Academy | Explorers Innovation Directory & Lab Learn more about what we do: Inspiring a brighter future, Together. SAN FRANCISCO | NEW YORK | SILICON VALLEY | PHILADELPHIA | DALLAS | NORTH CAROLINA | ORLANDO SEATTLE | LISBON | SANTIAGO | LONDON | TOKYO w: www.4xiconsulting.com e: hello@4xiconsulting.com
