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UPDATE: Council Committee Recommends $15.37 Minimum Wage for Some Hotel Workers

Opponents say increased wage may lead to hotel owners reducing staff, closing less profitable sites or replacing employees with automated kiosks.

Photo credit: Spencer Platt / Getty Imagine
Photo credit: Spencer Platt / Getty Imagine

By ELIZABETH HSING-HUEI CHOU
City News Service

A proposal to raise the minimum wage to $15.37 an hour for some Los Angeles hotel workers won support from a City Council committee Tuesday.

Under the proposal, the higher wage would go into effect for non-union hotels with at least 300 rooms by July 1, 2015, while non-union hotels with 125 or more rooms would need to raise their wages by July 1, 2016.

Without taking a formal vote, members of the council's Economic Development Committee — Nury Martinez, Gil Cedillo, Paul Krekorian and Curren Price Jr. — instructed the City Attorney's Office to prepare an ordinance that will be forwarded to the full City Council for consideration.

The panel also asked city attorneys to include a provision allowing businesses "facing a financial hardship" to seek relief from the minimum wage ordinance. The committee also discussed possibly developing incentives to encourage hotels to remain in or move to Los Angeles once the higher wage requirement takes effect.

Martinez, who co-authored the council motion to raise hotel worker wages, said if the Los Angeles hospitality industry is "thriving" and "benefiting from tourism ... then somehow that needs to trickle down to families and people who work for you."

The proposal was introduced in February by Martinez, Price and Councilman Mike Bonin. Bonin noted at the time that federal law bars the city from imposing a wage hike at hotels with employees who earn union-negotiated wages.

City officials said the requirement would affect about 40 hotels.

The committee backed the proposal despite a generally negative report prepared at the panel's request by Blue Sky Consulting Group. The report warned that hotel owners may respond to the wage increase by reducing staff sizes, closing less profitable sites or replacing employees with automated kiosks.

The report found that if hotel proprietors do try to cut costs, any increase in local economic activity stemming from the higher wages of workers "would be minimized." The report's authors added that over the long term, "economic activity could be reduced if investment in new hotels is diminished or capital investments on the part of hotel owners are deferred."

The report concluded there is an "inherent trade-off" in raising the minimum wage for workers in the hotel industry, in which some employees would see their wages go up, while others would see their jobs disappear.

But Price hinted during Tuesdat's meeting that the wage increase for the hotel industry could lead to increases in other industries.

"We have to begin somewhere," he said. "I think many would like to see a citywide approach and perhaps this will be an entree to that, should this be successful."

Hotel owners and representatives of the business community raised concerns during the committee meeting that the proposed wage increase would lead to job losses. But supporters said the plan would raise the quality of life for many hotel employees living in poverty and stimulate the local economy.

The California minimum wage is $8 an hour and is set to go to $9 in July and $10 by 2016. Voters in cities such as Long Beach and San Jose have opted in recent years to raise the local minimum wage above the state's for all or some workers.

San Francisco, which in 2003 pegged its minimum wage to inflation, requires employers to pay workers at least $10.74 an hour.

Allan June 10, 2014 at 11:14 AM
Yes do it. Would love to watch the unintended consequences from arms length.

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