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.