New Minimum Wage AI Overview

Los Angeles is moving towards a $30 minimum wage for hotel and airport workers by 2028, a move supported by unions and some council members who believe it will benefit the local economy. The city council passed an ordinance to implement this wage increase, and the law is expected to take effect in stages, reaching $30 per hour by 2028. This increase will impact hotels with over 60 rooms and businesses at LAX, including airlines and concessionaires.

Los Angeles Throttles Its Tourism Industry

The Wall Street Journal comments Los Angeles Throttles Its Tourism Industry

The 2028 Summer Olympics are three years away, but host city Los Angeles is already on track to miss the podium. 

The law requires not only a $30 minimum wage by 2028, but also $8.35 hourly in required benefits spending—for an effective wage of nearly $40 an hour. An Oxford Economics study on the mandate found that 15,000 hospitality and construction jobs would be eliminated, with $342 million in construction spending halted and nearly $170 million in tax revenue lost.

Los Angeles's Olympic bid was contingent in part on having enough hotel rooms for athletes, spectators and officials. Hotels signed agreements guaranteeing a certain number of rooms at a given rate during the Games.

Those agreements are now at risk: Eight hotels have said they will pull out of the room plan, citing the unworkable economics of the new minimum-wage law. A hotel development that would have created 395 rooms for the Olympics was canceled. More-severe consequences are expected.

Los Angeles relies on the transient occupancy tax revenue it receives each time a hotel room is booked. Fewer visitors mean less city revenue, which comes at a precarious time as Los Angeles has cut constituent services and 600 city jobs to close a $1 billion budget deficit.

Don't tell that to the hotel union, whose co-president Kurt Petersen has dismissed the evident consequences of the wage mandate as a "Chicken Little" mentality. His own members might feel differently: The union shed almost 10,000 members last year, perhaps in part to earlier wage hikes he championed.