Inflation has reached the North Pole as a "Santa shortage" looms, but all is not ho-ho-hopeless

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The Economics of “The Santa Shortage”

by Greg Rosalsky

It turns out that Santa might actually *not* be coming to town. Or, at least, it may be harder to book him than it was in Christmases past.

And, no, it’s not because kids have been naughty this year. Instead, you can blame the Ghost of Economy Present. Planet Money’s sources at the North Pole reveal that Santa’s services are more in demand than ever — and he and his helpers are having a hard time keeping up.

Mitch Allen is the founder — and self-described “Head Elf” — of HireSanta.com, one of the world’s largest staffing agencies for holiday entertainers. He recently joined us on a video call from the North Pole (okay, actually Fort Worth, Texas). Donning a green elf suit and fur-lined hat, Allen told us that his industry is overwhelmed with Santa requests.

Zoom call with “Head Elf” Mitch Allen

“Here at Hire Santa, demand is higher than it’s ever been before,” Allen says. His company has seen a 125 percent increase in demand for Santa compared to holiday seasons before the pandemic. For every new Santa who wants to work for his company, Allen says, he has 20 clients clamoring for Kris Kringle’s jolly services.

“We are turning down more events this year than we've ever turned down before,” Allen says. “There's definitely a shortage of Santas.”

The Grinch Behind “The Santa Shortage”

Part of the story, Allen says, is pent-up demand. For the last couple years, many families and brick-and-mortar businesses have opted out of traditional festivities, including in-person visits with Saint Nick. But this holiday season, most Americans are returning to normal — and that includes bringing their kids to sit on Santa’s knee and share their Christmas wishes.

But while demand for Santa has surged, the supply of Santas remains depressed. “The pandemic was particularly hard on the Santa Claus community,” Allen says.

Stephen Arnold is a professional Santa Claus and the president of the International Brotherhood of Real-Bearded Santas (IBRBS). And, yes, this is a real organization. Describing itself as “the world's largest organization of professional Santas, Mrs. Clauses, and associates,” IBRBS provides professional services to holiday entertainers, including background checks and liability insurance.

In 2020, Arnold says, IBRBS saw their membership plummet from around 2000 to 1400. “We’ve never seen a drop like that,” he says. Blame the pandemic. “You gotta remember: We’re all a little plump. Most of us are over the age of 60. We’re probably in many cases diabetic. We had a much higher incidence of death. So, yes, a lot of people backed away and decided not to perform.”

At the height of the pandemic, Arnold pivoted to virtual events with kids. For in-person events, he appeared in a protective snowglobe. Similarly, Allen’s company furnished its Santas with plexiglass barriers.

Santa Arnold in a snowglobe/Jamie Harmon Photography

Despite these types of precautionary measures, many former Santas opted out of reprising the role. Last year, concerns about the Santa shortage were so serious that a state lawmaker in Pennsylvania proposed creating “a modest tax credit for those hiring Santas or Santas working on their own.” Unlike Santa’s sleigh and reindeer, this proposed tax program was unable to get off the ground.

Santaflation

Over the last year, as vaccines and COVID treatments have become more available, and society has gotten closer to normal, both Hire Santa and the International Brotherhood of Real-Bearded Santas have worked to rebuild the Santa workforce.

“We here at Hire Santa have been working very hard to replenish the number of Santas,” Allen says. “I've traveled the country this last year, going to Santa schools, speaking at conventions, and really trying to connect with the Santa community to let them know the advantages of being a professional Santa as well as working with Hire Santa.”

Classic economic theory suggests that if there’s a shortage of something, there’s a simple solution: raise the price. In this case, that means raising Santa’s wages, which should convince more people to grow a white beard and don a red suit. And indeed, Arnold says, many Santas are earning more this year.

“I would say, generally, that the majority of our members raised their prices somewhere between 10 and 15 percent this year,” Santa Arnold says. In part, these increased prices compensate Santas for the rising cost of doing business, he says, including higher fuel costs and more expensive Santa suits. But they also reflect the reality that, amidst surging demand, there are only so many Santas to go around. Call it Santaflation.

AnvilArtworks/Getty Images

Head Elf Allen also says that he sees a trend towards higher wages for Santas. Professional Santas with his company, he says, can earn anywhere between $5,000 and $12,000 during the holiday season, depending on where they live and how much they’re willing to work. (For those curious about the math, that equates to roughly one to five thousand boxes of cookies, which are, apparently, Santa’s only source of sustenance).

