Los Angeles lawmakers plan to introduce an ordinance Tuesday that would require the operators of big hotels to pay workers $15.37 an hour, one of the highest minimum-wage rates targeting private employers anywhere in the U.S.
The initiative by City Council members Nury Martinez, Curren Price and Mike Bonin is expected to set off a fierce contest between labor and business. Union activists say workers deserve a bigger share of revenue in the booming hotel industry, while owners say that nearly doubling the state minimum wage of $8 an hour would hurt profitability.
The proposal has been anticipated for months, as the local hotel workers union, Unite Here, has been lining up business and political supporters. Hotel owners in recent weeks have been lobbying against the ordinance, arguing, among other things, that city officials previously promised a virtual “quarantine” on new wage controls.
In previewing Tuesday’s announcement, the council members sought to point out that it was not only liberals who are backing higher wages. Their news release quoted former gubernatorial candidate Ron Unz, a libertarian from Silicon Valley and supporter of a $12 minimum by 2016, as saying a “living wage” would create “an enormous, permanent economic boom.”
The law would apply to 87 hotels that have 100 rooms or more. Backers plucked the $15.37 minimum figure from a 2009 law that raised minimum salaries for workers at Los Angeles International Airport. (The LAX minimum has increased with inflation and now stands at $15.67.)
Council members declined to comment in detail before Tuesday’s introduction of the new ordinance, though Bonin previously explained why he supported a significant pay increase. “Economic justice and true economic growth go hand in hand,” he said, “and expanding the living wage to include all hotel workers in Los Angeles is both a moral and financial imperative for our city.”
Among the hotel industry’s rebuttals is that it is being targeted indiscriminately for regulation, while other businesses, and hotels in neighboring cities, must only meet the state’s base wage, which is set to increase in July to $9 an hour.
Bob Amano, executive director of the Hotel Assn. of Los Angeles, said city leaders cannot on one hand say they want businesses to invest here “and then on the other hand arbitrarily decide to single out one industry, the backbone of tourism in Los Angeles, with restrictions and requirements that are not imposed on any other industry.”
Unite Here Local 11 previously released a study suggesting that the higher pay would pump more than $70 million annually into the city’s economy. The union and supporters on the council are prepared to present businesspeople who support the $15 wage. One of those scheduled to speak in favor of the proposal Tuesday is a Highland Park restaurateur.
Hotel owners believe that one of their most powerful arguments against the increase will be promises that city officials made seven years ago, one of the last times they made policy on wages. The council and Mayor Antonio Villaraigosa at the time mandated a $10.64 an hour wage for 13 hotels adjacent to the airport.
The city declared that hotels in the corridor “derive significant and unique business benefits from their close proximity to LAX.” In exchange for this benefit, lawmakers argued, they could dictate a higher wage.
But Villaraigosa also wrote council members at the time that the LAX wage requirement should “include clear language regarding our intent to not expand living wage requirements beyond those unique businesses.” He added that such restrictions would “allay concerns that our recent action will somehow unleash a flood of other living wage regulations.”
The subsequent ordinance increasing pay at LAX-area hotels states that future minimum wage laws would be approved in Los Angeles only in two situations: if the businesses to be regulated have substantial connections to major city assets, such as the airport; or if the businesses employ so many workers and pay them so little that they create “a significant negative effect on the city economy.”
In the news release, the sponsors indicated that they were aware of those earlier restrictions. They said Los Angeles “has made significant financial investments to create a climate for the hospitality industry that allows them to thrive,” pointing to tourist attractions such as Hollywood Boulevard and Venice Beach, as well as improvements at the airport and the Convention Center.
The 2007 law, however, calls for the city not to impose new wage laws based on generalized support it has given to hotels or businesses. Instead, the city required that businesses to be regulated in the future must get as much benefit from a single city asset as airport-area hotels get from LAX.
Hotel owners said the city cannot possibly show that their properties get a benefit equal to the one that LAX-area hotels get from the airport. Hotel owners in 2007 “were absolutely led to believe that these changes would be limited to these particular hotels” adjacent to LAX, said Amano, of the hotel association.
The Los Angeles Alliance for a New Economy, an activist group supporting higher wages, plans to lobby for the ordinance on broader terms.
“What the opponents are not raising questions about are the fundamental issues,” said James Elmendorf, who is heading the group’s campaign for the living wage. “Is raising wages for workers good for workers? Is it good for the economy? Is it something the industry can afford? The answer to all of those questions is ‘yes.’”