The Los Angeles City Council passed legislation 12-3 requiring “hotels with more than 60 rooms, as well as companies doing business at Los Angeles International Airport, to pay their workers $30 per hour by 2028” plus “hotels and airport businesses would be required to provide $8.35 per hour for their workers’ healthcare by July 2026. The rest of Los Angeles will have a $17.28 minimum wage. (HT: @crucker)
To become law, the City Council needs to pass this again in a second vote on May 23.
A hotel janitor’s mandated base pay will far exceed what an entry-level retail or restaurant worker makes across the street. The City Council says a bellhop’s time in a big hotel is worth almost twice what a barista’s time is worth in a café and according to one councilmember that’s a matter of “human rights” and fairness.
A minimum wage is a price floor on labor – a legally mandated minimum price for hiring. And like any price floor set above the market rate, it creates a surplus: in this case, a surplus of workers seeking jobs, but a shortage of jobs available for those whose skills aren’t valued at the new, higher price. You can’t simply decree that a job which used to pay $18 is now “worth” $30 without tradeoffs.
If a worker’s productivity or skill would only create $18 in value for their employer, a business will not (cannot sustainably) pay them $30. The employer has options – none of which involve happily paying $30 for $18 worth of output.
- They may not hire the worker at all. Outlawing jobs below a certain pay doesn’t guarantee higher-paid work; it guarantees unemployment for those priced out. If a person’s skills or experience don’t merit $30 in the market, this law has made it illegal for them to earn a wage at all.
Consider an immigrant with limited English who might start in hotel housekeeping, dishwashing, or entry-level service jobs. At $15 – $20 an hour, an employer might take a chance and hire them, training them on the job. At $30 an hour, that same employer will likely demand a more experienced, highly productive worker for the role (if the role isn’t eliminated altogether). The rung at the bottom of the ladder gets sawed off.
- Employers substitute and automate. When labor gets costlier, it drives businesses to find ways to get by with less labor. That can mean investing in machines or tech or shifting work onto customers or remaining staff. Many chains curtailed daily housekeeping and never restored it fully (often spinning it as “green choice” to save water, while conveniently saving on payroll).
Expect more automation at the airport and hotels: kiosks instead clerks, mobile ordering in airport eateries, robotic floor cleaners. Even trash collection can be automated; Pittsburgh deployed robotic vacuum sweepers. When labor costs skyrocket, technology that replaces that labor suddenly looks a lot more attractive.
- Different workers will be hired for $30 roles. Minimum wage hikes often don’t improve the lives of the same workers – they replace the workers. A $30 hotel job will attract a flood of applicants, including many with more experience or higher skills than the current workforce. Employers will have their pick of a different pool of labor, replacing many current employees with people who can command $30. Giving a position a raise isn’t the same as giving a person a raise.
- Hours and non-mandated benefits get cut back. If an employer must pay each worker more per hour, one way to compensate is to reduce the number of hours offered. Full-timers might be pushed to part-time to avoid benefit thresholds; overtime hours get trimmed; ancillary perks like free meals or parking might disappear. Even the workers who keep their jobs might find themselves working harder for the same take-home pay – doing the work that two employees used to do, under more pressure.
- Businesses can try to pass on the higher costs to consumers – but that has limits. Hotels will raise room rates; airport concession stands will jack up that already pricey cup of coffee. Some customers will pay more, essentially transferring some of the wage hike cost onto tourists and travelers. But if prices rise too much, demand falls – tourists may choose hotels outside the city mandate, and diners may skip that $25 airport burger or trade down to cheaper snacks.
In effect, L.A. could make itself even more expensive, driving away the very tourism dollars it’s trying to redistribute.
This policy carves the city’s economy into favored and disfavored sectors. By 2028, a maid cleaning rooms at a large L.A. hotel must be paid $30, but a maid cleaning an office building or a small 50-room motel across town will still earn around $17–$18 (the broader minimum in place at that time). A cook flipping omelets at a hotel’s restaurant will cost double the labor expense of a cook flipping identical omelets at the diner down the block.
Businesses and workers will respond to the pay gap. If you’re a restaurant server or line cook, you’d obviously rather land a job at the hotel where pay is twice as high. That means the big hotels will have a flood of applicants, poaching some of the better workers from other restaurants and cafes. Those other establishments could then face staffing shortages and declining quality, as well as wage pressure not provided for in the law. The city is picking winners and losers: large hotels and LAX contractors are told to bear a hugely increased labor cost, while their competitors in other parts of L.A. get to follow the much lower citywide minimum.