Delays in the Santa Pipeline

But while higher earning potential may be helping to convince new Santas to shout ho ho ho, Allen also suggests that the labor market for Santas doesn’t work as frictionlessly as the picture-perfect model of classic economic theory would predict. “It's a little bit harder in this market because it takes so long for a Santa to become a Santa,” Allen says.

Part of the issue is that many people demand real-bearded Santas, as opposed to faux-bearded ones. “Over the last 40 years, there’s been a shift to real-bearded Santas,” Allen says. “The vast majority of our Santas are real-bearded Santas. That's what people are expecting and what they want when they come to Hire Santa.”

In case you were wondering, the International Brotherhood of Real-Bearded Santas has gotten more inclusive and does “now allow faux-bearded Santas to join as associates,” says Santa Arnold, the president of the organization. “They can’t vote, but they can participate in our programs.”

So, yeah, there is clearly a premium for real beards in the industry, and growing a full-blown Santa beard can take anywhere between six months to a year.

But becoming Santa is about more than simply looking the part (which, by the way, is changing in some communities, as more people seek diverse Santas as well as fitter Santas). Professional Santas, of course, need to be able to pass background checks and be eligible for liability insurance. And they need to hone their craft and learn to act the part, which is why there are dedicated schools to help people make their jolly transformation. Being Santa requires some unique skills, including acting, live entertaining, and the ability to field wild questions from inquisitive youngsters.

“Children, they say the darndest things, and so you gotta be able and prepared to be able to answer those questions,” Allen says. “These questions range from the silly, but also to the very heartwarming — and the heartbreaking — in many situations. We were just talking with one of our Santas today who's going to visit a nine-year-old girl who has cancer and it’s like, how do you deal with that? Kids are also dealing with family issues, divorce, death. Santa gets all of those questions and has to be ready to be able to answer those questions.”

Santa Arnold — who is quite the Santa doppelgänger — says he’s honed his skills answering kids’ questions over many years. Kids, he says, will ask questions like, “‘Why aren’t your reindeer with us today?’ And I’ll say, ‘well, my sleigh only flies one day a year.’ Then they’ll ask, ‘Well, how do you get around?’ And I’ll say, ‘My elves rent me a car.’”

Zoom call with Santa Arnold

Another common question Arnold gets: How do you get into my house if I don’t have a chimney? So, Arnold says, he comes prepared to events with a key. He’ll tell kids he uses this magical key to unlock their doors. And, he adds, “I also use this key to lock my cookie jars, so the elves can’t get into them. Because sometimes when I get back to the North Pole, I’ll find that they’ve eaten all my cookies!”

The Christmas Miracle of a Functioning Market

The Santa scarcity causing higher prices might make you want to scream, “Bah! Humbug!” But although there are delays in the Santa pipeline, increasing prices seem on track to deliver a Christmas miracle. After dipping sharply in 2020 and 2021, Arnold says the number of members in the International Brotherhood of Real-Bearded Santas is now approaching its pre-pandemic level. Head Elf Allen, over at Hire Santa, also says that the Santa shortage seems less pronounced than it was last season.

While Santa Arnold agrees with Allen that pent-up demand continues to overwhelm supply in his industry, he suggests that the talk of a “Santa shortage” may now be a bit overblown. More than a broad-based “Santa shortage,” he says, what we’re really seeing this season is a shortage of Santa at the most coveted time slots.

“Today, I probably had ten calls asking me to come on Saturday, December 17,” Arnold says. “No, I can’t. I’m busy. I’ve been booked for weeks and weeks. But if you’re willing to have Santa on like Tuesday morning, or Wednesday afternoon, it could still work.”

And here, again, the market is showing its power as an allocator of scarce resources. Arnold, like other Santas, charges more during highly coveted holiday timeslots, particularly weekends and days approaching Christmas Day. Call it Santa surge pricing. Arnold says he usually charges 50 percent more on the days near Christmas. “And if I’m performing Christmas Day, you’re talking crazy money. Because a lot of Santas want to share Christmas with their families.”

But, if you don’t have the money — or you didn’t have the foresight to book Santa weeks or months in advance — all is not ho-ho-hopeless.

Head Elf Allen suggests searching to see if Santa may be appearing at a nearby mall or other retail establishment. “And if you really have to have Santa at your home or event, be thinking about it for next year,” he says. “We are already booking Santa for 2023 and you wanna get on Santa’s list very early.”

Alternatively, you can take Santa Arnold’s suggestion, and try to book Santa at an unusual time, like a Tuesday at 8:30 am. Or you can try and snag Santa for a quick virtual visit. He says a five or ten minute Zoom call can be really special.

After virtually chatting with Santa and an elf for this report, we have to agree. It really put us in the holiday mood.

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