A contentious debate over fair wages in Los Angeles opened Tuesday when five members of the City Council said they intend to propose a $15.37 minimum wage for employees of hotels with 100 rooms or more.
“Income inequality is one of the most pressing social, economic and civil rights issues facing our city, and the time to act is now,” said City Councilman Mike Bonin.
A study by the city’s Economic Development Department found 43 percent of people who work in hotels earn wages that place them below the federal poverty line, according to Bonin. A labor union official said housekeepers, maintenance workers and restaurant employees at hotels currently earn an average of $10.55 an hour. That adds up to about $22,000 a year.
Bonin argued it's fair to require a higher minimum wage at hotels because they benefit from the city’s spending to enhance tourism.
“The City of Los Angeles has invested tremendously in creating a climate that has allowed large hotels to thrive,” Bonin said. “It is fair and reasonable that these hotels would pay their employees a fair living wage — especially when doing so would greatly benefit neighborhoods in Los Angeles.”
Proponents cited an Economic Policy Institute study that said increasing wages for hotel workers could generate more than $70 million in economic activity for Los Angeles. Council members Bonin, Nury Martinez, Curren Price, Tom LaBonge and Paul Koretz co-authored a motion asking the Chief Legislative Analyst to conduct a study of the economic impacts of the proposal. The council is expected to vote on the motion in a few weeks.
Business leaders immediately denounced the idea.
“This isn’t about helping the working poor,” said Ruben Gonzalez, vice president of public policy at the Los Angeles Area Chamber of Commerce. “This is about government using regulations to help unions organize.”
Gonzalez argued that labor unions would be able to use a higher minimum wage as leverage to convince hotels to support unionizing efforts. Labor law allows union contracts to set a lower wage in exchange for other benefits, such as better healthcare.
He also said mandating a higher minimum wage at L.A. hotels would hurt that industry economically.
“It becomes a competitive disadvantage,” Gonzalez said, noting hotels in Glendale, Burbank and elsewhere are not subject to such requirements.
L.A. already requires a higher minimum wage at hotels near the airport. Employees of vendors who operate at LAX also receive a higher minimum wage. A spokesman for Bonin said the proposed $15.37 for hotel workers is based on LAX workers’ wages.
But this proposal would go much further, covering 87 hotels and more than 11,000 employees, according to James Elmendorf, deputy director of the Los Angeles Alliance for a New Economy, a union affiliated think-tank.
“It's an important step toward reducing poverty in the city,” Elmendorf said. “Hotel workers are some of the lowest paid workers in L.A., and they work in one of the most profitable industries.”
The debate occurs as California prepares to raise the statewide minimum wage from $8 an hour to $9 an hour on July 1. On January 1, 2016, it goes to $10 an hour.