Exploring Careers in Leisure and Hospitality
Which of these positions offer future opportunities for young workers? Industry experts discuss trends in the restaurant and hospitality industry in Maximum Employment Matters.
Part 1 (1:21–3:00)
Why does the Federal Reserve care about careers in leisure and hospitality?
Part 2 (3:01–9:56)
What percentage of the workforce earn minimum wage and where are they located?
Part 3 (9:57–12:40)
Who works for minimum wage or less?
Part 4 (12:41–17:46)
What jobs are included in the leisure and hospitality industry?
Part 5 (17:47-25:39)
What opportunities are available in the restaurant industry?
Part 6 (25:40-29:13)
What skills are needed to be successful in the leisure and hospitality industry?
Part 7 (29:14-31:37)
What are some positions available in the restaurant industry?
Part 8 (31:38-40:00)
What resources are available to teach about minimum wage?
Part 9 (40:01-45:32)
Questions and Answers: What are your thoughts on how you can use the restaurant industry as a training ground while you're in school for a career path either within or outside leisure and hospitality?
Part 10 (45:33–46:30)
Questions and Answers: If servers can make more money than managers, what is the incentive to go into management?
Part 11 (46:31–47:02)
Questions and Answers: Will we have access to the information on this webinar? (Yes)
Part 12 (47:03–47:40)
Questions and Answers: Would you be willing to share your contact information?
Part 13 (47:41–49:35)
Questions and Answers: Why do you think women are more likely to work at minimum wage jobs?
Part 14 (49:36–51:52)
Questions and Answers: How does a recession effect jobs in leisure and hospitality?
Part 15 (51:53-56:34)
Questions and Answers: How will the proposed tax policy impact wage inflation?
Part 16 (56:35–59:38)
Questions and Answers: What skills are most important to making the transition into higher paying industry jobs?
Do your students have questions about the debate over the minimum wage? Give them insight into the economics of price floors by using this interactive lesson.
In these two lessons, students will assess their current and future human capital—their knowledge, skills, and training. Students will gain an understanding of the connection between their education level and earning potential, and explore the costs of a higher education.
The Classroom Economist takes a look at the labor market. It includes a discussion of how the labor market differs from a product market, what the different ways of looking at it are, and how to measure it.
Amy Vaughn: Welcome, everyone, to today's Maximum Employment Matters webinar. Our discussion for today focuses on minimum wage: a look at careers in leisure and hospitality. I'm Amy Vaughn from the St. Louis Fed, and I'll be facilitating today's call. Before we get started, allow me to cover the call logistics on slide two.
If you haven't already done so, click on the webinar link you received after registering. This option offers a few benefits. You can watch the slides as they are advanced; you can type questions to us, download the session material, or even choose to listen to the audio through your PC speakers.
Please note that the webinar performance is dependent upon your connection, so if at any time you're having problems, just pick up the phone and dial the toll-free number. To ask questions today, you can submit them at any time by clicking the ask question button in the webinar and we will be answering those at the end of the call. Also, be sure to keep your mouse handy throughout the webinar, as we will be asking you to participate in some polling questions throughout. And one additional note, the views expressed in this presentation are those of the presenters and not the official opinions of nor binding on the Federal Reserve Bank of Atlanta nor the Federal Reserve System. Now with that out of the way, I'm happy to turn the call over to our host for the program, Julie Kornegay from the Federal Reserve Bank of Atlanta.
Julie Kornegay: Thanks, Amy. Welcome and thank you for participating in today's Maximum Employment Matters. We have an outstanding lineup of presenters. We're excited to have our industry experts, Whitney Mancuso with the Federal Reserve Bank of Atlanta, Mindy Hanan with the Alabama Restaurant and Hospitality Association, and Lesley Mace with the Federal Reserve Bank of Atlanta Jacksonville Branch. Thank you all for joining us today. All right, next slide.
So before we get started, I wanted to provide a brief overview about how this webinar series came about and about the Federal Reserve programs. Oftentimes we are recruiting speakers or promoting programs and we get questions like, "Why is the Federal Reserve hosting a webinar on minimum wage and careers in leisure and hospitality?" Well, these types of programs are at the core of the Fed's mission. The Federal Reserve has a dual mandate of price stability and maximum employment. All right, slide five.
By offering these programs we hope to inform the audience of industry trends. Being aware of these trends will lead to an increase in human capital. This information can be used in education and training to provide more skilled labor. A skilled labor force attracts new industry, which brings with it higher-paying jobs, which produces more consumer spending and tax dollars, ultimately, increasing our standard of living.
And slide six. Our program today will focus on the areas within the Atlanta Federal Reserve or what we call the Sixth District. The Sixth District represents most of the Southeast and is a good indicator of the U.S. economy as a whole.
All right, slide seven. With that being said, Amy, I believe we have a poll question.
