Help not wanted: World Cup hiring boost has yet to materialize
The hiring boom the FIFA World Cup was expected to bring to the US looks like it may not end up materializing after all. Ahead of the June 11 kickoff of the soccer tournament, the first in the US since 1994, FIFA predictedthe events could create the equivalent of 185,000 full-time jobs, primarily in leisure and hospitality. Many Wall Street banks anticipated a smaller yet still-substantial boost. Instead, the latest jobs report revealed any pickup in leisure and hospitality jobs in May was completely erased in June, leaving employment in the sector down by some 21,000 over the past two months. The World Cup, a five-week event expected to bring more than a million fans to 11 US host cities from the New York City area to Los Angeles, was supposed to provide some relief this year for a tourism industry under pressure from President Donald Trump’s hardening of US borders and surging fuel costs sparked by the Iran war. But expensive accommodations and match tickets have raised concerns about the eventual boost. “Geopolitical tensions, higher airfares and other barriers could have limited international travel for the World Cup, which is weighing on the amount of leisure and hospitality hiring needed,” said Eli Nir, a US economist at TD Securities. While US hotels posted record revenue per available room during the week of June 21-27 — the busiest stretch of the World Cup so far — the improvement was driven more by higher room rates rather than more guests. CoStar data show revenue per available room rose nearly 17% in host markets even as occupancy fell nearly 3 percentage points from a year earlier. The US, which is co-hosting the tournament with Canada and Mexico, is where the majority of the matches are taking place. Even before the games began, the US hotel industry had warned of softer demand. An April survey by the American Hotel & Lodging Association across host cities found bookings were below expectations for 80% of respondents. Hotel operators cited FIFA’s release of unused room blocks, visa delays and geopolitical tensions that weighed on international travel, while CoStar said some business and leisure travelers may have avoided host cities because of higher prices and expected crowds. Shruti Mishra, an economist at Bank of America, said in a postmortem of the June jobs numbers that the most likely explanation for the disappointing hiring trend in leisure and hospitality is that businesses are favoring overtime for existing employees when needed rather than adding new ones. Bank of America had previously predicted the tournament would provide a 30,000-40,000 boost in payrolls across May and June. At the national level, the sector didn’t register a pickup in average weekly hours worked in June, and wage growth remained slower than in most others. Some employers in the middle of the action, however — like Lala’s Argentine Grill in Los Angeles — are adopting such a strategy. Horacio Weschler, the owner of Lala’s, said reservations sell out almost immediately on Argentina game days, and fans from places like Paraguay and Australia, who came to watch their teams play in California, have added the restaurant to their itinerary. Even so, he’s offering additional shifts to his more than 100 employees rather than training new hires. “It’s been hard to find workers,” Weschler said. “So we decided to give priority to the people who have been working with us for longer.” Read More: LA Stadium Workers Avert Strike Before First World Cup Game Closer to stadiums, there’s been a more pronounced pickup. Hiring by entertainment and food and beverage companies in neighborhoods where stadiums are located outperformed other areas in May, according to data from Gusto, a payroll-processing platform. Some employers further out, meanwhile, are regretting staffing up. Brett Dowell, the owner of Hammers Dueling Piano Bar in Kansas City, says he brought on five new people in May, but the World Cup has failed to expand tourist activity in the area beyond the traditional entertainment hub known as the Power and Light District — and he’s stopped scheduling the new hires. “Local establishments outside of that have been having a hard time,” Dowell said. “It was not worth it in our location.” This story was originally featured on Fortune.com