The “service” economy that isn’t

This summer’s outlook was already foreshadowed in January, when the Bureau of Land Management said that Log Gulch Campground in Montana would be closed because of staffing issues. By early May, Michigan gave another indication when it said it had hired fewer than half of the 1,300 seasonal workers it needs to staff state parks, despite pumping wages up to $15 an hour, or 50% higher than the state’s minimum wage; less than a month later, Michigan was pleading with campers to respect the 3 p.m. check-in time because its skeleton workforce couldn’t keep up with site clean-ups.

And now that we’re in the full swing of summer vacation season, recreational facilities and tourist-oriented businesses all across the country are struggling to stay open. Several state parks in Nebraska are cutting hours due to the worker shortage. Trolleys serving Maine’s beaches have been sidelined by a lack of drivers. Municipal swimming pools nationwide are closed or operating at reduced hours for lack of lifeguards. A spokesman for Hospitality Minnesota said this past weekend that the state’s hospitality industry is down 25,000 workers from pre-pandemic levels for this time of the year, even as record numbers of tourists and vacationers are demanding service.

The Wall Street Journal reported last week that employment at hotels overall was down 20.7% in March compared with the month before the pandemic hit. A series of graphs with its story shows a stubbornly high quit-rate for jobs in accommodations and food services (which includes RV parks), exceeding all other job categories, even as the number of job openings keeps increasing. “Waiting” on people was never a lot of fun, but even less so when the public overall seems more surly and demanding, and seasonal positions have been exceptionally hard hit. “The share of U.S.-based job searches for seasonal roles on April 10 was down 16.9% and 27.6% from the same date in 2021 and 2019, respectively,” the Journal reported, citing data from the job-placement service Indeed.

One relief valve for such shortages, turned off by the pandemic the past two years but now reopened, has been foreign workers. But while work visas are once again available, what’s often not available is housing for those workers. As explained by an economic development director in Wyoming, “so much of our real estate has been converted to vacation rental properties that affordable housing and summer-only housing is just at a premium”–economic development-speak for “too expensive for service workers to afford.”

Housing prices have also squeezed out local workers, of course, but now that’s compounded by high–and still rising–gas prices that make commutes from areas with more moderate housing prohibitively expensive. Add the reluctance of many older workers and retirees, another traditional source of summer help, to run the risk of Covid-19 exposure, and there simply aren’t enough bodies to meet demand.

Traditional economic theory holds that in this sort of situation, the market will eventually self-correct–that wages will start rising until they’re high enough to attract an adequate labor supply. That may yet happen. Thus far, however, the accommodations and food service industry overall has been cautious at best in responding adequately, and the RV park segment in particular has been downright miserly, with average hourly earnings last summer actually down approximately 16% from the previous summer, according to Labor Department statistics; and while earnings by RV park workers subsequently rebounded and were up 10% year-over-year in March, that was too little too late to retain a chunk of the shrinking work force.

Bolder wage increases would seem to be in order, but taking that road could very well upend the service industry’s business model. Meaningful wage increases invariably will force one of two outcomes: either higher prices, risking the loss of some amount of business, or lower profit margins. Lower margins would be the death of many restaurants, but much of the RV park and campground industry could take them in stride–it just won’t want to.

So here’s my prediction. If you’re an RVer or camper, expect the worst of both worlds: higher prices and less service.

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