- Starwood Capital CEO Barry Sternlicht said the government should pay people bonuses to return to work.
- It can then get the money back through taxing people who are newly employed, Sternlicht said.
- This would help ease the labor shortage, he told CNBC.
The US government should pay people to return to work during the labor shortage, according to billionaire Barry Sternlicht, whose investment fund Starwood Capital operates hotels.
“They should actually pay people a bonus for going back to work and getting back in the labor force, off federal programs and state programs,” Sternlicht said.
“Then they can tax them because they have a job. It would pay the government to pay people to go back to work,” he said.
Companies across the US are struggling to find staff, and some business owners have blamed the additional federal unemployment benefits during the pandemic, which they say incentivized people to stay at home. The benefits expired on September 6.
Sternlicht said that the stimulus and other unemployment support programs were “overdoing it in the wrong direction.”
“They may exacerbate [the labor market] problem and encourage people to stay home,” Sternlicht said.
But some companies in states that cut off the federal unemployment benefits months early are still struggling to find staff.
Workers say that they’re holding out for better pay, job benefits, and improved working conditions.
Starwood Capital founder Sternlicht said that one of his hotels in Brooklyn had 40 vacancies. It usually had a staff of about 220, he said.
“We can’t find them, they won’t come back to work,” he said. “It isn’t even what we pay. They won’t leave their house or whatever they are doing.”
Sternlicht didn’t say how much the hotel paid staff. US desk clerks at hotels, motels, and resorts earned an average of $26,770 a year in 2020, while maids and housekeeping cleaners made on average $27,420, data from the Bureau of Labor Statistics (BLS) shows.
Starwood Capital owns SH Hotels & Resorts, which has more than 1,500 employees across its four brands. There are 182 vacancies listed on its website, including 81 at its 1 Hotel South Beach on Miami Beach.
Starwood Capital currently has over $95 billion of assets under management and operates hotels as part of a broader portfolio that focuses on global real estate.
The labor shortage has hit industries ranging from education and healthcare to trucking and tech, but the hospitality industry has been hit especially hard.
“The whole service economy is in a crisis, whether it’s a restaurant, a pizzeria, a laundromat, a small shop,” Sternlicht told CNBC. “Amazon can raise wages, no problem,” he said, but added that was not an option available to smaller businesses.
Preliminary seasonally-adjusted BLS data shows that 1.76 million people were working in the accommodation subsector of the leisure and hospitality industry in September, down from 2.1 million in February 2020. Other BLS data shows that people have been quitting jobs in the accommodation and food-services sector at twice the national average.
Sternlicht added that the economy “can’t really recover until people come back to work” and that the low labor participation rate was “really hurting the underbelly of the US economy.”