Consider hotels that operate restaurants or offer room service. Suddenly their labor costs for waiters, bartenders, cooks, dishwashers will be nearly double that of any standalone restaurant not on hotel property. That makes them cost-uncompetitive with non-hotel restaurants. And they need to focus on higher priced meals (pricing out many guests, exacerbating inequality) and higher margin items (a flight to more alcohol). Many hotels will be forced to close down on-site dining or convert to self-service, since they can’t compete. Fewer restaurant outlets in hotels means fewer jobs for servers and cooks.
Hotel development in L.A. will slow, because projects will no longer pencil – and because the city council is telegraphing a willingness to impose higher costs on the sector in a discriminatory fashion in the future, too. That means fewer jobs and higher prices which keep tourist dollars away. Los Angeles, poised to host the world in 2028, is discouraging new hotels from opening or expanding right when they’ll be most needed. On the other hand, some hotels may downsize below 60 rooms to escape the law’s threshold, which also removes inventory from the market.
This $30 tourism wage is the result of a Unite Here Local 11 (hospitality workers union) and SEIU airport workers local campaign. The ordinance doesn’t cover unionized workplaces if the union contract waives it. This encourages unionization to lower costs creating a huge drive towards unionization (and increase in dues for the union itself).
Meanwhile, by targeting a specific sector, the city doesn’t risk the economic damage from a Los Angeles-wide $30 minimum wage. And airports and hotels can’t easily relocated outside of the city the way many other businesses could. But don’t expect to be able to get wheelchair assistance at LAX because the contractors who provide that service aren’t going to fully staff.
Local politicians can raise the minimum, but they can’t outlaw unintended consequences. And sooner or later, those consequences have a way of reminding us that reality isn’t optional, not even in L.A. But it could be worse for the industry. The City Council could bring back the proposal that every hotel in the city be required to house the homeless.
This is just another reason to never fly into or out of L.A. At first glance, the council members appear to be morons, and the union has snookered them into supporting another bad deal for everyone.
Well said, Gary, although you may have missed one of the potential remedies that are often deployed in this case: Outsourcing. It would probably mean a lawsuit, but certain “hotel employees” could be replaced by “contract employees” who are not employed by the hotel.
“Different workers will be hired for $30 roles.”
Indeed. Unions love the David Bacon Act, which requires that federal construction contractors pay “local wages” to workers. The dirty secret is that it was enacted to nip any inclination for those contractors to rely upon cheaper minority labor in the bud.
They probably think they are sticking the costs of this primarily onto businesses that cater primarily to travelers or onto travelers who aren’t voters and assume that this is a low-risk way to cater to some voters and publicly signal a desire for higher wages more broadly than at LAX.
Can’t wait until a pizza at LAX costs as much as at OSL airport. 😮
@jfhscott
The Davis-Bacon act is for construction projects that receive a certain threshold of federal money.
It has nothing to do with housekeeping or short order cooks in a hotel.
there’s a reason US tourism has gone down and yet blame Trump.
I’m guessing none of those voting on this issue have appropriate economic coursework. In particular, I despise the local variations. If you’re going to have a minimum wage (which I oppose on moral grounds), you should not have some jurisdiction changing it with a vote of just 15 people. Given Californians enough rope. . .
First it was fast food restaurants, and now this. $30 minimum wage for thee but $17 for me, what is the logic in that?
Seems rather arbitrary. What ever happened to equal protection?
If high minimum wages creates wealth, then why not just set it at $100/hr? Or $1M am hour? We’ll all be rich!
You piggies will keep staying there. Solidarity forever
@Jay Ger that wasn’t the point of the comment. It was an illustration of how setting wage floors often has unintended (or hidden intended) consequences. In that regard, it has everything to do with this situation, even if Davis-Bacon is not the governing law here.
Hotels will take certain steps to cut down on labor. Some automating of housekeeping jobs with electronic cleaning machines. Only cleaning every other day, which many hotels are already doing. Doing away with bell hops. People can simply take a cart, put their bags on the cart and schlep the bags to the room themselves. Automated check in/check out machines to reduce front desk. Or mobile check just like airlines do.
People on the left seem to think that we live in a 1965 world in which companies will simply pay more for workers if required.
