Labor Shortages And Tourism Boom Could Overwhelm Montana’s Hospitality Industry
America’s employers added just 266,000 jobs last month. That’s sharply lower than in March and a sign that some businesses are struggling to find enough workers as the economic recovery strengthens. It’s a problem for Montana’s hospitality industry, which expects tourists to return in droves this summer.
Powered by consumer spending and government aid, the U.S economy is surging out of the pandemic recession that cost tens of millions of Americans their jobs and businesses last year.
Experts say vaccinations, combined with growing consumer confidence and a pent-up demand for travel is fueling expectations for a blockbuster domestic summer tourism season.
Zak Anderson is chair of the Whitefish Convention and Visitors Bureau, a non-profit marketing organization made up of over 150 regional businesses. He anticipates this trend having a big impact on his organization.
“Everyone is really bracing for the biggest year we’ve ever had.”
Anderson tempers that optimism with this word of caution. Montana’s hospitality sector has a big problem on its hands, he says.
“We’re in our true shoulder season. This is generally the most quiet time of year. We’re staffed-up currently, but are we staffed-up and ready for those big summer months? We’re certainly not there yet.”
The economic rebound has been so fast that many businesses, particularly in the hard-hit hospitality sector — including restaurants, bars, hotels and outfitters — have been caught flat-footed and unable to fill all their job openings.
Patrick Barkey, director of the University of Montana’s Bureau of Business and Economic Research, says the workforce shortage is affecting businesses across the board.
“Nationally we’re looking at roughly four million fewer people in the labor force than there was prior to COVID. In Montana it’s a little more erratic than that, estimated as well, it looks to be at least ten or fifteen thousand people who are no longer in the labor force — and that’s ... a new thing.”
Montana’s unemployment rate peaked in April of last year at 11.9%. This past March it dropped to a near pre-pandemic low of 3.8%. That marks this year’s third consecutive month of shrinking unemployment, a metric that doesn’t include people who have stopped looking for work.
As of early May, the top three new job postings in Montana are for retail salespersons, cashiers, and stock clerks, positions averaging between $11 and $14 an hour.
Job postings are up above pre-pandemic levels nationally and in Montana, where new job postings average around $18 an hour, according to data from the state labor department.
For years Montana’s labor market has faced a shortage of skilled labor. More baby boomers are retiring and leaving the workforce than there are younger workers replacing them. But the COVID-19 pandemic brought new challenges, Barkey says.
“You really have to peel back the onion and say, ‘Okay, what are these people doing?’ The answer, at least in part, is they’re getting by thanks to the unprecedented income support that’s come through the federal government through the whole series of spending bills passed by Congress in the past year.”
Whitefish CVB’s Zak Anderson says he suspects some are using that government assistance to bide their time.
“A lot of the research is suggesting that people aren’t necessarily hanging onto unemployment so that they can not go back to their service industry jobs, and that more often it’s just giving them more time to find a job or a career in a different industry that is higher paying.”
Lisa Jones, a spokesperson with the Whitefish Convention and Visitors Bureau, says housing costs and availability are also playing a role in people’s willingness to go into service industry jobs.
“Unfortunately, all of the short-term rentals used to be long-term rentals. And now, those aren’t available, and so we don’t have housing, therefore we don’t have a workforce.”
Hospitality, lodging and service jobs require close contact with customers. COVID-related health concerns prompted some workers to leave those jobs.
Jones says a different byproduct of the pandemic frustrated many experienced retail employees and led to still more resignations: frequent confrontations with some customers over local masking policies.
“They worked as waitresses and bartenders and hostesses and cleaned rooms for years. And they enjoyed the lifestyle that came with their jobs and the beauty of the place that they lived, but there was lots of challenges with them trying to just ask people to do a simple thing like follow our ordinance and have concern for the health of our community.”
Montana’s Republican Gov. Greg Gianforte recently announced measures aimed at encouraging more people to enter the workforce. Gianforte says the state’s federally subsidized $300-a-week extended unemployment benefits will end next month. In a corresponding move the state will give one-time $1,200 payments to Montanans who were unemployed and re-enter the workforce.
According to reporting from the Associated Press, the U.S. Labor Department has not seen evidence that enhanced unemployment payments are keeping people from finding jobs.
Everyone contacted for this story tells MTPR that Montana’s hospitality sector needs creative solutions to address the labor shortage before the start of the summer tourist season. Suggestions include higher wages, signing bonuses, combined job descriptions, reconfiguring business hours and even outsourcing work when possible. All also recommend employers reward their existing workforce when possible to retain them.
Again, University of Montana Economist Pat Barkey:
“The competition from federal programs is going to go away as those programs expire. You’re going to see a lot of folks who are on income support who are going to need money and I think you’re going to see an increase in labor force participation as wages go up.”
Barkey says workforce shortage problems always resolve themselves, just not in ways that satisfy everybody.