Think of the last time you stayed in a hotel. You left your room and passed the housekeeper in the hallway, pushing a cart filled with towels and toiletries embossed with the hotel name. The housekeeper works hard; you left a tip and hope they’re treated well.
Unknown to most guests, often that housekeeper isn’t employed by the hotel. Instead, they work for a subcontractor we’ve never heard of, an arrangement leading to lower wages and benefits. A City Council bill scheduled for a hearing on Wednesday could change that, requiring hotels to directly employ front desk and housekeeping staff. This bill would improve conditions for low-wage workers by reducing consequences of the “fissured workplace.”
In this business model, adopted widely in recent decades, corporations avoid employing workers and instead subcontract, outsource, franchise, use temporary and staffing agencies, or misclassify workers as independent contractors. By doing so, they seek to avoid legal obligations, and the impact on workers is grim.
For starters, fissured workplaces increase labor violations. According to Brandeis Prof. David Weil, who coined the term, this uptick results largely because when a business subcontracts, the subcontractor needs a cut for overhead and profits, leaving less money for pay, and incentive to cut corners.
In extreme cases, this enables egregious lawbreaking under the noses of household-name corporations, from child labor violations at factories processing Cheerios in Michigan, to worksite fatalities at a New Orleans Hard Rock Hotel construction site.
Fissured workplaces also create downward pressure on wages and benefits, as Weil explains: “Earnings fall significantly when a job is contracted out — even for identical kinds of work.” Indeed, two New York hotel workers recently described a 35% increase in pay — from $17 to $23 per hour — when the subcontractor they worked for quit and they were directly employed by their hotel.
Subcontracting is not essential for businesses to thrive. Some companies don’t subcontract at all, or have chosen to stop. After its subcontractor was found illegally using 14-year-olds on the night shift at multiple plants, the meat processing giant JBS brought its janitorial work in-house, creating unionized jobs in the process.
Various policy efforts have sought to address violations resulting from workplace fissuring. More than half a dozen states, including New York, have construction-industry laws creating general contractor liability for subcontractors’ wage violations, motivating greater due diligence and oversight by general contractors.
California’s “client employer” law creates up-chain joint and several liability for wage theft under certain conditions. New wage parity statutes for temporary workers in Illinois and New Jersey remove some financial incentives of fissuring, by mandating that temp workers receive pay comparable to that of direct employees.
Like these laws, the City Council bill would mitigate the harmful effect of fissuring on workers. Specifically, it would require hotels to directly employ housekeeping and front desk workers. (It would also require hotels to be licensed, as in most cities nationwide).
The bill is good policy if we care about people earning decent wages and benefits. Also, as a guest, I feel safer if people guarding the keys and entering my room are vetted, vouched for, and employed by the hotel I’ve chosen, not a subcontracted entity unknown to me.
The Hotel Association of New York City last week dropped its prior opposition to the bill, in response to amendments allowing current subcontracts to reach completion. But housekeeping subcontractors and certain hotels have prophesied doom, as routinely occurs in reaction to pro-worker proposals. (Remember the business outcry when the city enacted paid sick leave? Two years later, surveyed employers reported it was “no big deal”).
Most dramatically, workers reported being required to attend a protest in opposition last month, which could fall afoul of a new state law curbing business’ ability to force political activities on their employees.
Bill opponents ominously warn that jobs will be lost. So…if the bill passes, hotels will stop cleaning guests’ rooms? The middlemen might be eliminated, but the jobs won’t be — they’ll be better.
Also, city law requires retention of current hotel workers for several months, and the amended bill secures current workers’ jobs. Any industry opposition is curious, especially since many New York hotels already directly employ front desk and housekeeping staff, demonstrating what should be obvious: Direct employment of key workers is not incompatible with running a successful business.
Measures like the Council’s hotel bill should be embraced in New York and beyond. The hardworking people who clean up for us deserve a better deal.
Gerstein is the director of the NYU Wagner Labor Initiative.