@jay ger
I said exactly that. The Davis Bacon Act and this silly ordinance have something in common – both disincentivize hiring of minorities who are willing to work for less than inflated floor.
About time. Reasonable minds can differ, but increasing the minimum wage, generally, is long overdue. Yet, this is targeted, and necessary, especially in-advance of the Olympics. I share concerns over automation or if owners/managers decide to reduce staff (but they don’t have to, that’s a ‘business’ decision, not a necessity). Ultimately, paying people more leads to less turnover, increased productivity, and dare I say, greater ‘efficiency.’ Ooh, some of you really co-opted that word recently. Yes, happier, better-paid workers are more motivated. Shocking! Any increases on consumers are nominal, offset by the benefits of better service. So, yeah, I fully expect Gary (and others) to gripe about unions and to spout anti-labor sentiments here. That’s a shame, because they’re pushing for better for themselves, consumers, and the greater economy, built on equity, not oligarchy. For real, if it even happens, this should be good for both hotel and LAX workers, boosting the local economy, setting an example for elsewhere. I’m for it.
The issue is, as always, what’s a reasonable level?
The scare tactics expressed by Gary were also alleged when the City of Seatac WA became the first city in the country to adopt a $15 wage in 2013. It has about 10,000 residents and contains the entire airport.
Guess what…nothing draconian happened. The airport functions well and people make a living wage.
Using the implications of Gary’s arguments, we should instead have zero minimum wages. Hey, why not become like Bangladesh or Guatemala?
You missed 6), which is go out of business. If a business can’t exist without paying labor sub-living wages, then that business shouldn’t exist. Being a business owner isn’t a right, and the rest of us shouldn’t have to subsidize the products/services of such businesses through the welfare supports we have to pay to underpaid workers who are still living in poverty.
Also, 5) is less of an issue if similarly situated businesses are subject to the same minimum wage, as that allows all businesses to raise their prices. And again, if the product/service isn’t sustainable unless workers are paid poverty wages, then that business can simply cease to exist.
1) and 2) are not problems, they are features – fewer jobs that pay more are better for workers than workers needing multiple jobs that pay less.
And 4) wouldn’t be an issue if we had single-payer healthcare.
There’s nothing remotely controversial or debatable about your position, Gary. It’s basic common sense. The problem is that the people of Los Angeles prefer to elect politicians who lack the basic economic skills necessary to maintain the historic prosperity of their city.
LAX is at the edge of the city of Los Angeles. There are hotels near LAX that are in the city and out of the city. Those out of the city will now have an economic advantage of lower wages and therefore will be more profitable with all other things considered equal. Meanwhile, those hotels in the city will figure out how to lower labor costs and those lessons will be applied widely elsewhere, too. Checking in may go partially online with contracted people from other countries. Why have more than one person at the front desk? Robotic cleaning and room service will be implemented as much as possible. Make sure to tip the robots.
A total boneheaded move by politicians who are more interested iin pandering to their voters instead of thinking things through and doing what is right for everyone…
The end results of this will be –
– people simply won’t open businesses in these areas and if opened, may not stay
– there is a fine line between the cost of automation and manual labor – once this is crossed, the machines (especially today’s AI driven machines) will win and there will be a net loss of Jobs
-Business owners are going to have to pass these costs into their pricing and if they become non-competitive, the customer won’t come and the job will be lost
i can go on –
Paying $30 an hour makes no sense and just smells of an effort to try to bribe people to stay in The Failed State.
…as California slowly sinks into the sunset, the CUSTOMERS begin to look at other alternatives and more corporations leave the state for “greener pastures”. Californians voted for these knuckleheads. Let’m live with the consequences.
@gregh
So now you can make up your facts to make a point?
My comment stands, using Davis-Bacon in an argument about housekeeping wages is a non-starter
@MPirro. You are so right about Kalifornia politicians. Memories of LA mayor Garcetti and the asinine “wet sand, dry sand” during Covid. Then there is the follow on Karen DumBass and the LA fire mess.
Moronic statement of the year: “paying people more leads to …. increased productivity…”
OMG! Really? Why not pay everyone $100/hr? Or $1,000? “You will get tired of winning…”
@George thank you for making this yet another “left” versus “right” argument. Is there anything you do not see as some conspiracy by the left to screw America?
What I find interesting is the parallel to the tariff and immigration policies. Why are we having to charge tariffs? Because the cost of unskilled manufacturing labor became too expense in the US and the jobs moved. Why are we having to pay so much more to labor in some states? Because we scared all the people away who were willing to work for what hotels, restaurants and construction companies were willing to pay.