Vaughn: That's right. Let's kick off our first polling question. So for those of you on the webinar, you'll see the question in the pop-up box that asks, what percentage of U.S. workers make at or below federal minimum wage? Your options are more than 10 percent, between 5 and 10 percent, or less than 5 percent. I'll give everyone just a few seconds to answer that. I'm going to go ahead and stop the poll and show the results to everyone. And it looks like most people say less than 5 percent. So back to you, Julie.
Kornegay: OK, great, thank you. So now I'm excited to introduce our first speaker, and she will reveal the poll questions results. I'm excited to introduce Whitney Mancuso. She's senior research analyst in the Federal Reserve Bank of Atlanta's research department. Whitney, thank you for joining us this afternoon.
Whitney Mancuso: Hey, Julie, it's great to be with you, thanks for the opportunity. I thought it would be helpful for our discussion to get today to gather available data to give us a picture of exactly who works for minimum wage in the United States. The U.S. Bureau of Labor Statistics, or BLS, annually publishes the characteristics of the minimum wage. These data are released in the summer and refer to the prior year. So today we will be talking about data for 2016. What the report shows is that among workers age 16 or older earning a wage or salary, about 79.9 million shaded in orange on the pie chart were paid in an hourly rate. Among those hourly workers, 2.7 percent or 2.2 million workers made no more than the federal minimum wage of $7.25 per hour. In fact, about 1.5 million had an hourly wage less than $7.25. However, that doesn't mean that the hourly earnings of these workers was less than $7.25. In particular, under the federal minimum wage law, an employer can pay a tipped worker an hourly cash wage as low as $2.13 as long as the combined earnings from the wage plus tips is at least $7.25.
In our next slide, we can see how the share of minimum wage workers has changed over time. The green line represents the level of the federal minimum wage since 1979. In this chart, the orange bars represent the share of hourly workers who earn at or below the federal minimum wage. As you can see, the share of hourly workers paid at or below the federal minimum wage has fallen from highs in the early 1980s. Also, it has fallen since the last increase in July 2009 when the minimum wage was set at $7.25. It peaked at 6 percent of hourly workers in 2010, and as noted before, has fallen to 2.7 percent in 2016.
Our next map looked at changing state policy, which has had an impact on that declining share. While the federal minimum wage sets a floor on hourly wages, a number of states have established minimum wage rates that exceed the federal level. As we scroll through the years in the next series of maps, you can see more and more states adopting their own minimum wage that is higher than the federal minimum. This increase in the share of workers affected by higher state minimum wage rates has contributed to the decline and the share of workers for which the federal minimum wage is binding.
In addition, several cities have raised the minimum wage for certain types of workers and businesses in excess of the state minimum. Another factor that has probably also contributed to the decline in the share of workers facing the federal minimum wage is the general tightening of the labor market in recent years. In October 2010, the national unemployment rate was 10 percent, the highest level since 1983. Our latest reading for October of 2017 is 4.1 percent, the lowest level since 2000. As labor resources have become more scarce, wages have been bid up and this has helped push more workers above the federal minimum wage rate.
It's interesting that the states where the federal minimum wage rate applies, those in orange on our map, are generally in the South. Or put more simply, the minimum wage is lowest in the South. Not surprisingly, then, the states with the highest incidents of hourly paid workers earning at or below the federal minimum wage is also highest in the South. The states with the smallest percentage earnings at or below the federal minimum wage are mostly in the West. This can be seen in the following map, which depicts the percentage of workers making at or below the federal minimum wage. Those states shaded in red have a higher share of hourly workers making at or below the federal minimum than the nation as a whole.
One argument for why there should be a regional variation in minimum wage rates is the cost of living varies from place to place. It is much more expensive to live in Honolulu, Hawaii, than in Jackson, Mississippi. To get some idea of these differences, we can use the regional price parity indices produced by the U.S. Bureau of Economic Analysis. Among the 20 states with the lowest relative price levels, 14 are states in orange on our map, states with a relative low minimum wage. In Mississippi, the federal minimum wage of $7.25 is equivalent to $8.41 nationally, while in Hawaii the state minimum wage of $9.25 is equivalent to $7.79 nationally. So, adjusted for cost of living, the minimum wages are not so different.
Next, I want to look at who works for minimum wage or less. The pie chart indicates that mostly women, shown in pink, earn minimum wage or less. In our next slide, we see slightly more than half of hourly workers who earn minimum wage or less work part-time. And part-time workers work less than 35 hours a week, while full-time work more hours.
In our next slide, we can see who makes minimum wage or less by education level. The chart shows that the less educated tend to work in minimum wage jobs. High school graduates and those with some college account for more than half of those earning minimum wage or less.
In our next slide, we look at earnings by age. It isn't surprising to see that the younger you are, the more likely you are to earn minimum wage or less. Nearly half are age 16 to 24 years old.
In our next slide, we look at who earns minimum wage by industry. Leisure and hospitality account for the bulk of jobs paying minimum wage or less. This again isn't too surprising when you think about the types of jobs that dominate the leisure and hospitality industry. A large number are considered low skill, meaning they do not require specialized training, certificate, or a degree and allow for easy entry and exit. Also, when I took a closer look at leisure and hospitality, it looks like in terms of jobs, the industry is dominated by food services and drinking places. So again, the fact that tips are not counted is probably a huge factor.
