US Hotels and Their Workers: Room for Improvement

Executive Summary

The U.S. hotel industry—a low-wage industry that has grown rapidly over the past two decades—provides jobs for workers with little formal education or training, including some people leaving welfare.  Hotels have also received public economic development subsidies as part of central city economic development projects.

This report summarizes the industry’s performance on issues of interest to its workers and to those who are concerned about low-wage workers and wage inequality, the opportunities available to people leaving welfare and the quality of jobs created by businesses receiving public economic development subsidies.  The industry’s record on these issues is a mixed one, with both positive and negative features.

n      Since the mid-1980s, hotel employment has grown faster than overall U.S. employment,   reflecting the expansion of the industry in the 1980s and late 1990s.  In 2000, about 1.8 million people worked in hotels, 48.1 percent more than in 1984.

n      Between 1989 and 2000, hotel employment rose dramatically in a number of southern and western states, most notably in Mississippi and Nevada. In Mississippi, hotel jobs increased from 7,900 to 35,568 jobs or 350 percent. In Nevada, during the same period, hotel jobs increased from 128,162 to 216,512 or 69 percent. Taken together, Mississippi and Nevada accounted for nearly 45 percent of the 260,000 new hotel jobs created nationwide during the 1990s.

n      Hotel workers had a median wage of $8.62 per hour in 2000.  This was $3.41 per hour below the overall U.S. median hourly wage of $12.03.  (These wages may not include tips for such workers as waiters and waitresses, bartenders, and bellhops.)

n      The wage gap between high- and low-wage hotel workers has grown during the last two decades.  In 2000, high-wage hotel workers earned 325 percent of what low-wage hotel workers earned; in 1979, high-wage hotel workers earned 240 percent of what their low-wage counterparts earned.  The high-wage/low-wage gap was larger in hotels than in several industries with similar overall wage levels, including meatpacking, nursing homes, building services, laundry services, department stores, grocery stores, and child care.  (High-wage workers are those who earn more than 90 percent of all workers in their industry, while low-wage workers are those who earn less than 90 percent of all workers in their industry.)

n      Poverty-level wages are common in the industry.  In 2000, 47 percent of hotel workers, but only 27 percent of all U.S. workers, earned less than the hourly wage that a full-time, full-year worker would have to earn to reach the federal poverty line for a family of four.  (This does not mean that 47 percent of hotel workers lived in poverty, since some could have exceeded the poverty level by relying on the earnings of other family members, working more than one job or working longer than regular full-time hours.)

n      Except in Las Vegas, hotel wages in the 20 metropolitan areas with the most hotel jobs were too low to enable a single parent to support herself and one child at a basic-needs level in 1999.  Half of these major hotel centers had average hotel wages that were no more than 76 percent of the amount that a one-parent, one-child family needed to afford the cost of basic necessities.

n      The largest hotel occupations are maids and housemen (22 percent of hotel jobs in 2000), managers (18 percent), clerks (9 percent), and cooks and personal service workers (about 5 percent each).  Managers have been increasing as a share of hotel employment, while waiters and waitresses have been declining.

n      Recent research shows that hotel housekeepers, the industry’s largest single occupation, do not have access to career ladders on which they could advance within the industry.  There is more potential to create career ladders in some other hotel occupations, such as food and beverage service and front desk jobs.

n      During the last decade, some hotels outsourced parts of their operations that managers considered “non-core” or unprofitable, such as food and beverage services.  This decision may depress wages for hotel-related work.  Wages are usually higher in hotels than in the industries that take over these functions.  For example, median wages for cooks are higher in hotels ($9.05 per hour) than in restaurants ($6.71), and janitors earn more in hotels ($7.96) than in building services companies ($7.24).

n      About 20 percent of hotel workers worked part-time in 2000, compared with 17.7 percent of all U.S. workers.  Part-time hotel workers were about twice as likely as part-timers in the United States as a whole to be working part-time involuntarily.  About 20.9 percent of part-time hotel workers, but only 10.8 percent of all U.S. part-time workers, preferred a full-time job but were working part-time for economic reasons.