This like everything else we are dealing with will result in fewer employees doing more, cost getting passed on to consumers and / or businesses going under.
They all moved to Colorado and are busy turning it into a California client state.
I live in LA. We have so many low information voters that elect these Marxist council members. And one wonders why our city is failing and in (another) budget crisis. We have the most homeless in the US, by a wide margin. They reap what they sow.
I purchased an inexpensive robot vacuum and it’s better than any housekeeper keeping my floors spotless.Now if I could get it to make my bed 🙂 Housekeepers in my building we’re getting 150 to 200 dollars for 3 hours work
So now I hire nobody.I was in for 100 to 125 for 3 hours
“The Fallout has Already Started”? I didn’t see anything in here to back up this statement.
Unintended consequences… Couldn’t have said it better myself Gary. A couple of unintended consequences will be patrons no longer tipping at all. If someone is making $30 an hour, why am I tipping 10-20%? Less staff, based on higher earnings, will mean longer wait times on everything. Hotels moving outside of Los Angeles to places like Hawthorne or El Segunda, which means less tax revenue for LA.
@Christopher Raehl — Yes. Thank you. However, airports (unlike hotels) really are essential, so we cannot just ‘let it fail’ (as with other services, like the Postal Service, etc., which I’m sure some here would also like to see fail if it isn’t profitable; yet those same folks will spend unlimited money on the military, because ‘national security,’ etc., which I’m not opposed to either, within reason). Kudos as well on universal healthcare. I look forward to the end of this 2nd Gilded Age and the new Progressive era that should follow.
Also, well said, @Tom K from Seattle, on the analogy to SEA airport, which did not have the ‘unintended consequences’ that some (like @Humdrum) often fear-monger about.
I spotted computers for check in at a hotel in San Diego last month. In March HP Amsterdam/Schiphol had the self check-in computers.
Hotels for the past few years have been using the robot vacuums for common areas.
It’ll be great for employment when the hotels opt for tech instead of $30/hour illegal alien.
LA and CA are so stupid, no wonder 300 people a day are moving to AZ and half from CA!
@Christopher Raefhl
California already has a large single payer system called Medi-Cal. It serves more than 15 million people. It is terrible for all.
At $30/hr, a married couple where both earn that wage would earn $120,000 per year.
To match the purchasing power of a minimum wage worker in 1970s Los Angeles, the minimum wage today would need to be about $29 to $40 per hour.
People just want the same lifestyle boomers used to have
The clause enabling union contracts to waive the minimum wage requirement is interesting. While I don’t believe that any established union at a hotel etc. would agree to wages under the minimum, this rule would seem to encourage employers to support–or at least not oppose–unionization as an initial way to save on labor costs. However, once the union is established, future contract negotiations will surely insist on higher wage rates. It’s an odd argument that unionization can lower wages. Also, I would hope that hotel management understands the longer term implications of supporting unionization as a way to potentially obtain lower wages in the short term.
@derek is you think Medical is terrible you see what states that actually hate poor people provide as healthcare coverage.
It’s really sad that a travel blog has turned into a place where seemingly word for word points from MAGAland are used to criticize a city fair pay proposal.
I’ll guess that many of those who are commenting here are also anti-immigration and all for the MAGA Tariffs, a big contradiction – y’all are scaring away BOTH workers and tourists from coming to the USA with your actions.
Many here also have the resources to travel thru LAX, yet don’t want to share even dollar or two to hard-working (likely non-white) people keeping them safe, making their lattes, cleaning their rooms, etc. Sad and hypocritical.
The greed and hypocrisy of Gary and his readers is only amplified when you factor in the Olympics where big companies will spend billions to promote their brands and charge above rack rates for hotels/cars/food; I can see you clutch your pearls at the thought of a local resident getting even a small fraction of that revenue.
– LA Resident here too.
@Gennady — For a lawyer or surgeon (and maybe a pilot!), $100/hour is indeed low; for a CEO, $1,000/hour is low (or is it? Maybe they should be paid much less!). So, it’s all relative. And yes, for some of these roles $30/hour *minimum* does seem right, especially for the geographic area and the need. You remind me of the folks in Aspen, Vail, and Telluride, who complain that ‘nobody wants to work anymore,’ yet in reality it’s that no one can afford to live there (or even reasonably nearby). ‘Ugh, just commute from Grand Junction, losers!’ they’ll say. Most of y’all are out of touch. Pay folks a living wage, get better service.
