The shrinking US workforce during the Covid pandemic will “cripple” the economic recovery, warned billionaire investor and businessman Barry Sternlicht on Wednesday.
The founder of Starwood Capital Group, which operates hotels as part of its broader portfolio, said the federal government should pay people to go back to work rather than stay home.
“The entire service economy is in a crisis, regardless of whether it is a restaurant, pizzeria, laundromat or small shop. Amazon can raise wages, no problem, “but corner shops can’t, Sternlicht said on CNBC’s” Squawk Box. “
Sternlicht said sometimes it’s not about the money.
As an example, he said one of his hotels in Brooklyn, New York, is trying to fill 40 positions with its 220 employees.
“It’s not even what we pay for,” he said. “They are not going to leave their house or whatever they are doing.”
He said the low participation rate while there were millions of job openings “really hurts the dark side of the US economy.”
The vacancies, which fell to 10.44 million in August, are still historically off the charts. The latest labor ministry survey of job vacancies and labor turnover, released Tuesday, showed the shortage was compounded by the record 4.3 million workers who quit their jobs in August.
The fall in the unemployment rate in September, despite a much weaker than expected hiring, was due to a slight decline in the employment rate. The labor force participation rate, a measure of people who work or are actively looking for work, has not declined as business activity has increased with the lifting of the Covid containment closures and restrictions.
The government, which has spent trillions of dollars helping the unemployed and troubled businesses, should focus all further efforts on incentivizing people to return to work, Sternlicht said.
“You should actually be paying people a bonus when they get back to work and back into work, outside of federal and state programs,” he said. “Then they tax them because they have a job.”
Sternlicht, who describes himself as socially liberal and fiscally conservative, said the Biden government was exaggerating “in the wrong direction. All of these support programs … can exacerbate this problem and encourage people to stay at home to really work without their service people. “
In 1991, Sternlicht founded Starwood Capital – which became Starwood Hotels, now part of Marriott – and other leisure brands. Starwood Capital focuses on global real estate, hotel management, the oil and gas sector, and energy infrastructure.