n      Hotel workers’ employee benefits fell in the late 1990s.  From 1995 to 2000, benefits fell by 3.7 percent after adjusting for inflation.

n      Hotel workers have more occupational injuries than private sector workers as a whole.  From 1992-2000, hotel workers averaged about 8.9 injuries per 100 full-time workers, compared to 7.0 injuries per 100 full-time workers in the private sector as a whole.  However, hotel workers had fewer occupational illnesses and fatalities than private sector workers as a whole. 

n      Compared to U.S. workers overall, hotel workers are younger, have less formal education, are more likely to be women, are more likely to be immigrants, and are less likely to be white.  In 2000, about 21.8 percent of hotel workers were under age 25, 24 percent did not have a high school diploma, 57.9 percent were women, 28.4 percent were immigrants and 45.6 percent were non-white. 

n      In recent years, the industry’s workforce has increasingly been made up of immigrants and Hispanics and workers’ levels of formal education have been rising.

n      Not all hotel jobs are the same.  Unions, which represented 11.7 percent of hotel workers in 2000, improve the quality of hotel jobs substantially.

• In 2000, hotel workers represented by unions earned a median hourly wage of  $10.00, $1.50 more than nonunion workers’ median wage of $8.50 per hour.  (Even after adjusting for other factors that can affect wages, union hotel workers in the late 1990s earned nearly 10 percent more per hour than their nonunion counterparts.)
  
  
• Union hotel workers are more likely to work a standard full-time workweek.  About 21.5 percent of all nonunion hotel workers, but only 9.2 percent of union hotel workers, worked part-time in 2000.  About 14.2 percent of nonunion workers, but only 2.4 percent of union workers, worked 45 or more hours per week.
  
  
• Unions benefit traditionally lower-wage groups the most.  In 2000, non-white hotel workers represented by unions earned $2.30 more per hour than non-whites without union representation; women represented by unions earned $2.00 per hour more; union workers with less than a high school diploma earned $2.50 per hour more; and foreign-born union workers earned $2.37 per hour more than their nonunion counterparts.  Unions represent workers who come disproportionately from several of those groups.  In 2000, about 30.2 percent of union hotel workers did not have a high school diploma, 47.9 percent were immigrants and 63.8 percent were non-white. 
  
  

• As of May 2002, hotel jobs had not recovered from the combined effects of the recession and the Sept. 11 terrorist attacks.  From March 2001 (the beginning of the recession) through May 2002, hotel industry employment declined by 122,000 jobs, or 6.4 percent.  Of those lost jobs, 63,000 were lost after September 2001. 

• Unless carefully designed, “work-first” welfare reform has the potential to drive down the wages of all low-wage workers, trap workers in jobs from which there is little opportunity to advance or promote the cycling of workers from one low-wage job to another.  These concerns are especially important for the hotel industry, where many workers already earn poverty-level wages, wages in major metropolitan areas are generally insufficient to support a single parent and child, turnover is already high and pathways of advancement are not equally available to all workers. 

• Hotel jobs can be improved by promoting “high road” hotel competition based on high productivity, high quality and innovation, and blocking “low road” competition based mainly on low costs (including low wages) and little attention to productivity or quality.  Policies that can accomplish this are:
• providing government and foundation support to multi-employer partnerships that are dedicated to raising job quality and creating meaningful career ladders for hotel workers;
• directly raising wages at the bottom through a higher minimum wage, living wage laws and job quality standards attached to economic development subsidies;
• protecting workers’ right to form and join unions;
• integrating education, training, workforce development and career path development more fully into welfare reform;
• requiring employers to provide equal hourly wages and benefits for part-time and full-time workers doing equivalent work; and
• obtaining government funding of detailed industry data collection for regions where hotels are especially important to the local economy.