@Parker You’re the party of Bernie Sanders, a what 85 year old that probably can’t even get his own email. And yes there’s some of that on the right. But the blunt truth is that “pay people more money argument” doesn’t work in an increasing world of technology and AI. Software systems are being taken over AI. Even people like me that develop coding for software won’t be needed in 20 years. Luckily for me I will be retired.
I was recently at a McDonalds. I rarely, rarely go into a McDonalds. Just about everyone was using the kiosks. There were no dedicated cashiers. If you wanted a cashier you had to wait for a manager to come up and ring you up. That’s how McDonalds dealt with rising hourly wages. Get rid of cashiers and make managers do double duty, to the extent a cashier is even needed.
But again anyone that would listen to Bernie Sanders as he gives a 1965 rant.
“I’m for it.”
Largely, because you’re ignorant of economics, unprincipled and lack basic morals. Other than that, you’re doing fine.
Easy solution
Let them eat cake!
https://www.reddit.com/r/Edmonton/comments/zasrf0/cake_boss_vending_machines_are_appearing_in_town/
@ oneskypesoatatime While “fair share” pay may be easier to determine than “fair share taxes,” I don’t want a city council or politician determining either. Additionally, I’m not sure that it is possible to “scare away” workers and those not wanting to work from coming to the USA.
BTW, I was a LA resident (native) . . . no regrets about leaving. Southern California used to be a great place to visit, just didn’t want to live there and didn’t need to.
I forgot where I was – it was a mid-tier hotel with a national chain – but checkin was done via a KIOSK. There was a camera, a big screen, and a few slots for different things.
While it worked, it was just an odd experience – I like interacting with humans, face to face.
But something tells me that my foreign, ESL check-in agent is about to get busier and we are going to see more and more people unemployed from this move.
@Mike P — What took you so long? Let’s not mistake differences of opinion or approach as ‘ignorance’ (for instance, I have not forgotten your preference for the Austrian School, though it is quite subjective, lacking empirical rigor.) Or, you can ignore substance and just continue with the ad hominems. Silly names can be fun!
The Commies (aka Democrats) are going to destroy this country if allowed to continue.
Here we go again with stupid “progressive” CA politicians sticking their noses in something that is really NONE OF THEIR BUSINESS. When they did something similar in the restaurant industry what happened? Lots of under staffing and restaurant closures happened.
This will accelerate the exodus of businesses leaving CA. Dem politicians won’t be satisfied until virtually everyone is unemployed and dependent on the government. They fool the sheeple by pretending to care but this is their end goal.
Perhaps you have already reported on this, Gary. But if you haven’t, have about an article about how the state of Hawaii is raising its hotel tax from nearly-18% to nearly-19%, effective January 1.
The $8.35 per hour for workers health care will be the end of some businesses. It amounts to $17,368 per year per worker, assuming 2080 hours a year (40 X 52). For a business with 57 workers that will cost $1 Million a year.
I live in the City of Los Angeles. As some of the other commenters have said, several of our councilmembers (and LA County commissioners) are hard-left politicians pandering to their voting base and unions. What they also fail to realize is that some of their constituents are immigrants living the American Dream by opening their own hotels. Not mega-resorts but independent, limited-service properties. Maybe some of them franchise flag properties. But this could put them out of business or force them to lay off staff. What good is a $30/hour minimum wage to people who are out of work?
But the councilmembers seem to think they’re sticking it to the big, bad, evil corporations — when they’re really just screwing over their fellow Angelenos, all in the name of trying to look good and be equitable. But they’ll drive business and tax dollars elsewhere. Santa Monica, El Segundo, Inglewood, Long Beach, Glendale, Beverly Hills, Burbank, etc., aren’t part of the City of LA and held to those laws. They’ll be happy to welcome more visitors that businesses in LA can’t afford.
Minimum wage laws provide no jobs. They only outlaw jobs.
I used to believe in this BS about minimum wages, and was certain that when the voters in SeaTac (the city where the airport lies) implemented the nation’s highest minimum wage a decade ago there all sort of awful things would happen (exactly the ones outlined here) and SeaTac would pay the price.
