The loss of hospitality industry jobs as a result of the COVID-19 pandemic has hit hard in many cities, but particularly in Philadelphia. The hospitality sector now accounts for around 40 percent of Philadelphia’s workforce, but employment in the sector is down 38 percent compared to pre-pandemic levels, according to the Bureau of Labor Statistics — an estimated 12,000 workers out of a job through no fault of their own.
On December 10, the Philadelphia City Council unanimously passed the Black Workers Matter Economic Recovery Package, a set of three bills that includes the right to return to those same jobs as workplaces re-open.
It was a victory not only for organized labor, but also for broader community organizing in solidarity with low-wage workers, led by groups like POWER, an interfaith, multi-racial social justice network of 50 congregations across Philadelphia and about as many more across the state.
“I had not [testified] in person in city council before and here I was doing it online,” says POWER Board Member Frances Upshaw, who testified in support of the bills. “It gives you some added angst. But I was happy to be able to do it. All of us have something to do to help these situations.”
The bills’ passage makes Philly the largest East Coast city to create a “right to recall” for hospitality workers, joining Baltimore, Oakland, San Francisco and Los Angeles City and County, which all passed similar legislation earlier this year.
“Black workers are always left out of recovery,” says Philadelphia Councilmember Helen Gym, who sponsored one of the three bills. “We are determined not to repeat the mistakes of the past. We have gone through recessions before. We know what mistakes we made, when all we did was look out for corporations, they got bailed out and let loose without protections and responsibilities.”
The mistakes of the past include the “first fired, last hired” phenomenon — during recessions, unemployment rates tend to start rising earlier among African Americans and rise faster, and those rates stay higher than pre-recession levels for longer, relative to whites, according to a 2011 analysis by the Center for American Progress.
Researchers at the Federal Reserve Bank of Dallas reiterated the concern over “first fired, last hired” at the outset of the COVID-19 pandemic.
Sheri Davis-Faulkner, a labor scholar at Rutgers University, testified about “first fired, last hired” during her Philadelphia City Council testimony for the Black Workers Matter package of bills. Black women, she noted, are nearly 60 percent of hotel room attendants in Philadelphia. According to a survey of five hotels carried out by UNITE HERE Local 274, 60 percent of hotel workers with more than 20 years on the job are Black or African-American.
“If not allowed to return to their jobs, many of these workers may face racial or age-related forms of discrimination and hiring,” Davis-Faulkner testified.
Davis-Faulkner also laid out in her testimony the challenges presented by the private equity investor takeover of many hotels, which started before the crisis. CNBC reported in March that private equity firms already had $1.5 trillion in cash waiting to acquire businessess in distressed industries, including hospitality.
The Rutgers scholar’s dissertation research looked into private equity firm activity and impact. A lot can change when a hotel gets transferred from long-time hotel industry ownership into the hands of a private equity firm.
“I’m appreciating the fact that we have already listed that there’s [hotel] industry support,” Davis-Faulkner said. “But the recognition that private equity firms do not always operate in the ways that long-time industry corporations do… Putting protections in place preemptively is extremely important and recognizes the context of what has been happening, particularly in major cities as it relates to the finance industry and the ways in which when we’re kind of down and we’re in a recession or things are happening that we’ve seen a sweep-up of properties, a shift of ownership as it relates to employers.”
With that in mind, Philadelphia’s Black Workers Matter Economic Recovery Package included a bill to establish the right to recall for qualified hotel workers whenever a hotel in Philadelphia gets sold or goes through a foreclosure, even beyond the COVID-19 pandemic.
Outside of Philadelphia, hotel industry lobbyists have mostly opposed right-to-recall measures.
Troy Flanagan, vice president of government affairs and industry relations at the American Hotel and Lodging Association, told Time Magazine, “This type of mandate creates a new operational burden as employers are trying to get back to business and reopen as best they can.”
The Hotel Association of Los Angeles called right to recall measures “an overreaching effort to micromanage how the hospitality industry can re-hire employees after the COVID-19 catastrophe.”
Heather Rozman, executive director of the Hotel Association of Los Angeles, said in a statement, “If the city truly wants to protect its workforce, they should engage all stakeholders and work toward a plan that doesn’t destabilize our local hospitality community and exacerbate the economic crisis causing permanent business closures, permanent tax revenue loss for the city budget, and permanent job loss for Los Angeles workers.”
In Philadelphia, Councilmember Gym says she and City Hall’s law department were watching closely as things unfolded on the West Coast. As usual, when it comes to labor laws, they also had to consider the possibility of state pre-emption of local laws. In Pennsylvania, for instance, local governments are not allowed to set their own minimum wage, meaning Philadelphia is only subject to the federal minimum hourly wage of $7.25 or $2.13 an hour for tipped workers — even after voters approved a 2019 ballot measure to symbolically call for a $15 an hour minimum wage in the city.
“I don’t think we had any conflicts in terms of whether the right to recall was legal or not,” says Gym. “It falls into the same vein as paid sick leave, gig worker protections, anti-retaliation laws, and on a broader front it follows in the steps of fair workweek, the domestic worker bill of rights that have been defining Philadelphia’s economic prosperity agenda for a while now.”
