Mid-year update on hospitality industry workforce trends

Published August 3, 2018

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Are you ready to handle your growing and evolving workforce?

It’s the middle of 2018 and the hospitality industry continues to be challenged in attracting and retaining key employees. The unemployment rate from the Bureau of Labor Statistics is at an all-time low and companies are scrambling to find and acquire talent.

In Louisville, Kentucky alone, an increasing number of luxury hotels are being built to meet the demand created by a rise in local tourism. With the expansion of the newly renovated Kentucky International Convention Center, the city will now be able to accommodate 25 percent more business than it could two years ago. Conferences and events that were considered too large for the previous convention center are now booking space.

To help serve the increased foot traffic, more hotels and restaurants have been opening over the past few years. Louisville Mayor Greg Fischer has stated that the city is building a five-star tourism ecosystem. More tourists will be walking around, eating out in restaurants, as well as enjoying the rapidly growing bourbon industry.

To help combat the workforce shortages during a booming period, online ordering, in-store kiosks and curbside delivery are becoming Options at an increasing number of businesses. Many restaurants are also working on automating or outsourcing various back-of-house processes to reduce labor hours for workers. Although overtime pay can be a welcomed bonus initially, workers experience a sense of satisfaction only for a limited period of time before they start asking for additional pay on their current salaries.

Minimum wage increases affected numerous states across the country this past January. (See interactive map here.) Under the Fair Labor Standards Act (FLSA), the current federal minimum wage is $7.25 per hour, but the FLSA does not supersede any state or local laws that are more favorable to employees. Therefore, if a state or municipality has a minimum wage that is higher than the federal rate, employers subject to the state or local minimum wage law are obligated to pay the higher rate to employees working there. The minimum wage for federal contractors in 2018 is $10.35 per hour. The map above shows the states that are increasing their minimum wages, including the new rates and amounts of the increases recently passed. A listing of the states increasing their minimum wages is provided and the effective dates of the changes are mentioned below the map.

In addition to the minimum wage increases, paid sick leave has been pushed onto several state ballots and is now the law in six states. There are a number of other states that are now pushing for this and the hospitality industry may experience increased costs by over hiring to cover shifts for those taking paid sick time off. Labor costs will increase due to the tight labor force or possibly due to government mandates. The industry needs to be prepared for this by analyzing costs or raising menu prices to compensate and institute more innovative ideas. Fortunately, consumers are becoming more open to price increases as long as the quality of the product, service and atmosphere remain outstanding.

Are you ready to handle your current growing and evolving workforce? If you need assistance with HR related projects, challenges or concerns, MCM can help. Contact Tiffany Cardwell, CCP, PHR, SHRM-CP, HR Consulting Principal, via e-mail or phone (502.882.4660).