Well, none of that happened!! SeaTac saw improvements (especially in much lower criminality). Nearby Seattle copied SeaTac. I learned to stop to listen to people who speak for their own interest and not with hard facts and look at the evidence instead.
Good job LA for doing the same. Lowering crime is great, and the data shows that increase in the lowest wages is the single most effective way to do so (who would have thought, uh?)
@ Mary
Number one, your name isn’t Mary. Number two, you are lying through your teeth, union boy, about the reality of what happened in Seattle. The city is in freefall. Crime has exploded, homelessness is off the charts, drug abuse, illegal aliens, and vagrancy are at historic highs, restaurants are CLOSING because of the minimum wage, and no one wants to be in downtown Seattle.. The cost of living has skyrocketed. Murderers are set free by George Soros-supported ‘progressive’ DA’s who hate law-abiding American citizens. Tech companies are cutting back on hiring and shifting operations to other states. Boeing and other major employers are just a shell of what they used to be. That’s the reality of Seattle. Just another failed snowflake city that is in deep sh!t now that federal bailouts have ended and reality is sinking in.
There is no association between higher minimum wages and lower criminality. You have completely made that up.
Also analysis of the Seattle minimum wage increase showed it resulted in lower total wages as the increase in pay was more than offset by the reduction in jobs. And that was a much lower wage increase so the effects will obviously be more pronounced the higher you go.
“Using a variety of methods to analyze employment in all sectors paying below a specified real hourly wage rate, we conclude that the second wage increase to $1 reduced hours worked in low-wage jobs by 6-7 percent, while hourly wages in such jobs increased by 3 percent. Consequently, total payroll for such jobs decreased, implying that the Ordinance lowered the amount paid to workers in low-wage jobs by an average of $74 per month per job in 2016”
National Bureau of Economic Research | NBER
https://www.nber.orgPDF
Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle
City works in LA and LV will be getting raises!!!!
Can not pay City Union workers less than Min Wages.
You’ve proven that you have no fear of hyperbole but you’re laying it on a little thick here. Nonetheless while this was doubtless well-intentioned it’s ultimately unlikely to be beneficial to the public.
@Christian — Raising the minimum wage, whether in-general or targeted (as here) actually often does benefit the public, at-large, by spurring additional economic activity as those who are paid more then spend more in their communities, and also for the consumers affected, say airport passengers and/or hotel guests, often receive better service as workers are usually retained (less turnover, more experience, all of which is good for their employers, too), and more motivated, since they can actually thrive instead of struggle. So, as I’ve said before, this is indeed a ‘good’ thing, and hope it actually happens here and elsewhere.
Every time the minimum wage is about to be raised we’re told about all the horrors that will happen if it’s raised. And every time all that happens is workers are better off. Those of us in Seattle went through this exact exercise years ago and none of the negatives predicted happened.
Minimum wage legislation is not an area I studied heavily in economics. But, I know enough to offer the following. The economic models of a binding minimum wage increase is clear and negative. The research is varied in their results. There are a host of ecomists who have sold there soul and will “find evidence” that supports the labor union or think tank that employees them. It is very easy to do bad research. So, I could conclude no ill affects from a minimum wage increase by studying cases where the increase wasn’t binding (i.e., the new rate was at or below existing market rates).
Look at the research by real scholars and you’ll be frightened by this $30 rate.
So, is this LA’s attempt at the Curley effect:
“James Michael Curley, a four-time mayor of Boston, used wasteful redistribution to his poor Irish constituents and incendiary rhetoric to encourage richer citizens to emigrate from Boston, hereby shaping the electorate in his favor. As a consequence, Boston stagnated, but Curley kept winning elections.”^
It’s been used by Coleman Young to turn Detroit into what it is. And, Robert Mugabe used it. Now, the LA city council?
^Glaeser and Shleifer, Journal of Law, Economics, & Organization, April 2005, V21 N1 p.1
I just paid $22 for a Burger King Whopper at Terminal 2 at LAX. I’ve never been so mad in my life.
Wonderful. Let’s continue to make laws that have zero common sense and which is not thought through.
Force me to double what I pay the same someone, to maintain the cost of my payroll, i will cut some heads and raise some prices. Goodbye to that illiterate single mother; I can actually now hire someone to read and write. Good luck finding a job with your attitude; I’ll hire me a college grad.
Thank you law makers for being clueless. You just created a new class of unemployed!! Boy what a way to get illegals here; they’ll be paid less every where else. Good job!
