The U.S. leisure and hospitality sector added 35,000 jobs in July, the Bureau of Labor Statistics reported Friday. This category of workers, which is a proxy for the larger travel industry, employed 805,000 workers last month.

The U.S. economy as a whole added 164,000 jobs in July, and the national unemployment rate remained unchanged at 3.7 percent, which was near a half-century low.

Hotels, airlines, resorts, travel agencies, and other employers saw continued tightness in many regional labor markets. Labor shortages have been a megatrend Skift has been tracking this year.

Hotels and Inns

The lodging sector is travel’s largest employer. In July, 2.2 million people worked in leisure and hospitality accommodation, a rise of 7.8 percent compared to the number of workers during the same month a year ago.

“This is the tightest labor market we have seen in a generation,” said Brian Crawford, EVP of government affairs at the American Hotel & Lodging Association.

Hotels and motels, excluding casino hotels, employed 1,676,400 workers in June, the latest month for data specifically on them. That represented a national trend in hotel payroll has been on an upward streak since February 2010, when only 1.39 million workers served the sector.

“Labor and related costs represent between 45 percent and 50 percent of the total expenses needed to operate the typical U.S. hotel,” said Mark Woodworth, senior managing director and head of lodging research at CBRE Hotels, a consultancy. “Low unemployment levels in most markets, particularly the top 25 largest metropolitan areas have been driving these costs upward at a much greater pace than the overall rate of inflation.”

According to the Labor Department, the rise in hourly compensation for leisure and hospitality workers last year was 3.5 percent, year-over-year.

In June, the last month for which numbers are available for this sector, bed-and-breakfasts and other inns only had 15,200 workers. The segment has seen a broad decline since its peak this decade of 17,800 workers in September 2016.

One explanation of the decline may be rising labor costs, as the period coincides with a tightening of the jobs market. However, the rising popularity of Airbnb and similar short-term rental services may also be having an impact.

Airlines and Airports

The commercial airline industry employed 466,900 workers for scheduled flight service in June, the latest data available. That represented an industry record for headcount.

“U.S. airline employment continues to grow, outpacing overall U.S. job growth,” said Carter Yang, a spokesperson for Airlines for America.

Airport operations employed 107,400 workers in June, a record that continued a multi-decade rise. Airports have been steadily growing the ranks of their workforces since August 2009, when airports had only 60,600 operational workers.

“With inflation-adjusted airfares at record lows and consumer confidence remaining strong, more people are flying now than ever before,” said Yang.

Travel Agencies

The U.S. had 89,100 travel agents in June. That was down 4 percent from June 2018.

The travel agent sector has broadly hovered at around 92,000 workers for the past few years.

The sector has never recovered from its high of 108,300 workers last seen in August 2006, before the financial crisis. But the travel agency community has withstood the shocks of online booking trends better than some skeptics might have expected.

Rental Car

About 139,900 workers served the passenger car rental and leasing industry. That Labor Department category imperfectly lumps together employees of rental car chains like Hertz and Enterprise along with a smaller subset of car leasing companies. But the figure suggests ongoing stability in the sector.

Short-Term Rentals

The Bureau of Labor Statistics doesn’t track in a fine-tuned way the number of people who work as full-time hosts of Airbnb-style property rentals. The agency groups these workers under the category “contingent and alternative employment arrangements.” For what it’s worth, a larger lump of all types of so-called “gig workers” is no larger now than it was in 2005, the agency said.

Museums and Theme Parks

The labor department lumps a lot of the attractions at local destinations, such as museums and theme parks, into a group. In July, museums, historical sites, and similar institutions employed 175,000 people.

The gain continued a trend. The museum and similar recreational service category saw its workforce expand 38 percent since February 2010.

Scenic and sightseeing transportation employed 34,400 workers in July, broadly in line with the past few years.

Need for Seasonal Workers

An ongoing issue for hotels, resorts, and inns has been a need to hire seasonal workers. Many Americans are reluctant to take jobs for brief spells during a tight job market. But foreign workers coming from countries with worse economies are often more eager.

For example, the Grand Hotel in Mackinac Island, Michigan, has traditionally used the H-2B visa program to fill job gaps. The island’s 450 residents aren’t enough to fill more than 4,000 seasonal jobs on the island.

“The best solution to the worker deficiency is for Congress to bring back the returning worker exemption which expired in 2008,” said Jennifer King, director of human resources for the Grand Hotel. “This rule exempted returning, rule-abiding H-2B workers from the statutory cap of 66,000 workers a year nationwide.”

In 2016, the Trump Administration clamped down on issuing the H-2B visas needed for these seasonal workers.

Lobbying by travel and other sector groups prodded the administration to boost the number of H-2B visas by almost half, to nearly 100,000 for 2019. That is the highest number of such visas that the government has issued in all but two years, 2006 and 2007, since the late 1980s, the government said.

“The time is past due for our elected leaders and lawmakers in Washington to come together to find a balanced approach to immigration reform that enables hotels and other businesses to meet the increasing demand for employees, while protecting our national security,” said Crawford of the American Hotel & Lodging Association.

Economic Outlook

The tight labor market means Americans are spending on domestic travel.

“We see from our own and other data sets that spending on discretionary items including travel and eating out are especially high,” said Robert Frick, corporate economist at Navy Federal Credit Union, which can see the spending of its 8 million members.

“This trend shows how confident consumers are,” Frick said. “And that confidence is a direct reflection of the strong jobs market.”

Overall, the airline industry benefits from a strong U.S. economy. But untapped demand remains. One in 10 Americans have never flown in a plane, the industry association Airlines for America said. Six in ten Americans don’t have a valid passport for international travel, which also holds back the sector.

Some clouds loom on the horizon, though.

“The ongoing trade war will significantly reduce tourism from China,” said Bernard Baumohl, chief global economist at The Economic Outlook Group. “People want to go where they feel welcome, and current U.S. policies and talk haven’t been especially encouraging for Chinese tourism.”

Record low unemployment rates can be deceptive of future trends, too.

“The report suggests the economy is suffering a slow leak, given the broader context of other signals,” said Baumohl. “Several factors raise the specter of a recession in 2020.”

Subscribers to Skift Research can read out latest reports on Global Travel Economics 2019-2029, U.S. Traveler Profile and Key Statistics, and U.S. Accommodation Sector: Skift Research Estimates 2019.

Photo Credit: Shown here is the Grand Hotel on Mackinac Island, Michigan. It's one of several hotels across the country that hires seasonal workers for its peak season and is affected by the tighter labor market. Don Johnston / Grand Hotel