Resources

Oxbow Bend, Snake River

Grand Teton National Park, Wyoming

Earthquakes, The Ice Trade, and the Next Era of Hospitality

Matt Moore

At the turn of the 20th century, over 90,000 people in the United States worked in a vast industry that involved the harvesting, warehousing, transport, and sale of…ice: frozen blocks of New England pond water that were shipped to destinations along the eastern seaboard, the Caribbean, Europe, and even far flung locales such as India and Hong Kong. The industry was valued at $28 million (about $910 million in 2021 dollars). In terms of workforce, the ice trade was comparable in size to today’s U.S. furniture manufacturing or electrical appliance manufacturing industries. By the end of World War I, as the arrival of cheap electric motors made mechanical refrigeration, plant-produced ice, and domestic cooling appliances substantially more affordable, the ice industry vanished.

Several times throughout modern history, technological advances, societal shifts, and catastrophic events have uprooted industries and even entire economies. The San Francisco Earthquake of 1906 triggered a global gold shortage, catastrophic losses for British insurance firms half a world away, a stock market crash, the greatest US recession prior to the Great Depression, and ultimately, the creation of the Federal Reserve, whose decisions – not to mention the words, tone of voice, and body language of its Board of Governers – can substantially shift the global markets today, 115 years later. All because two plates of the earth’s mantle, on their 35-millimeter-a year journeys in opposite directions, slipped and momentarily lurched forward one April morning in 1906.

Another recent event has caused a shift whose reverberations and knock-on effects we are only just beginning to observe, much less understand. The Covid-19 pandemic that began unfolding in late 2019, has already precipitated massive changes in how we work, purchase goods and services, travel, learn, dine, and interact with each other. Some of the changes will be temporary. San Francisco was mostly rebuilt within 9 years of the 1906 earthquake after 80 percent of the city was destroyed. However, some of the changes are likely to be permanent (don’t expect many malls to be buit anytime soon).

In the hospitality and tourism industries, a shift in perception is underway. After a period of widespread, rapid layoffs followed by a quick rebound where employees experienced exposure to a deadly virus and hostility and abuse from guests at an unprecedented level, service industry jobs (especially jobs that pay minimum wage or sub-minimum “tipped position” wages) have lost appeal for many potential job seekers. This is important for employers to take note of, as societal perceptions are not prone to quick reversals.

Imagine an employer today offering $260 a week (or $3.60/hr) with no benefits for a job that involved 6 day work-weeks and 12-hour days performing hard manual labor with no possibility of overtime. No one would sign up for that. Yet millions of Americans worked under just these sorts of arrangements at the end of the 19th century.1 Because these arrangements eventually and irreversably stressed the capacity of employees while falling far behind the cost of living, workers started needing and demanding more. The gradual emergence of trade unions and legislation, such as the National Labor Relations Act of 1935, permanently changed employee expectations and perceptions of what was meant by safe working conditions and fair pay – salaries and benefits that could comfortably support the cost of living.

The Covid-19 pandemic has caused a similar shift, in rapid fashion. Some employers are quickly adapting and figuring out the new calculus of operating a hospitality business in the post-Covid world. Others are more hesitant and may be expecting a reversal to pre-Covid norms. We’ve heard a lot of employers who have struggled to find staff this year repeat the common refrain of “People just don’t want to work anymore.” At CoolWorks, we’ve consistently challenged that assumption as an evasive answer to a complex equation, evasive because it neglects to confront a reality that is uncomfortably staring down an entire industry and pushing it towards changes that may be difficult but inevitable.

But challenging one assumption or opinion with another doesn’t offer any insights. Facts are what matter, so we wanted to back up our assumptions by hearing from actual employees and job seekers. We sent out our “CoolWorks 2021 Employment Survey” a few weeks ago, and were overwhelmed by the response we received. We’ve put together a summary of the key takeaways – including some insights as to why many job seekers aren’t quickly, or ever, returning to the hospitality workforce – that you can find here.

The end of the ice trade was ultimately the result of a collapse in demand for the product; collapse in demand for the jobs can be equally ominous for an industry. The bursting of the housing bubble in 2008 pushed millions of potential workers away from the construction trades as the flow of capital for new commercial projects dried up overnight, and the value of and demand for housing plummeted. Thirteen years later and a widespread housing shortage is being compounded by a lack of tradespeople. Industries may shift slightly quicker than tectonic plates, but one momentary lurch can cause upheavals that change the landscape forever.

The ground has rumbled and shifted. Those organizations that recognize that the world has changed will also identify the opportunities among the rubble, and lead the way in rebuilding a better world.

1(Average weekly pay in 1900 for a male factory worker was about $8.00 – $10.00, or $260 – $325 in 2021 dollars).