The U.S. Hospitality/Services Sector

Via Andrew Sullivan;

Nona Willis Aronowitz explores restaurant work:

Nearly half of people ages 16 to 29 do not have a job. A quarter of those who do work in hospitality—travel, leisure, and, of course, food service. A study of 4 million Facebook profiles found that, after the military, the top four employers listed by twentysomethings were Walmart, Starbucks, Target, and Best Buy. The restaurant industry in particular is booming; one in 10 employed Americans now work in food service—9.6 million of us. Those numbers are growing each year. Even though more and more laid-off, middle-aged Americans are turning to restaurant jobs, as of 2010 about two-thirds of food service workers are still under age 35. And the industry’s workforce is more educated than it was just 10 years ago. In major U.S. cities, about 9 percent more food service workers have been to college.  

Matt Yglesias comments on Willis Aronowitz’s article as well:

If owning a Quiznos franchise becomes systematically more profitable than owning a Subway franchise due to some labor arrangement, then what will happen is Quiznos franchises will proliferate across the land as Subway withers and dies. Meanwhile, one of the main reasons why the food service sector has become our “employer of last resort” in the United States is precisely because the jobs are bad and the wages are low. Firms have not yet invested a lot of time and energy in figuring out ways to get by with fewer fast food workers, but in France I saw that McDonalds outlets had installed touchscreen kiosks where you could place your order without needing to visit a cashier. American manufacturers got remarkably good over the decades at producing more stuff with fewer workers, precisely because one man’s good job is another man’s employee I’d like to find a way to lay off. 

The more promising thing about food service is that some of the same characteristics that make it a poor venue for large-scale labor organizing—relatively low startup costs and relatively few barriers to entry—make it feasible to experiment with new models. You can start a brewpub coop or take your talents on the road with a food truck or leverage a reality TV appearance to escape wage slavery and become a local entrepreneur. But all this kind of thing requires some modicum of skills—real cooking ability or understanding of business principles or both. It’s important for the country to start taking food service seriously as an industry and major element of the labor market, because the ongoing rise of e-commerce is going to mean that more and more of our commercial space will be dedicated one way or another to these things.

We all know that as globalization progresses, the more developed nations will have less in the way of a manufacturing sector, unless wages rise so low as to keep them globally competitive. But that really does not seem possible as there will be a bottom for the foreseeable future; rising wages in China will force movement to Bangladesh and India. Focusing on the service sector, especially the food service industry seems prudent. Those are the types of jobs that will not diminish in number due to offshoring. There’s no reason we cannot be seen as a culinary destination, and although there surely have been individual attempts to try, the current demographics can spur a new push. Maybe skilled workers who have been are are getting laid off will put their mental capital, education, and experience, into innovations for food service. With luck, there will be some successful entrepreneurial endeavors out of these young and middle aged workers who now make up the bulk of the hospitality industry.

Yglesias explores the factors behind Willis Aronowitz’s discussion of organized labor too. He credits industries where windfall profits which create an incentive for workers to organize and negotiate a share of the higher up’s profit to be a driving criterion. I would say that a tighter labor market is more of a factor than just windfall profits. There needs to be a highly competitive labor market to spur workers to organize. Windfall profits are probably more of a correlated offshoot though.

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