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Employment in Hospitality Surged in 2018: But does it match Revenue Figures?

Timothy Lozier Labor Law, Latest News Leave a Comment

This past week, the U.S. Bureau of Labor Statistics released a report on current employment statistics that seems to paint a positive outlook on job growth, particularly in the Hospitality and leisure. According to the report, the leisure and hospitality sector added 306,000 jobs in the U.S. throughout 2018, after adding 354,000 jobs in 2017. The Food Service and Drinking Places grew their segment within this sector by 235,000 jobs in 2018, seemingly from sales growth.

Source: U.S. Bureau of Labor Statistics, Current Employment Statistics Highlights: https://www.bls.gov/web/empsit/ceshighlights.pdf

However, looking at the U.S. Census statistics mentioned in the report , the revenue figures seem to state otherwise. Looking at the Census data for Food Service related sectors, the industry saw revenues decrease across the board by 17% from 2017 to 2018. This seems to contrast the notion that jobs are being added while revenue and profits are declining.

Source: U.S. Census Bureau, Monthly Retail Trade Report, Segmented to Food Service and Hospitality industry: https://www.census.gov/retail/index.html

What does this all means for the future? With minimum wage rates increasing and companies looking to find ways to balance their costs and wage rates, there is a pressing need to determine what the market will do in 2019. At the same time, employers are struggling to maintain their operations in a way that will allow them to keep pace with the market, maintain wages, retain staff, and frankly – stay in business.

We wrote an article a few weeks back on the importance to mitigate these risks through payroll management and tax credits in business.  This especially rings true, if the reports are correct. More job growth, but flat (or declining) revenue can pose risk to an organization. Important to staying streamlined is:

  1. Streamlining the payroll process: Keeping a compliance-focused payroll management system will enable you to eliminate any errors in payroll, report on your payroll management statistics, and make changes to ensure you are maximizing your staff.
  2. Connecting Time Collection to Payroll: building a Time Collection and scheduling system to reduce overtime, manage tip wages and credits, and build in intelligence to accurately determine time worked can help to reduce any extraneous risks.
  3. Take advantage of Tax credits: There are many advantages to having a solution to help you file tax credits and get some money back on your time and labor, so you are able to build in the advantage of having less overall costs in the long-term.

In the end, the market is showing job growth, which if correct, means we have to account for more costs, especially with increases to minimum wage. And, if the revenue outlook is neutral (or worse), then there will be a challenge to profitability. The key is to look for ways to streamline your processes, implement controls and take advantage of payroll management solutions and credits to help mitigate the risk of costs overrunning profitability.


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