So in closing, among hourly workers, those making at or below the federal minimum wage tend to be women and young and have lower levels of education. Over half work in the leisure and hospitality industry, while most work part-time. These workers tend to have higher concentrations in the South. Now I'll turn it back over to you, Julie.
Kornegay: Thanks, Whitney, that was really interesting information. If you have questions for Whitney, please go ahead and click the ask question box at the bottom of your left-hand webinar window panel and go ahead and get those coming in for us. And Amy, I believe we have another poll question.
Vaughn: We do. Again, for those of you on the webinar, we're going to put that poll question out on the web for you to vote. And the question is, have you ever worked in the restaurant industry? Yes or no. Simple question, but we really want to see who our audience is and what your experience is to see if you identify with the things that we're going to be talking about in the next couple of sections. So just a simple yes or no. Let's see how many of you have worked in the restaurant industry. I'm going to stop that polling question and show the results now. And it looks like a lot of you have. So that's pretty interesting. So let's see what Julie has to say.
Kornegay: Thanks, Amy. So we have talked a bit about minimum wage, and as Whitney pointed out, many of the minimum wage jobs out there are within this industry. So I thought I would provide an overview of the leisure and hospitality industry and look at what jobs are included. So on slide 25, according to the Bureau of Labor Statistics, leisure and hospitality is a supersector and part of the service-providing industry group. Leisure and hospitality supersectors consist of art, entertainment and recreation, as well as a combination in food service.
So when we look at the arts, entertainment, and recreation sector, let's do a little deeper dive on what's included within those areas. Typically, we have establishments that are involved in producing or promoting live performance events or exhibits intended for public viewing, establishments that preserve and exhibit objects in sites of historical or cultural interest, as well as establishments that operate facilities or provide services that enable patrons to participate in recreational activities. Accommodation and food service sector is comprised of establishments providing customers with lodging and/or preparing meals, snacks, and beverages for immediate consumption.
So slide 26. We're going to take a look at some of the fundamentals of leisure and hospitality. And so leisure and hospitality is projected to add between 2.1 and 3.3 million jobs by 2021. Jobs from concierges and lodging and entertainment attendants are expected to increase by up to 19 percent through 2018, and meeting and convention planning jobs are set to experience a 33 percent increase through 2022. Next slide.
So, many employees in this field work part-time and earn less than the national median wage of $37,040. But as a reminder, when we refer to median wage, this is the wage in the middle. This is half of the workers earned below that level and half earned above it. So median wage is typically substantially less than our average wage in the industry. There are many occupations in this area that earn more than the national median wage. By 2018, 40 percent of jobs in this sector will go to workers with at least some postsecondary education, particularly in the middle-skills category requiring education beyond high school but less than a bachelor's degree.
Slide 28. So this slide looks at median wages for different careers in leisure and hospitality. And as you can see, there's a wide range in income. The orange trend line represents the median wage of $37,040. Most of the jobs listed have wages above the median annual wage. These jobs do not require a four-year degree. People interested in these jobs typically start in an entry-level position and work their way up. Some positions do require training and industry certification as part of their employment requirements. But overall, there's a lot of opportunity in leisure and hospitality. So as we kind of look at the chart, anything from a fitness trainer, chef, head cook, information clerk (those are going to be folks that maybe answer the phones), flight attendants, lodging managers, food service managers, and then the meeting, convention, and event planners mostly all have salaries above that median annual wage. So if you look at the lodging manager position, the median annual wage is $51,840. And remembering that half of the people serving made more than that. So there may be people earning over $100,000 a year in that position.
Next slide. So with our industry overview complete, Amy, I believe we have another poll question.
Vaughn: That's right. Our final polling question we have for you, I'm pushing that out to those on the webinar. That question is, what percentage of 18 and under workers' first job was in the restaurant industry? What percentage of 18 and under workers' first job was in the restaurant industry? Your options are less than 25 percent, 25 to 50 percent, 50 to 75 percent, or 75 percent or higher. If it's any indication of what our results were from the last polling question, I think I could take a guess. But let's go ahead and stop that polling question now and show you all the results. That will take just a few seconds to come up. And as I thought, about 80 percent say 75 percent or higher of 18 and under workers' first job was in the restaurant industry. And then we have just under 20 percent say 25 to 50 percent. So Julie, let's get back to you.
Kornegay: Thanks. So we are thrilled to have our next speaker with us today. She's going to reveal the actual results of the poll question. Mindy Hanan is president and CEO of the Alabama Restaurant and Hospitality Association. Mindy, thank you for joining us this afternoon.
Mindy Hanan: Thank you, Julie, I appreciate the opportunity to participate. The restaurant and hospitality industry often gets a bad rap for having low-paying, dead-end jobs. Today, I'm here to share with you that the hospitality industry is the industry of opportunity. It's a field that generally has low barriers to entry and an individual's only limited by their own drive and ambition. The statistics I'm going to share with you today come from a survey done by the National Restaurant Association, which surveyed over 5,000 current and previous restaurant employees. On the first slide it shows the proportion of current employees whose first paid job was in the restaurant industry. Six of 10 restaurant employees said their first paid job ever held was within the restaurant industry, which is roughly double the proportion reported by the total United States adult population. Younger workers were much more likely to get their first job experience in a restaurant.
