Retail, Hotels and Restaurants Face Labor Challenges

Retailers, hotels and restaurants rely on a large workforce with relatively low wages. Now, inflationary pressures and looming labor shortages might escalate two major challenges: squeezed profit margins and rising demands for a living wage.¹ In the map below, we identified 53 companies that might be particularly sensitive to these challenges.

We projected some of the highest additional employee costs for companies operating in countries with double-digit inflation (Turkey, Argentina, Bulgaria, Poland and Brazil), as of June 2022.² But we found little evidence that these companies were planning to raise wages above statutory levels.

The combination of a tight labor market and rising inflation offers both investors and workers a chance to differentiate between companies.