Every day, we see the real-life impact of policies like the proposed City of Los Angeles wage increase. Council members requested an economic analysis on the nearly 70% wage hike for hotel and airport workers – and what they got back is nothing short of a joke. But let’s be clear: for the small businesses that will bear the brunt of this policy, there’s nothing funny about a $30 minimum wage.
Small businesses are the backbone of this city, but you wouldn’t know that from reading this report. It barely scratches the surface of how drastic wage increases will hit them. Sure, it throws in some mentions of automation and operational changes, but let’s face it, most small businesses don’t have the capital to invest in high-tech solutions. This isn’t about padding profits – it’s about staying alive.
Wage hike will cause layoffs
What’s worse is the report doesn’t even mention how these rising labor costs will force businesses to cut staff, reduce hours or close their doors entirely. Small, independent businesses don’t have the financial cushion to absorb these costs without hiking prices and in today’s economy, customers are going to take their business elsewhere. We’re getting squeezed from all sides, and this report acts like that reality doesn’t exist.
City will lose revenue
And let’s talk about city revenue. If small businesses close and jobs are lost, who’s going to make up for the lost tax revenue? Los Angeles depends on sales taxes, business taxes and tourism dollars. But when hotels and restaurants are forced to jack up prices to cover these higher wages, will L.A. still be a competitive destination for tourists?
Fewer tourists mean less Transient Occupancy Tax revenue, and that’s going to hurt the city’s ability to fund public services. This report says nothing about that.
Even worse, the researchers behind this report ignored hundreds of pages of economic data from industry experts and refused to talk to the businesses that would be directly affected by this ordinance. Had they bothered to pick up the phone or glance at the data, they’d know that tourism in L.A. hasn’t fully bounced back from the pandemic. Hotel revenues are still down. Conventions are bypassing our city. Even LAX is seeing reduced traffic, so much so that expansion projects have been put on hold because there’s no need for more capacity.
A huge financial strain
Bottom line? This report paints a rosy picture that just doesn’t match what’s really happening on the ground. It doesn’t account for the financial strain on small businesses or the broader impact on city revenue.
Los Angeles is about to be in the global spotlight in a big way. In the next few years, we’re hosting the World Cup, the Super Bowl, and the Olympics – and hopefully a few more World Series appearances along the way. We got these events because of our vibrant tourism economy, our ability to showcase the best of L.A., the state and the country. But without thoughtful leadership from the City Council and a recognition that they don’t have enough data to make an informed decision, the very hotels, restaurants and venues that make us great could be in jeopardy.
Council members called for a data-driven process from the start, but that hasn’t happened. We join them in demanding a real economic analysis before any action is taken on this ordinance.
Stuart Waldman is president of the Valley Industry & Commerce Association, a business advocacy organization based in Van Nuys that represents employers in the San Fernando Valley area at the local, state and federal levels of government.