On our next slide you'll see the median age that restaurant employees started working in the industry. Members of the restaurant industry workforce generally got their start in the industry as teenagers. Overall, the median starting age is 18, which is consistent across all positions. With the exception of restaurant employees age 65 and over, workers in all age groups got their start in the restaurant industry in their teens.
On the next slide it shows us the proportion of survey respondents who are currently enrolled in school. A sizable proportion of survey respondents said they are currently enrolled in school. Occupations most likely to include students are host and hostess, which is 47 percent, crew person at 37 percent, server at 33 percent, and dishwasher or bus person at 29 percent. Eighty-nine percent of employees 18 and under and 45 percent of those 18 to 24 are currently enrolled in school.
On our next slide it's going to show employees' first job in the restaurant industry. Restaurant employees are very upwardly mobile. Among restaurant employees who are not currently in their first restaurant industry job, the vast majority said they started in an entry-level position, more than eight of 10 in each category. At least nine out of 10 managers and supervisors said their first restaurant industry job was an entry-level job. A solid majority of employees across all categories also said their first job in the restaurant industry paid at or below minimum wage.
Our next slide shows the proportion of employees who advanced to higher-paying jobs in the restaurant industry. Among restaurant employees who are not currently in their first restaurant industry job, a majority said they advanced to a higher-paying job in the restaurant industry, including 97 percent of managers and 94 percent of shift or crew supervisors. Nine of 10 individuals in operation positions have advanced to higher-paying jobs in the industry, as have 88 percent of chefs and cooks.
Our next slide will show you…it's going to bust the great myth of the hospitality industry. Generally, servers are not underpaid. They usually make more than back-of-house employees and in many circumstances make more than the managers. Earnings of restaurant employees vary by occupation. Restaurant managers reported a median hourly wage of $13.78, while shift or crew supervisors reported earning a median of $10.50 an hour. Chefs and cooks reported median wages of $12 an hour. These are hourly employees that are not paid a salary. The salary people in these positions may make higher than this. But you will see that waiters and bartenders often make the most in a restaurant.
And to illustrate this point, I recently attended a meeting, and we had a speaker from the state of Maine. Maine had eliminated their tip credit and raised minimum wage to $12 an hour. The servers and bartenders in that state organized to change the law back. One of the primary organizers of the group spoke at a meeting I was at. She stated she usually worked three to four hours a night and averages $75 an hour. The change to no tipping and a higher minimum wage meant a pay cut of over 80 percent for her. She told us there is no other industry that gives her the ability to work a few hours at night and make that kind of money.
Our next slide will show you the length of time a typical employee who starts at an entry-level wage receives a raise. The typical hourly employee who starts at an entry-level wage receives a pay raise after six months based on median responses from the restaurant operators.
And then our last slide talks about the restaurant industry and the perceived opportunity for career advancement. When asked to think about the restaurant industry as a whole, perceptions about the opportunity for career advancement were quite divergent. Sixty-four percent of former restaurant employees think that the opportunity exists. In contrast, only 34 percent of individuals who have never worked in the industry think that there's opportunity for career advancement in the restaurant industry. So while the industry may have a perception problem from those on the outside, those in the industry realize that restaurants are a training ground for careers and entrepreneurism. Whether it's the first job, teaching basic skills and work ethics, or a lifelong professional calling, restaurants offer a wide range of opportunity for rewarding careers.
On our next slide you'll see food and beverage service competency model. The food and beverage service competency model profiles the employee ability and technical skills essential to achieving lifelong career success in the industry. This model is hosted on the U.S. Department of Labor's Career One Stop website. There's a link on the bottom of the page to this model and it's interactive, so you can click on it and it gives you the skills and things that are required in the different positions throughout the industry.
Our next slide profiles what our association has been concentrating on in the last few years. We've become much more active in workforce development. The national credentials that the industry recognizes are the ProStart certificate achievement and the ServSafe manager certification. ProStart is an industry created curriculum that includes both management and culinary skills. The pictures on this slide are from our culinary competition that we hold annually for our ProStart students. As you're aware, this is not old-fashioned home economics. This is full-scale culinary arts. Our ProStart students prepare spectacular meals and are judged by chefs and managers from the industry. In addition, there's a management competition that is similar to "Shark Tank." The students develop a restaurant concept and must have a business plan detailing everything from marketing, personnel, menus, food costing, and their restaurant theme. There are scholarships and trophies for those who place, and the first-place winners advance to our national competition.
Our next slide tells a little bit more about the ProStart program. This program has been extremely successful in our state providing classrooms with mentors. Each year, judges from competition had ended up hiring students they had met. One student upon graduating from high school was hired at Outback Steakhouse at $12.50. A few other students impressed the director of human resources at the Perdido Beach Resort so much that they have converted hotel rooms into living space for some ProStart students in the summer working at the hotel. These students, upon returning to Birmingham, were hired to work at one of the city's premier restaurants.
