A week in America | 20 May 2021

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In the latest blog from the U.S., Martin Liptrot looks at the issues facing the hospitality industry as they begin to face the prospect of reopening.

The last Monday in May is Memorial Day. It honours the ordinary men and women of the military killed serving the nation.

It also traditionally marks the start of the summer vacation season.

Across America, businesses and communities are facing difficult decisions about what to anticipate or expect. While the COVID 19 vaccine program is slowly rolling out across the country, it is still unclear what the public health message is and whether travel, hotels and amusements will or should be fully open.

Many Republican Governors have ordered the lifting of pandemic protections like mask wearing or social distancing. Ignoring the rising infection rates, they have declared in lurid headlines “We’re open for business” and have basked in the congratulations and cheers from hoteliers, restaurant owners, hospitality and tourism chiefs and others with a vested interest in welcoming the crowds back to our beaches and attractions.

In states like Florida where I am based, this has come as a welcome relief to the tens of thousands of bar and restaurant workers who rely on the visitors and their generous tips for their livelihood.

But many hospitality businesses are still struggling to find staff to work their kitchens, serve their food and drinks and pamper guests. Despite national unemployment figures being at 6% and numbering 10 million, American workers are in short supply.

Many business leaders and politicians on the right believe the cause of this labour shortage is the ‘generous’ unemployment cheques being offered to people to simply ‘stay at home’.

On top of the state unemployment benefit – up to $275 per week here in the Sunshine State – the Federal Government has agreed to top that up by another $300 a week. Florida collects no state income tax so can’t easily build up a Social Security fund of its own and while the ‘top up’ is less than the $600 a week the Trump Administration paid during the early outbreak of the virus, it is still considered by our leading politicians to be ‘generous to a fault’.

Commentators argue that at $575 a week – equivalent to $30,000 a year – much of the motivation has been taken out of ‘job hunting’. ‘Rewarding the work shy’, they say.

I am sure for some, probably the young who live with their parents, with few bills or financial responsibilities this may be the case, but for many the picture is more complicated.

Social Security here in the U.S. is not the same social safety net we experience in the UK. It is a short-term sticking plaster affair.

Typically, unemployment cheques are limited to 13 weeks, only available to those who have been paying into the system for some time and are onerous to apply for and collect.

If you were a higher-level earner before unemployment struck, the paltry amounts available can quickly see your family savings and retirement funds evaporate, home loans default, credit card debts spiral and medical insurance become unaffordable.

But it’s at the lower pay points the challenges are most acute.

While many critics believe a $575 a week handout is too much to motivate claimants back to work, it points to the frightening fact of how low real wages are for so many in the hospitality and service industries.

If you are employed as a cleaner or janitor on minimum wage in a Florida hotel, a 40-hour week pays only $345 – and that’s at Florida’s ‘generous $8.65 an hour’ versus the federal minimum wage rate of $7.25.

Thankfully, Florida’s legislators have agreed to elevate minimum wage to $15 an hour in increments by 2026.

But in the hospitality sector, where tips constitute the lion’s share of an employees take home salary, employers are exempt from the minimum wage and often pay half or less per hour, passing the buck for their staff’s pay to their clients and customers through their gratuity.

With restaurants operating on reduced hours, fewer tables and less visitors than normal – that has impacted waitresses and bar staff’s ability to make those valuable tips. And if they need to pay childcare and transport costs, it quickly becomes not worth their while anymore.

But that argument hasn’t reached the Governor’s mansions. 21 of the U.S. States are about to opt out of the $300 federal top up, claiming it is a disincentive to work and thus turning the screws on working people a little more tightly.

Whatever the public health consequences may be, re-opening the hospitality sector now has become an economic necessity for many. The argument that ‘work at any price is good’ is being championed in the usual media and social channels.

No doubt, getting the country back to normal as quickly as is prudently possible is a good thing. But at what cost? Pushing people back too early could have disastrous public health consequences and set us back months in our recovery efforts. We need to make work pay and as part of that the nation needs to review its social security and benefits system. It needs to give workers and those who serve us as much protection as it affords its own finances, the bar owners’ associations and the multinational hotel and entertainment chain lobby.

Martin Liptrot is a writer and commentator on public affairs and politics based in Florida.