THE COMPENSATION SITUATION
by Josh Corman
Money, like politics and religion, is one of those things that isn’t supposed to be discussed at the dinner table. That said, we’re about to dive into the dollars and cents of the spa industry, so if you happen to be reading Pulse at a dinner table, now might be a good time to relocate.
The 2019 ISPA U.S. Spa Industry Study Compensation Supplement may not provide ideal mealtime conversation fodder, but it does offer a clear breakdown of how spa employees are compensated, what they earn and what the staffing picture looks like across the industry. A closer look at the numbers reveals some notable recent trends.
First, it’s worth noting that compensation levels across the spa industry have continued to trend upward over the last five years. For example, in 2014, 86 percent of full-time spa directors in resort/hotel spas and 45 percent of those in day spas earned more than $60,000. In 2019, those figures rose to 94 percent and 74 percent, respectively. Similar gains1 are evident among other positions as well:
- In 2014, 27 percent of spa managers earned more than $50,000; in 2019, that figure rose to 38 percent.
- In 2014, 73 percent of estheticians2 earned more than $30,000; in 2019, that figure rose to 98 percent.
- In 2014, 70 percent of massage therapists earned more than $30,000; in 2019, that figure rose to 96 percent.
- In 2014, 54 percent of nail technicians earned more than $30,000; in 2019, that figure rose to 81 percent.
Rising wage levels aren’t the only notable change to the industry’s compensation landscape since 2014. In addition to earning more, service providers are also earning differently. In 2014, 45 percent of day spas reported paying service provider employees a straight commission on services, while only 26 percent used straight hourly pay plus a commission on services. In 2019, however, the number of day spas that reported using straight hourly pay plus a commission on services rose to more than 60 percent. That number also rose among the resort/hotel sector, from 57 percent to 67 percent.
Although employees of resort/hotel spas continue to earn more, on average, than their counterparts in other types of spas, it seems clear that compensation levels across the industry are more robust than ever. In addition, the shift toward straight hourly pay plus a commission on services for estheticians, massage therapists and nail technicians signals a significant increase in potential earning power for those groups.
Given the broad economic recovery since the Great Recession and the corresponding increase in spa visits and revenues, a rise in wages and earning potential for spa employees is perhaps not surprising. However, it never hurts to sprinkle in a bit of caution among the good news. Across the spa industry, the large number of unstaffed positions may remain a source of concern, even after the COVID-19 pandemic subsides.
On one hand, the industry’s overall growth to more than $18 billion in 2018 and the record number of both spas in operation (22,160) and spa visits (190 million) that year suggest that the industry is booming despite an estimated 28,420 unstaffed service provider positions. On the other hand, the high level of demand we previously saw for skilled, experienced service providers may explain why estheticians, massage therapists and nail technicians are commanding higher wages.
Although those wages are certainly attractive to service providers, reducing the number of unstaffed positions remains a key component of maintaining the overall health of the spa industry. Given the steady rise in demand for spa services in the U.S. and beyond (indicated by the rise in number of visits and industry revenue), an ideal outcome— one that sees the number of unstaffed positions drop without a decline in wages, is still possible.