Our next slide shows more information about the ProStart national certificate of achievement. This is something that we're working toward. We don't have any students in Alabama that have done this yet, because you have to get them in the program early for them to have time to complete it, but this is our goal to have the students complete this. It's a two-year program where the students learn all about the restaurant and hospitality industry. They have to pass two national exams and demonstrate a mastery of foundation skills and have over 400 mentored hours. And it can be paid or unpaid hours in working in the industry in various areas. And students who receive the national certificate of achievement are eligible for more scholarships from the National Restaurant Association's Educational Foundation and also can receive credit from more than 75 universities and colleges throughout the country.
On our next slide it shows a variety of positions that are available in the hotel and restaurant management field. You can find this on the Chooserestaurants.org website. Each one of these positions, if you'll go to the next slide…if you click on these positions, they each drill down to a more exact description. This shows a QSR [quick service restaurant] team member, and it gives a job description of what the position requires, their annual salary, as well as years of experience and education that the person should have, as well as the number of openings each year, and then required skill set. The next slide is just another example of a higher position of executive chef, showing the same information for that position.
And then on our last slide we are really concentrating now on being a resource for teachers in our state. The Alabama Restaurant and Hospitality Association partners with over 25 schools throughout the state of Alabama. We participate in professional development that is conducted by the Career Tech Educators Association. We also provide "train the trainer" classes for ServSafe here and other professional development opportunities. We also offer secondary educators membership in our association and have recently added Chef Jessica Henry as a resource for our teachers who are in the hospitality and culinary field, and her contact information is listed on the slide. If you're not in the state of Alabama, we also have restaurant associations in the other states and they either have an educational foundation or do it through the association, and so you can contact your restaurant association for help.
But we just appreciate everything that you all do and appreciate the opportunity to have participated.
Kornegay: Thanks, Mindy, that was really interesting. And so if you have questions for Mindy, please click the ask questions button in the lower-left section of the webinar window, and we'll do our best to get to as many of those questions as possible at the end of the program. I know I've got lots of questions. We're excited to welcome our final speaker this afternoon, Lesley Mace. She is the senior education program manager at the Jacksonville Branch of the Federal Reserve Bank of Atlanta. And she's going to share with you additional resources that supplement this webinar. Lesley, thank you for joining us today.
Lesley Mace: Thank you, Julie, and I'm glad to be here. And I will go on to the next slide. I'll get started. Today I'm going to be talking to you about resources to teach about the minimum wage, but also more broadly, to teach about important economic content and standards that can be taught for the example of the minimum wage. And then we'll go on to the next slide. We'll get started with the first resources.
These first resources come from Economy Matters, which is the Federal Reserve Bank of Atlanta's online newsletter, that it features articles on the regional economy, economic research, our community and economic development efforts, the Fed, and banking and finance. Economy Matters also features quizzes on these topics and on money in general, which make for great Bell Ringers in the classroom. And we look at the first article, "A Story in Charts: Who Works for Minimum Wage?" which was coauthored by Whitney Mancuso. This article gives information on the Bureau of Labor Statistics' characteristics that minimum wage workers report and contains many charts and graphs on characteristics such as gender, age, education, industry, and location as well as state data and is a great tool for visual learners.
On the left-hand side we have the article "Southern States Avoid Minimum Wage-Raising Bandwagon." And this article starts out by noting that half of the hourly paid workers who earn minimum wage live in the southern states. The article also covers the history of wages in the South, it looks at regional price differences, it also addresses the debate on raising the minimum wage, and if it truly costs jobs and also discusses barriers that workers may face in gaining skills that could enable them to earn higher wages. And you have to link there to Economy Matters, and we'll go on to the next slide.
This next slide is our minimum wage lesson, which was featured in the Federal Reserve Bank of Atlanta's Extra Credit newsletter, and you can subscribe to that newsletter online for free and access this and many other lessons and resources. This lesson integrates the previous two articles as well as the Bureau of Labor Statistics' characteristic of minimum wage workers report.
It starts out with the four corners exercise where students explore which groups are most likely to work for the minimum wage. In debriefing the exercise, students look at charts on the first article I mentioned and it will help them understand the factors that influence your likelihood to work for the minimum wage. Then students will go on to some graph analysis, looking at the equilibrium in the labor market and price floors. And then they will have the opportunity to work with primer resources through the Federal Reserve Economic Data, also known as FRED, which is an online graphing tool from the Federal Reserve Bank of St. Louis. They will use this tool to graph minimum wage over time, which they will learn does not change very frequently. They will also build a chart with their own state data, as many states do have higher state minimums.
