Wages for Restaurant, Hotel and Hospitality Workers Cause Controversy

The restaurant sector has been one of the world’s largest providers of employment. As of December 2022, America’s restaurants and various other food service and drinking establishments employed 11.9 million people, according to the Bureau of Labor Statistics. (The National Restaurant Association typically estimates that number to be even larger.) Likewise, hotels and similar businesses are very large employers, at about 1.5 million workers in the U.S. alone in late 2022.

Initially, vast numbers of people lost their jobs during Coronavirus shelter at home restrictions, but by the spring of 2021, many companies had not only rehired staff but were having great difficulty in attracting enough workers. Wages have risen.

While the count of jobs provided in hospitality is exceptionally high under normal conditions, the wages tend to be among the lowest of any industry. This tradition of low wages is due to many factors. For example, restaurant work is an entry-level job for many people, with few formal skills required on the low end. Next, the profit margin at typical restaurants is relatively low. Restaurant customers are very price sensitive. It is a significant challenge for restaurant operators to maintain profitability at all, leaving little room for substantial employee wages and benefits.

There are a few exceptions to this low wage scenario: waiters, wine experts and service captains in very fine restaurants can earn substantial tips and pay. Managers of high-volume restaurants may also earn good salaries and benefits, and highly experienced head chefs can enjoy good salaries.

Otherwise, most restaurant workers are hourly, and they often contend with part-time schedules. Their benefits are usually very limited, if any benefits are offered at all. This creates a paradox: One of the most enjoyable and vital things a consumer can purchase is a good meal. Nonetheless, consumers are unwilling to pay enough for those meals to create good wages for those who cook for them and serve them.

Restaurant wages are creating a great deal of public interest in America. Several cities (or U.S. states) have enacted minimum wages that are significantly higher than the federal minimum. Elsewhere, some restaurant workers were publicly demonstrating their demands for higher pay. These factors may lead to higher pay in restaurants. On the other hand, they may lead to rapid adoption of automation and robotics in restaurants, eliminating jobs. For example, table computers and touch screens are now well advanced and in use in a growing number of restaurants for ordering and paying for meals. Meanwhile, robotics for repetitive kitchen tasks is nearing commercial viability. Robots are also now commercially available that pick up completed food orders from the kitchen and carry them to the appropriate location in the restaurant.

Hotels are likewise very large generators of jobs, most of which were at relatively modest pay levels. Those jobs include high numbers of maids, hotel restaurant staff, gardeners and desk clerks. However, a big difference between the hotel and restaurant sectors was that major hotel chains, such as Marriott, tend to offer somewhat better levels of pay than restaurants do, at the properties they own and/or manage. Major companies such as Marriott also tend to offer good benefits and excellent opportunities for career advancement from within the ranks.

Cruise lines are an outlier. While North America is the world’s largest cruise market, and major cruise lines require vast numbers of crew members for their ships, they nonetheless employ very few residents of the U.S., Canada or Mexico. Instead, crew members at the lower levels (such as cabin stewards, servers and kitchen workers) tended to be contract workers from low-wage nations, recruited in Eastern Europe, Southeast Asia and Central America. Many are content to have relatively low pay, a steady job, good living conditions onboard and, in some jobs, the ability to earn tips.

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