Philadelphia city council members also did engage around two dozen hotel industry representatives, labor representatives and community organizers, including several POWER members, in two virtual roundtables in advance of the bill’s committee hearing.
“The roundtable discussions allowed industry to really bring up concerns and we were able to work with them to figure out changes to address them,” says Rosslyn Wuchinich, president of UNITE HERE Local 274, which represents around 4,000 private-sector hotel and food service workers in Philadelphia.
Wuchinich says it was a collaborative discussion, focusing a lot on the logistics of how management would be obligated to contact workers and the timeline for a right to recall. Originally workers had up to ten days to respond to a recall from a former employer to their previous position. That got knocked down to five days. Originally there was no sunset date for the right to recall after COVID-19, but the final legislation says the right to recall for jobs lost due to COVID-19 expires at the end of 2025 — the year by which hotel industry voices are largely saying the industry should recover from the pandemic turmoil.
There is no sunset date, however, for the other bills in the Black Workers Matter Economic Recovery Package. The second, sponsored by Councilmember Kenyatta Johnson, requires that seasonal workers at sports stadiums and food service workers at the Philadelphia International Airport keep their same jobs if a new contractor takes over services at their workplace. The third is the bill to protect workers after transfers of hotel ownership or hotel foreclosure, sponsored by Councilmember Isaiah Thomas.
Violations of the bills can result in penalties to businesses of up to $1,000 per employee per day of violation.
“I can tell you first hand, these bills were unnecessary, because when managers can re-open again they call the people they have the most experience working with to begin with,” says Ed Grose, executive director of the Greater Philadelphia Hotel Association.
Grose, who works most closely with the management staff at each hotel, raises another point he hopes the laws can address going forward. In his view, he wants the legislation to protect them as well, particularly when there’s a change of ownership in the hotel.
Each hotel can have a slightly different ownership and management structure — the name on the hotel may just be a brand licensed by a management company behind the scenes or it may be the owner of the hotel. Grose says it’s not uncommon for new ownership to bring in a different management team, rather than sticking with the old team who is loyal to the same workers as under the previous owner.
The new laws he says will make it harder for new owners to come in. “But I would say in most cases the new owner is going to keep the old employees anyway,” Grose says.
The Greater Philadelphia Hotel Association did not testify against the package in November. Nor did anyone from Aramark, the hospitality industry giant based in Philadelphia. Grose says he agreed not to testify in advance of the hearings, but later took offense to some of the comments made during the hearings about hotel managers and operators. “We felt we were duped,” he says.
“I think the precedent for the way the roundtables were done was the fair workweek legislation in 2018,” says Wuchinich. “There’s been a real transformation in city council’s prioritization of lower wage service workers and their unions. I think there’s an understanding of the importance of those workers to the health of Philadelphia’s communities and economy.”
The bills create new worker rights in the aftermath of COVID-19 and going forward, but making those rights a reality on the ground still requires resources for communicating those rights to covered workers as well as to businesses that are now subject to them. For that, Councilmember Gym and her colleagues are counting on the buy-in of both labor groups and industry groups — as well as the city’s newly fortified Department of Labor, which became a permanent fixture earlier this year after voters approved a change to the city charter in June.
Now that it’s permanent, the Philly Department of Labor has a dedicated funding stream from the city that, while it’s subject to cuts in a recession like every other city agency, can’t be eliminated on the whim of the mayor or city council. It also has the mandate to enforce the city’s labor laws, which now include the Black Work Matters Economic Recovery package.
Gym expects the department to draft and set regulations for the enforcement of these new laws through a collaborative process as well, with labor and industry groups at the table.
“Our hope is that those business-labor roundtables transfer into some of those actors,” says Gym. “I don’t want to just pass a law that a business turns around and says ‘oh where did this come from?’ We’re trying to show people that government is taking a look at the health of all actors in the community, but we cannot go back to the way things were.”
Grose still feels left out in the cold. He cites two hotel closures so far, one of which is being converted into apartments. “It’d be nice to get some help from our city government as opposed to just more restrictions,” he says. “It’s taken us a very long time to get our hotel inventory to 14,500 rooms, and if there isn’t some assistance we’re going to start seeing more closures soon.”
In some ways the history of economic progress in the U.S. has always been the history of expanding worker rights. The abolition of slavery, the abolition of child labor in the early 20th century, the right to organize, the weekend, 40-hour workweeks, the recognition of women as full participants in the labor market, the outlawing of racial and other forms of discrimination, the minimum wage. Worker organizing fought hard for so much that now gets taken for granted today.
“I worked for the federal government, as a contracts specialist, for 32 years,” says Upshaw. “As I was working, I didn’t realize that everybody didn’t come away from a job without a pension or decent healthcare. It was closer to the end that I realized everybody wasn’t getting the same thing. A lot of things you take for granted that everybody has, once you realize that’s not the way it is, that’s an eye opener.”
Editor’s note: We’ve clarified a number of things in this story: That compensation levels aren’t covered by the right-to-return law, and that the right to return for jobs lost to COVID-19 expires at the end of 2025.
This article is part of The Bottom Line, a series exploring scalable solutions for problems related to affordability, inclusive economic growth and access to capital. Click here to subscribe to our Bottom Line newsletter. The Bottom Line is made possible with support from Citi.
Oscar is Next City's senior economics correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha, and Fast Company.