They will also build a graph and explore the relationship on earning the minimum wage and looking at that through different education levels. They'll look at whether recessions affect the number of workers who are earning the minimum wage. And then they will use the CPI [consumer price index] calculator from the Federal Reserve Bank of Minneapolis to adjust historical minimum wages for inflation, and they will find that minimum wage has not kept pace with inflation over time. Another part of the activity, they actually look at the salary of the president. The president's salary actually stayed the same for 32 years from 1969 to 2001, so minimum wage workers actually got a raise first. And we will go on to the next slide.
This next slide will highlight two resources from the Economic Lowdown in the Federal Reserve Bank of St. Louis. At the Economic Lowdown you can find podcasts, videos, and online courses all free on a variety of economic and personal finance topics. And here are two resources on the labor market. On the left-hand side we have the episode 10 podcast. It's about eight minutes long. It covers the equilibrium in the labor market and how firms are the demanders of labor and individuals the suppliers. It covers the role of wages and labor supply. The podcast also discusses the demand for labor as a drive demand, drive from the demand of goods and services, and the role of government regulation in the labor market. It also brings in how the law of supply and demand applies to the labor market and touches on the relationship between education and income. On the right-hand side we have the video version, about a five-minute video that has many visual examples and a number of graphs to show how supply and demand applies to the market for labor.
For both of these resources you can sign up through the instructor management panel and enroll your classes, assign students these resources, and after they have listened to the podcast or viewed the video, they can take an assessment, and their scores for that assessment will be delivered to your inbox within the portal.
Now we will move on to the next slide, which is the Page One Economics newsletter from the Federal Reserve Bank of St. Louis. The Page One newsletter is a great source for informational text on economics and personal finance. Each issue includes an article, discussion questions, and an extension activity. And the articles do meet the common core literacy standards. In this issue they will be discussing the history of minimum wage. The article also looks at basics of the labor market and price floors, unintended consequences of minimum wage, it's just the potential for low-skill workers to lose their jobs. And also alternative means of reducing poverty, such as the earned income tax credit. The discussion questions for this article have students summarize arguments for and against minimum wage raising and also asks students to discuss whether the minimum wage is an efficient means of reducing poverty. In the extension activity, they analyze graphs on the labor market and price floors, and also apply the concept of price elasticity to the labor market.
And we will go on to the next slide. And this next slide will have a link to the Bureau of Labor Statistics' characteristics of minimum workers report, which draws data from the current Population Survey, which is conducted by the U.S. Census Bureau. Here you will be able to dig a little deeper on the characteristics of minimum wage workers through 10 tables giving detailed statistics, for instance, on education where we have workers who do not have a high school diploma. You will be able to dig in deeper to people who have completed one year of high school, one to three. When it comes to full- and part-time workers, they have hours of work per week, such as 10, 20, and also details on 20 different occupational industries. And the report also includes a large amount of historical data on the minimum wage. So this is a good source for students to work with quantitative data and also gives a lot of interesting insights to add to the discussion. So now I will turn it back over to Julie.
Kornegay: Thanks, Lesley. There's a lot of resources out there to help teach these topics. Thank you so much for sharing your ideas with us. So now we have reached the Q&A segment of today's program and we have lots of questions rolling in. So our first one is from me. And so I had an opportunity to speak with everybody earlier today, and it was funny that so many of us have actually worked in the restaurant industry in the past. And so I thought I would ask Mindy, just to get her feedback about, in my experience, the more I learned about food and beverage as a server, the more money I earned. And waiting tables is very much a sales position. Once I realized the importance of understanding what the customer was looking for in their experience and then understanding the products that I had to sell, I was able to really leverage that to increase my sales, my ticket amounts, and then obviously people tip on how much the ticket is. So do you have any thoughts on using…I guess what I'm trying to say is do you have thoughts on how the restaurant industry can be a wonderful training ground while you're in school—whether it's high school or college—for a career path, even outside of the restaurant industry?
Hanan: Yes, I think that it is. I think the restaurant industry, you know, teaches people how to deal with the public. Especially if you're a server or a hostess, you know, that's a very important skill to have. And as you said, learning how to meet your customers' needs. And the other thing that working at a restaurant a lot of time teaches somebody is, you know, show up on time, show up in your uniform, show up prepared to work. Those are important basic skills a lot of times that the people who come, when they come they don't necessarily have those values instilled in them, and so that's one of the things I know that the restaurant industry works on as well as teamwork. Restaurants and hotels don't run with one person. It takes a whole team to make something happen, so it takes the bus people, and the kitchen people, and the servers, and everybody all working together on a common goal. So I think that there's lots of things that then translate into other areas.
I worked as a cashier as my first job at a barbecue restaurant, and that's where I learned to count money. And I still count money the same way that I've learned to count money then. And then I went to work for a bank and, you know, on from there. But I think those skills actually translate to most everything you do in life.
Kornegay: Yeah, I would agree. So Whitney, I know we had talked earlier. Do you have any thoughts on this?