I greatly appreciate Gary Leff’s opinions on matters with which he is particularly conversant and knowledgeable. This article about the inevitable results of the LAX-proximity minimum wage increase might be an example of an article of a different sort.
Full disclosure: I am not only the member of a union but have been involved in union governance for years. I have also worked on every continent but Antarctica in my profession, traveling through airports around the world for half a century.
I have yet to see a correlation between consumer prices or service quality at or near airports and prevailing labor rates as a strong trend. Supply and demand and other market forces seem to rule, except in rare instances such as the Street Pricing rule at PIT (Pittsburgh International) that mandates that businesses in the airport may not charge more to customers than the same product or service would cost outside the airport (at their downtown stores, for instance)
Captive audiences for business on the gate side of security pay high prices for everything – those businesses will likely have no problem absorbing the increased costs. Likewise the busy corporate-owned hotels and restaurants around LAX where proximity drives business.
It is not surprising to read corporate talking points pretty much in order in this article, but with regard to unions and collective bargaining a few points to consider:
People who make a living wage support the businesses in their communities. People struggling to feed their families and keep a roof over their heads much less so.
People who work under collective bargaining agreements are treated more fairly and in many cases have access to health care they would otherwise not have .
Unions, unlike private corporations and ad-supported travel blogs, are not “for-profit” organizations – they do not “profit” from collecting union dues but dues do provide operating capital for them to continue to serve their members. The object of the game is not to “make more money” but to create an opportunity for more people to work under collective bargaining agreements and live better lives… lives that might even be good enough to afford air travel.
Housing in the Los Angeles metro area is very expensive. One consequence of raising wages may be the opportunity for a greater number of employees to be able to afford to live a bit closer to work. I have spoken with people routinely commuting to LAX area from Palmdale or Lancaster – distances of 70 and 80 miles respectively because they could not afford to live closer.
Yes, raising labor costs may have consequences both with regard to automation and hours worked – possibly fewer overtime hours for workers, which may provide employment opportunities for more people or may diminish number of workers per shift.
History has shown that these consequences work their way into business irrespective of minimum wages… there are autoscanning checkout kiosks all over the country even in low wage areas because business owners see economic benefits to installing them.
It is a complicated economic picture. There may be some negative consequences to the wage increase, but the question has to be asked who bears the brunt of those consequences?
Hotels are already “optimizing” their housekeeping management using AI algorithms – nobody cleaning hotel rooms around LAX is skating on a cushy job. Hotel prices may go up… that’s just business. Less expensive hotels are likely to be busier – there’s the market at work.
We’ll see!
It must be nice to live in the land of make believe like Los Angeles. I see this going bad. I am not an economist but I am someone who understands human nature and I see all of the possibilities @gary described occur in some form or fashion.
Worked at LAX for a company and $30 is a good start but from what I used to do and how had we worked we should have been paid $40hr back in 2018…
The real minimum wage is ZERO
Great news! I love Los Angeles hotels and I do not mind the price increases when they correspond to better pay for the workers. I lived in Seattle and Tacoma and Mary is right it is wonderful living there-
@Mary
If you actually knew what happened in Seattle / SeaTac and not what was written in some left wing puff piece in somewhere like the Guardian you would have known that after SeaTac upped its minimum wage the number of low wage jobs based in SeaTac declined. A lot.
Then when left wing members of Seattle City Council rammed through the same huge increase in minimum wage there was a precipitous fall in minimum wage workers hours / jobs. And a lot of small businesses in Seattle either closed down or moved outside the city. Mostly to the Eastside. All those restaurants that closed in Seattle over the last few years. Thats why.
The left wing crazies on the City Council behind the minimum wage debacle in Seattle were all either kicked out by the voters or else refused run again because they knew they would lose. But hundreds of small businesses in Seattle were destroyed and thousand of low wage workers either lost their jobs, lost net income, or were never employed in the first place.
As for LA. Its the usual Big Labor scam. The council member mainly responsible is a “union organizer”. She never seemed to have a real job. The union she works for represents less than 5% of the sector worker. But that does not really matter. Because the real motivation behind Big Labor pushing insane minimum wage increases is not any concern for workers on minimum wage. Who have very low union membership rates. But because so many union contracts are linked to the minimum wage rate. They are minimum wage + $x contracts.
The unions have a terrible track record at negotiating wage increases for the workers they represent. But if the unions can get the minimum wage rate increased by $5 or $10 that will be the biggest wage increase they have been able to get in many decades.
