Los Angeles’ minimum wage hike for workers in the tourism industry could potentially do more harm than good.
In May, the Los Angeles City Council approved minimum wage increases for employees in the tourism industry. The municipal ordinance requires hotels in Los Angeles to gradually increase their hourly minimum wage each year until it reaches $30 in 2028.
The move has drawn significant pushback from Los Angeles businesses, including a coalition of hotel owners announcing a petition in June to fight back against the minimum wage hike, citing concerns over job losses and other “dire” economic consequences, Fox Business reported. The petition has collected over 140,000 signatures, surpassing the 93,000 signatures needed to put the initiative on California’s 2026 ballot, so residents will now have the ability to vote to revoke the ordinance in 2026, according to the outlet. (RELATED: ‘Extreme Uncertainty’: Things Keep Getting Worse For LA’s Democratic Mayor)
Will Swaim, president of the California Policy Center, told the Daily Caller News Foundation that if the minimum wage increase is implemented, it could result in problems such as hotels reducing hours for their employees, layoffs and rising labor costs.
“The misconception — advanced by the union that backed this initiative — is that hotels will pay this out of their profits,” Swaim told the DCNF. “They won’t. Hotel owners and operators will follow the familiar path blazed by all businesses in the face of arbitrary increases in the minimum wage: They’ll raise their rates – and that will drive away lower-income visitors and reduce the need for labor. Hoping to reduce labor costs, they’ll turn to automation and find other labor-saving efficiencies. That will lead to reduced hours for employees and even layoffs. Finally, unable to bear the sudden rise in labor costs, many hotels will become rundown, or will close or sell off to larger corporations – a centralization of ownership that will make the industry less competitive.”
The implementation of the minimum wage increase for hotel workers was set to take effect on July 1, but is currently halted while the Los Angeles City Clerk’s office determines whether the petition against the ordinance contains the required number of signatures, the National Law Review reported on July 2.
Vehicle traffic drives towards Los Angeles City Hall as gasoline fuel prices above five dollars a gallon are displayed at a Shell gas station in the Chinatown neighborhood of Los Angeles, California, on February 17, 2022. (Photo by Patrick T. FALLON / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images)
“You’d think the politicians who claim to be most concerned about working people, would find all of this – the automation, the reduced hours and layoffs, shutdowns and corporate concentration – they’d find all of this horrific,” Swaim added. “But in talking with them, it’s clear they believe the problems will take months or even a year or two to really emerge, and by then it will be some other politician’s problem.”
Many hotel owners in Los Angeles have pushed back against the minimum wage increase, citing concerns such as higher labor costs, according to the Wall Street Journal. Jon Bortz, president and chief executive officer of Pebblebrook Hotel Trust, which owns some hotels in Los Angeles and the surrounding area, told the WSJ that “we would love to sell [hotels in Los Angeles],” but said that “nobody will buy them.”
Los Angeles’ current minimum wage is $17.87. David Roland-Holst, an economist hired by Los Angeles to assess the wage proposal, said in December that although some job losses will likely occur from the minimum wage increases, the higher wages will serve as a “potent tool for economic growth,” the Los Angeles Times reported.
Roland-Holst added that the wage hikes will help create 6,000 new full-time jobs in the city by 2028, according to the outlet.
“We don’t see any empirical evidence of massive layoffs in response to minimum wages anywhere in California,” Roland-Holst said, as reported by the outlet.
In December, Los Angeles-based hotel owners threatened to back out of a deal to supply thousands of rooms during the 2028 Summer Olympics — which is set to be hosted in Los Angeles — if the minimum wage increase got approved, the LA Times reported.
“The [Los Angeles] hotel industry is already sounding the alarm,” Swaim explained to the DCNF. “Many of them signed [a] deal with the city to make themselves available for the 2026 World Cup and the 2028 Olympics. Now they’re saying they won’t be able to afford that deal. They’re pulling out — and that will lead to a spike in room rates for visitors. And long after the Olympic circus has left town, Californians and tourists will struggle to find affordable lodging.” (RELATED: California Has Shed Thousands Of Fast Food Jobs Since Newsom’s Minimum Wage Hike)
“This is how California routinely kills entire industries – fast food, gasoline, housing, farming, insurance and more,” Swaim added.
Democratic Los Angeles Mayor Karen Bass’ office did not respond to the DCNF’s request for comment.
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