The coffee pot wars: Unions and firm restructuring in the hotel industry

After considerable debate about recent labor market trends in the United States, something of a consensus may finally be emerging on the major forces at work. Debate will undoubtedly continue over the relative weight of different factors, but it is clear that changes in markets, technologies, and institutions have all contributed to the sharp rise in inequality and the stagnation of real wages for many workers.¹ Because less-educated workers have been hurt the most, policymakers have largely focused on education and training as remedies. But the translation of changes in trade and technology into greater inequality has been driven in part by the disintegration of postwar labor market institutions. Reconstructing institutional arrangements for "the new economy" thus seems like the most promising point of intervention, beyond the needed improvements in human capital formation. Firm restructuring continues to redefine the nature of work and opportunity in virtually every sector of the economy and in ways that a supply-side policy alone cannot harness. "Perhaps the most important implications of the new employment relationship concern increased inequality in the workplace and, ultimately, in society as a whole" (Cappelli et al. 1997, 11). Put another way, while globalization and technological change are largely beyond our control, the distribution of their burdens and benefits is not. Firm choices about the setting of wages and the allocation of labor are made within a set of constraints and opportunities, which derive not just from product markets but also from surrounding institutional arrangements. The problem is that we know much less about these institutional effects than, say, the effects of new technologies. Our focus on the hospitality industry provides an ideal case study for rectifying this gap. The hospitality industry is a classic low-wage, labor-intensive service industry that employs large numbers of low-income people, especially workers of color and immigrants. Firm restructuring is prevalent and shares many characteristics (including consolidation, subcontracting, and flexible staffing) with other service industries. Most important, although unions represent only a small share of the workforce nationwide, union density remains high in key urban areas, particularly among larger hotels at the higher end of the market. Hospitality thus affords us a window on a key labor market institution-unions-in the context of a rapidly changing industry. Specifically, our goal in this study is to isolate the impact of union density and worker voice on how firm restructuring occurs and how it affects jobs and workers. Drawing on a series of in-depth case studies and background industry research on the hotel industry, we ask the following questions: How have hotels reorganized their operations over the past two decades, and why? How has firm restructuring affected workers, especially those in entry-level jobs who have no college education? How have unions been able to mediate those effects, and does the answer depend on union density in the region? Our hope is that a close reading of why employers choose different competitive strategies (which have different effects on workers) will help develop a viable policy response to growing inequality, and in particular to the growing number of workers trapped in lowwage service careers. From anecdotal evidence, we anticipate that unions have indeed had an impact on restructuring in the hotel industry. The question is, how much of an impact? How have unions achieved that effect, and under what conditions? And to what extent have workers without a college education benefited as a result?