A shrinking US workforce during the Covid pandemic is “set to undermine” economic recovery, billionaire investor and businessman Barry Sternlicht warned Wednesday.
The founder of Starwood Capital Group, which operates hotels as part of its broader portfolio, said the federal government should pay people to return to work, not stay at home.
“The entire service sector is in crisis, be it a restaurant, pizzeria, laundry or small shop. Amazon can raise wages, no problem, “but family stores can’t,” Sternlicht told CNBC. ” Squawk Box. “
Sternlicht said that sometimes it’s not about the money.
As an example, he said that one of his hotels in Brooklyn, New York is trying to fill 40 jobs in its 220-person state.
“It’s not even that we’re paying,” he said. “They will not leave their home, no matter what they do.”
He said the low labor force participation rate with millions of job openings “is really hurting the underside of the US economy.”
Jobs, which fell to 10.44 million in August, are still left behind. The Labor Department’s latest job vacancy and turnover report, released Tuesday, showed the shortage was exacerbated by a 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 recruitment, was due to the decline in economic activity. Labor force participation, which measures the number of people working or actively looking for work, has not improved as business activity has skyrocketed following the lifting of closures and Covid mitigation restrictions.
Sternlicht said the government, which has spent trillions of dollars helping unemployed and stranded businesses, should focus any further efforts on encouraging a return to work.
“They have to actually pay people back-to-work and return-to-labor bonuses outside of federal and state programs,” he said. “Then they tax them because they have a job.”
Sternlicht, who called himself socially liberal and financially conservative, said the Biden administration was “overdoing it in the wrong direction. All of these support programs … can exacerbate this problem and encourage people to stay at home. And the country cannot really work without its attendants. “
In 1991, Sternlicht founded Starwood Capital, which created the Starwood hotels, now part of Marriott, and other leisure brands. Starwood Capital specializes in global real estate, hospitality management, oil and gas and energy infrastructure.