Massachusetts’ Leisure, Hospitality and Tourism workforce: resilient, relevant and in need of reinforcement

Contact:  Keith Mahoney - 617-338-2391 or keith.mahoney@tbf.org

Boston – A new report released today at the Boston Foundation takes the first in-depth look at the Massachusetts leisure, hospitality and tourism (LHT) industry in decades, and finds that while the sector quickly rebounded from the Great Recession, it is still plagued with low pay and high turnover. The report, The Work of Leisure: Behind the Scenes of the Massachusetts Leisure, Hospitality and Tourism Industry, was compiled by a research team at the University of Massachusetts Donahue Institute, who coupled a comprehensive look at labor, salary and demographic data with a survey of more than 300 employers and business owners in the sector.

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“This research fills a much needed gap in our understanding of just how critical businesses like hotels, restaurants, and other tourist-serving operations are to recovery and growth of our economy,” said Paul S. Grogan, President and CEO of the Boston Foundation. “But for all its importance, we have not paid attention to this critical sector and whether it’s employers have what they need to increase wages, reduce turnover and ensure the long-term health of the industry.”

The research finds the LHT industry, the third-largest in Massachusetts, employs 376,000 workers and generates more than $28 billion in economic output on its own – and its spending and economic activity spins off another 232,000 jobs and $41 billion in additional output. The industry was one of the most resilient in the 2001 and 2008 economic downturns. Despite that, it is an industry that faces challenges, especially when it comes to finding, retaining and compensating its workforce. Despite employing roughly 10 percent of the state’s workers, the LHT industry pays out just four percent of total wages.

Those figures are driven by a combination of factors – including lower hourly wages, a large percentage of part-time workers and a workforce that is younger, less educated, and often balancing work and education. More than half of LHT workers work part time, 56 percent are under the age of 35 and more than a quarter are advancing their education as they work. Forty-five percent have a high school degree or less, and the LHT workforce is more highly Latino and foreign-born than the overall labor force. The result: a statewide median personal wage of $17,000, compared with a median personal wage of $45,000 for non-LHT workers. In all, 20% of Massachusetts workers living in poverty are working in the LHT industry.

“Leisure, Hospitality and Tourism is a critical part of the Massachusetts economy, but the research highlights some of the key issues facing the industry, its employers and its workers.” said Mark Melnik of the Donahue Institute, lead author of the report. “We hope this and our other findings can be a call to action for policymakers to address the needs of this critical part of the Massachusetts economy in years to come.”

Opportunities for replacement workers drive training needs

The turnover of the workforce, combined with lower educational barriers to entry, do make the LHT industry an area of opportunity for new workers. Researchers estimate the industry will generate 6,500 new jobs annually – more than 1 in 9 new jobs created in the state. In addition, the researchers estimate an additional 59,000 jobs will open up annually as workers leave the industry and need to be replaced.

Meeting those job needs and improving the pipeline of talent into the industry, the report authors note, requires a rethinking of training capacity. The report notes that 80 percent of job openings in the industry require no formal educational credentials, and only 3 percent require a bachelor’s degree or higher, and suggests a need to focus on short-term and on-the job training and targeted credentials. However, a “skills gap” does exist in a few areas – the research suggests a need for English language, communication and job and citizenship application assistance would open doors for foreign-born workers to fill more of the 32,500 annual job openings in culinary related work that do not require a high school diploma, and employers cited challenges finding skilled culinary staff – such as chefs, cooks, and first-line food prep supervisors, for more than 8,000 annual job openings requiring a high school diploma.

The report catalogs a broad network of training options available through community colleges, four-year colleges, vocational high schools and training programs, but notes that the 1,200 high school graduates and 1,044 postsecondary graduates with LHT training cannot easily meet current demand growth. Employers surveyed said they are satisfied with the workers they get from training programs, but they are concerned about the size of the pipeline and the availability of a career ladder in the industry. The cost and availability of labor and health care top the list of employer concerns over the next five years. Local cost of living concerns, too, have made maintaining a well-staffed, skilled workforce challenging for LHT employers statewide.

Local and state policy concerns

LHT employers also express concerns over a number of local and state issues, including transportation access, housing costs and regulations that make business operations more challenging or fail to manage the threats posed by the sharing economy. Overall satisfaction with the industry is tempered by these issues and the desire for the state to provided better-funded, more consistent marketing efforts in regional, national and international markets.

The report lays out a series of goals and challenges with policy implications for the leisure, hospitality and tourism industry, and suggests policies that might begin to address the goals.

Goals include:

• Better alignment of the LHT workforce with cost of living, training and recruitment challenges. The report suggests finding ways to increase the minimum wage but consider adding a lower “training wage” to the mix; increasing affordable housing supply through zoning and improvements in subsidized housing; advocacy and strategic efforts to improve workforce development training and active efforts to preserve and provide pathways for foreign-born workers to access jobs and citizenship. 
• Improvement of LHT marketing funds and strategy The report suggests restoring funding for regional tourism councils, and seeking out new ways to expand the state tourism marketing budget to attract convention, national and international tourism, such as locally targeted hotel room taxes in Tourism Destination Marketing Districts. 
• Leveling the competitive playing field for leisure, hospitality and tourism businesses. The report suggests a need to better understand and regulate the impact of sharing services on transportation and LHT employers, who pay lodging taxes and face other regulations not currently applied to short-term rental platforms. 
• Controlling the rising cost of doing business in leisure, hospitality and tourism. The report notes that while digital communications have become more critical to LHT businesses, the cost of using and/or providing these services are adding up. The report suggests greater oversight of digital infrastructure pricing, as well as increased flexibility in water and sewer rates and improvements in statewide transportation access to give visitors greater mobility outside Boston and its immediate suburbs.

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The Boston Foundation, Greater Boston’s community foundation, is one of the largest community foundations in the nation, with net assets of more than $1 billion. In 2017, the Foundation and its donors paid $130 million in grants to nonprofit organizations and received gifts of more than $194 million. The Foundation is a close partner in philanthropy with its donors, with more than 1,000 separate charitable funds established either for the general benefit of the community or for special purposes. It also serves as a major civic leader, think tank and advocacy organization, commissioning research into the most critical issues of our time and helping to shape public policy designed to advance opportunity for everyone in Greater Boston. The Philanthropic Initiative (TPI), a distinct operating unit of the Foundation, designs and implements customized philanthropic strategies for families, foundations and corporations around the globe. For more information about the Boston Foundation and TPI, visit tbf.org or call 617-338-1700.