That’s why minimum wage has gone up so much. It’s got nothing to do with concern for the welfare of the people who work in low wage jobs. Nothing. And when low wage workers loses jobs by being priced out of the market the unions dont care. Because few of them are in unions anyway.
Follow the money.
The money has to come from somewhere. Prosperity can’t be legislated.
Either those workers do enough work to bring in $30 + raw materials and expenses to their business or the money is devalued.
No amount of legislation can make sweeping the floor and filling cups with soda worth $30. Only devaluation of the currency can do that.
The only issue I see with your analysis using using the words “might” and “should” instead of “certainly will”. The ONLY real minimum wage is 0.
Oh the poor employers. Cry me a river!
Ahhh, exactly what I expected in this space. A long diatribe against labor advancement, which just makes you so mad, for some reason.
You’re as predictable as the WSJ opinion page.
As a retired business owner I agree: you simply can’t afford to pay someone more than they produce.
And when you raise the pay rate you also raise a number of other costs, such as FICA, Medicare, unemployment insurance, worker’s compensation, disability insurance, sick leave, holiday and vacation pay. All these benefits are directly based on gross payroll and can easily double the payroll.
By definition, a business has to make money. A non-profit is a different animal.
For those who just dont get how hiking the minimum wage works in the real world (not the fantasy world of political slogans) let me illustrate. In a city that is way Bluer than LA. San Francisco.
If you went into a cafe in San Francisco in the 1980’s, somewhere like Lower Haight, Inner Mission, Potrero Hill, there would at least two or three people (often four) behind the counter serving customers. With another two or three making food. The people serving would be students usually. The food preparers usually older whites / blacks.
Go into the same cafes in the same neighborhoods in the late 1990’s / early 2000’s and there are now usually only two people serving customers. And the food preparers are almost always now hispanics. First generation from Mexico / Central America.
By the late 2010’s most cafes are down to one person serving customers. With maybe two at lunchtime etc. With hours way down per worker due to various recent laws / regulations. Usually only one food preparer. Usually a young hispanic.
That’s a lot of people who lost hours / job opportunities over the decades. All due to state / Federal regulations and minimum wage hikes. Mostly minimum wage hikes.
Greedy cafe owners getting rich? Far from it.
Talk to the owners, I have, and they all tell the same story. No matter what their personal political beliefs. Their biggest single overhead is staff costs. And they are getting really squeezed on these costs the last decade or two. They try to look after their staff but its either cut numbers / hours or go out of business. Which many of them have since the early 2010’s.
In cities like San Francisco (and Seattle) there used to be a pretty stable group of neighborhood cafes which stayed around for decades. Many decades. But starting around 2005/2010 a lot of long established places either went out of business or moved to a much smaller cheaper to run location i.e fewer staff. Between 1985 and 2005 there was not much turnover of these cafes. Between 2005 and 2025 – so many gone.
Guess why?
Lots of reasons but minimum wage hikes way beyond what is economically viable is the main one. Its time to abolish the minimum wage. The minimum wage is now the single best job killer for low skilled / low experience people. Just a political tool used by Big Labor for their own benefit to the total detriment of the financial interests of the vast majority of low wage workers. The complete opposite of the justification for the introduction of the minimum wage in the 1930’s
Abolish the minimum wage. Now.
Having to live in Palmdale or Lancaster because living closer to Los Angeles is too expensive is simply not true. Rents or mortgage payments may be cheaper than some places but the price is commuting expense and time. Living that far away is usually about lifestyle choice since there are many places that are cheap enough when considering the total dollar cost including commuting and possibly extra money for heating and cooling. The average rents in places east of downtown and in South Los Angeles are less than a lot of the city but people with kids often don’t want to live in those places (low achieving schools and higher crime). Rent control keeps down the cost of rent for many long term tenants. There are also a lot of cities outside of the City of Los Angeles that have lower rent costs than a lot of locations in the City of Los Angeles. When I moved to Los Angeles, I lived in the Hollywood district because I could rent a one room apartment for less than other places while still having a reasonable neighborhood. I moved when I had a better job ($10/hr.) to a place where I paid more for rent. Another change of a job ($15/hr.) brought in enough money to get married and start looking for a place to buy instead of renting. Things are much more expensive now but the analysis I did about living in Palmdale or Lancaster at the time still works.
Another reason to avoid Los Angeles as much as possible.