Mancuso: Well, actually, here in our research department we have a Regional Economic Information Network that reaches out to businesspeople throughout the Sixth District, and we collect a lot of information. And one of the important things we do is on labor markets, human capital issues. And just about every business we talk to, human capital is incredibly important. Those soft skills that she mentioned, you know, coming to work, communication is incredibly important. And not just with the customer, but also with your colleagues and with managers and learning to work with people and customers. So we hear that quite a bit from our business contacts. So that's very important to their business, and they're not necessarily in the restaurant or hospitality industry. It translates to many different industries. Those are the employees they're looking for that have these types of soft skills. It's not just the technical skills that people need to accomplish work and keep business moving. It's also these soft skills.
Kornegay: You know, I would add to that showing up is definitely important, but I think to be truly effective in these types of jobs, you have to have really good communication skills. Everything from listening to what the guest is saying, what their order is, repeating it back to them, making sure you type it into the system properly, keeping an eye and having that level of conversation with the kitchen to make sure that everything has been ordered and it's fired and ready to go, making sure the apps don't come out the same time the entrées do, and pacing. To use an industry term, if you get in the weeds, ask somebody, communicate to other management or one of your partners to help. You know, can you help me go clear? Can you help me do this? And you know, those are the types of communication skills that I feel like really can elevate you in this industry to where you go from just making good money to making really good money.
I've got another question, and this one is for Mindy again. So if servers can make more money than managers, what is the incentive for workers to go into management?
Hanan: That's a good question. Servers, a lot of times, you know, they have more limited schedules. A lot of times the servers are part-time people. A lot of the part-time jobs don't provide benefits, whereas a management position, you have a lot more opportunity to move up. A server, that's what you're going to be, and you may make a good deal of money, but that's where you're going to land if that's what you want to do. Whereas in management you have a lot of opportunity to move up, and there are other benefits that somebody would get when they would enter into a full-time position.
Kornegay: OK, great. So let's see, I've got a question here and it says will we have access to the information on this webinar? Yes, you will have access. We recorded this webinar and we will post it online. It will probably take about two weeks, and then you can use it with your students and other concerned people just to share information about this industry. So that will be coming very soon. And then our next question says, and Mindy, I'm going to put you on the spot so you can kick me later if you need to. Would you be willing to share your contact information, so that if you would be willing to come and speak to a classroom? And this is coming from Auburn High School. So I don't think we'll have to twist your arm too hard to get you over there.
Hanan: I would be glad to come speak to them, but they may prefer to have someone from the industry who has the experience. But I can hook them up either way.
Kornegay: OK, that's fantastic. I will make that connection after the program. All right. So let's see, let's go back to Whitney, I've got a question for you. Why do you think women are more likely to work at minimum wage jobs?
Mancuso: Well, I think it's probably a reflection of something you probably hear in the media quite a bit. It's the earnings gap between men and women and sort of this is reflective in this, that more women earn less money. But also with the leisure and hospitality industry that dominates, as Mindy's noted, it's pretty flexible and you could enter and exit pretty easily. And women tend to have, even today in our society, more family responsibilities, and so they sometimes—you know, there's a trade-off when you're entering and exiting the workforce, or you work less hours, or maybe you don't have the ability at a particular time to work more hours or move up the ladder. So it's probably a combination of that earnings gap, and then also just the family responsibilities. We hear that a lot.
And there may be some other things as well, but I think it is typically a low-skill job, so there's a lot of competition for those jobs, I mean, in a lot of places because of the ease of entry. So you have a larger pool of workers to choose from generally. So, of course, we know that tends to keep wages low when the supply of workers is higher. And again, women tend to work in that leisure and hospitality industry more so than men. At least when I've looked at the numbers.
Kornegay: OK, very good. Mindy, this question is for you. How does the recession affect jobs in leisure and hospitality?
Hanan: It definitely depressed the market, because people were not eating out or traveling as much. However, you know, in Alabama, we didn't see as much of that. We did see some restaurants go out of business and close, but we did have new restaurants open. We generally, in Alabama, have a labor shortage when it comes to employees for the restaurant and hospitality industry, which is one of the reasons we're so focused on it. I speak to the people down in the Baldwin County area, they're like, "We don't pay minimum wage. We can't find anybody to work for $15 an hour." So you know, overall, I would say it softened the industry and its ability to maintain their profitability. But Alabama generally tends to be a state where we don't have the high highs and we don't have the low lows, so Alabama is fortunate that it doesn't affect us generally as it affects other states in the country.
Kornegay: And I can say, too, the people, if they want to go out or they need a night out, I mean, they may…I guess how would you say? Like kind of go down brand instead of going to a really fancy restaurant they just might go to something maybe a fast casual or something along those lines. Would you say that's a fair…?
Hanan: Yes, I would. I would tell you, this is from personal experience, in Montgomery before the recession, a lot of the restaurants you would go here, and you would go at 7:00 and you might not get a table until 9:00, and the restaurants would be busy until 11:00. Now most restaurants are not busy after 9:00. I don't think that it's fully made a full recovery even now. I think that the stock market's doing well and things like that, but I still feel like people are being very cautious with how they spend their money.
Kornegay: I would agree. All right, Whitney, I've got a hard one for you. You ready?
Mancuso: I guess.
Kornegay: How will the proposed tax policy impact wage inflation?
Mancuso: Proposed tax policy… I actually have not looked at that really closely. We tend to not look at things until they're really concrete and firm, because in the state legislatures and in any federal legislatures, everything changes so much so we don't invest a whole lot of time. We have heard a lot more just in general, a bit more optimism from businesses in some of the surveys we've done. And that's just their current understanding of what the tax policy is, so that would lead to stronger GDP [gross domestic product] economic growth going forward, but we really…as far as knowing exactly how it's going to pan out, we haven't really, at this time, looked at it superclose, because it's still in flux quite a bit.
Kornegay: Right, right. But I think generally we could anticipate more reinvestment within industries, which would allow them to hire more people, or you know, with a tight labor market hopefully that would help.
Mancuso: Well, we have a supertight labor market right now, and we're still not seeing a whole lot of wage growth. I mean, it still remains relatively modest. I mean, there's some things going on. You have the baby-boom generation retiring and leaving the workforce who commanded much higher wages and salary, and they're being replaced by younger workers who tend to make less. In every job category usually younger workers make less. But we just really have not seen wage growth overall.
We have our Wage Growth Tracker here at the Atlanta Fed that we produce that also bears that out. We've heard a lot of stories from employers that it's a lot about lifestyle issues for a lot of workers. And it's not just millennials. It's among all generations. And they're not as focused on a wage as you might think. They're focused on lifestyle issues and that sort of thing. So we've heard that over and over and over again that, you know, commute times make a difference to them. They don't want to move to a job where it will pay a lot more or they're stuck in traffic a lot longer. Or you know, if they get to take their dog to work with them. There's all sorts of crazy stories, things that are more important to them than a wage. And so we really haven't seen that wage inflation you would expect to see with the unemployment rate as low as it is.
But we also, at the same time, I mean, labor force participation has declined as well. And then we are starting to see some improvement…well, not gigantic improvement, but we have seen it in the last year in the low end of the skill set, actually being attracted off the sidelines and into the labor market. So you know, there's a lot of debate on how much slack is left and when will…and that's what we're constantly looking for is when will wages start to really accelerate as you would expect with an unemployment rate of 4.1 percent.
Hanan: And I just have this to add. One of the things that's a challenge for us right now is that people are getting more used to the gig economy that they want to work when they want to work, and not when you want them to work. And so we're trying to figure out a way to make that work for the restaurant and hospitality industry. Because it doesn't work that way for us, and so we're looking for solutions to those issues currently.
Kornegay: OK, well, we've got about three minutes left, so I'm going to ask one last question and give you both maybe a minute to respond. So Mindy, I'll start with you. What skills are most important for making the transition into higher-paying industry jobs? And we've talked a little bit about this, but I'm wondering if there's anything that you can think of that we haven't quite covered yet that would…
Hanan: I think, you know, depending on what side of the restaurant you want to work in, if you want to work in the back of the house, obviously having some technical skills will help you advance quicker. One of the CEOs in a major restaurant chain, he was speaking at a meeting that I was at, and he said, you know, somebody will come to him straight out of high school and work for five years and do what they're supposed to, and work hard, and go through their training program. Within five years, they would be making $100,000 and they don't have any student debt. But you know, the main thing is just the good work ethic is the thing that will advance you the most, I think, in the restaurant and hospitality industry. It's not necessarily difficult work, but it is hard work a lot of the time. And so I think that there's a difference in that. And I think a work ethic is the main thing that makes somebody successful in the business.
Kornegay: Good answer. All right, Whitney, what about you? Do you have any final thoughts on what would make somebody successful in this area?
Mancuso: I think it's just along the same lines. I mean, it's sort of continuing to improve yourself. I mean, even I've had this job for quite a number of years and I'm still having to learn and improve my skill set, and I don't think you can ever sort of stop that journey. Whatever industry you're in, you need to continue to educate yourself or get the proper training that moves you along and makes you a good and productive employee. And which typically, you know, you have a better chance of staying employed and making more money. So whenever I talk to students, it's whether you decide to go on to college or go right into the workforce, you still have to have the mind-set that you're going to continue to learn and improve your skills along the way, even if it's not with a formal degree. Everybody seems to think everybody needs to go to college, and I really don't believe that. I really think you just need to continue to learn and improve your skill set.
Kornegay: I couldn't agree more. That's really good food for thought. So all right. Well, we're going to transition to slide 54. And we're excited about…ladies, thank you so much for your time this afternoon. Our next webinar will be exploring careers in energy. That's February 7 from 3:30 to 4:30 Central. We'll have Rob Sunderland of Southern Company and Stephen Toups with Turner Industries as our guests, so we hope you can join us.
And on slide 55, on behalf of everyone, I would like to thank you for participating today. If you've joined us via the webinar tool, you likely saw a survey link pop up on your screen. Please take a moment to complete the survey and let us know how we did. We'll also send the survey via email. You only need to fill out the survey once. The resources mentioned today are linked in the PowerPoint, so make sure to download the presentation or visit frbatlanta.org/education.