At first, it appeared that a minimum-wage hike for hotels was inevitable. But now, business leaders and hotel owners are launching a counterattack against an expeceted L.A. ordinance that would nearly double the rate local innkeepers must pay their workers.
The turnabout comes over a labor-backed proposal that would require owners of hotels with more than 100 rooms to pay their workers a minimum wage of $15.37. Supporters were confident it would win council approval and Mayor Eric Garcetti later chimed in to say he would sign such a measure.
But last week, as hotel owners and business groups met with council members, passage no longer looked as certain, giving them hope that the measure could be stopped outright or at least slowed down or changed to make it less burdensome.
Two local business groups – the Los Angeles Area Chamber of Commerce and the Central City Association – last week took their case to individual council members, saying that the new minimum-wage mandate would result in job cuts and less hotel construction. Business leaders said that some of the newer council members seemed willing to consider their concerns.
Also, after an initial silence, the Los Angeles Hotel Association, which represents most of the major hotels, last week was planning to send a letter to council members calling for the city to conduct a study of the economic impact of a wage hike. The letter will also remind council members that when the city required hotels around Los Angeles International Airport to pay their workers the so-called living wage seven years ago, the city promised not to extend the living-wage mandate to other hotels.
“The city clearly expressed its intention to not expand living-wage efforts beyond LAX-area hotels,” hotel association executive director Bob Amano said in a two-page memo provided to the Business Journal. The memo features points expected to be in the letter.
As a result, it now appears a battle looms over the labor-backed proposal, which would only affect L.A. hotels with more than 100 rooms, currently 87 hotels. If passed, the measure would make them pay their workers a minimum of $15.37 an hour, up from the current minimum wage of $8. (The $15.37 wage was what airport-area hotels were required to pay workers who don’t have health benefits through the middle of last year; the airport hotel rate jumped to $15.67 on July 1, according to a formula.)
Garcetti indicated in a Los Angeles Times article Jan. 27 that he would likely sign such a measure if it came to his desk.
A formal measure containing this new minimum-wage requirement had not been introduced to the City Council as of late last week. It was supposed to be introduced by the end of last month, but late last week, business leaders told the Business Journal they believe proponents are waiting until they line up more supporters on the council before introducing the ordinance. When it does come forward, Councilmen Mike Bonin and Paul Koretz are expected to take the lead in carrying the legislation.
The delay and the meetings with council members have given local business leaders some hope that the minimum-wage proposal could be derailed – or at least watered down or phased in.
“We have several new council members now, members who may be more receptive to voices from the business community than their predecessors,” said Gary Toebben, chief executive of the L.A. chamber. Seven of the 15 council members took office last year. Business leaders say they believe the votes of about five of the council members could still go either way.
Amano of the hotel association said last week he has met with about half of the council members.
“We feel good about these meetings,” he said. “They genuinely listened to our point of view.”
Amano said the key point he has conveyed to the lawmakers is that raising the minimum wage could result in job cuts among local hotels and could stymie the development of new hotels in the city.
“Mandating a higher minimum wage would affect the calculus for developers of new hotels,” Amano said. “At a time when the city is desperately seeking more hotel rooms around the (Los Angeles) Convention Center, stifling new hotel development in this manner is definitely not the way to go.”
Amano and other business leaders are also pressing for the city to conduct a study of the economic impacts of the wage hike.
“The economic impacts could be huge here,” said Carol Schatz, chief executive of the Central City Association. “No other large city in the country is doing this right now. It’s highly irresponsible for the city to act without knowing what those impacts are.”
Some business leaders say privately a compromise proposal could ultimately emerge. Such a proposal might include phasing in of a higher minimum wage, either by wage level or the number of hotel rooms. There’s also the possibility that the hotel owners and operators could agree to voluntarily pay a higher wage, though not as high as $15-plus, in exchange for getting the wage mandate dropped.
Exempting union hotels
One key point for business leaders is whether the minimum-wage ordinance would exempt hotels that have collective-bargaining agreements with unions. The 2006 ordinance requiring airport-area hotels to pay the city’s living wage exempts hotels with collective-bargaining agreements, as does a similar measure in Long Beach requiring hotels with more than 100 rooms to pay workers at least $13 an hour.
In Los Angeles, Unite Here Local 11, the union representing hotel workers, said about one-third of the larger hotels have collective-bargaining agreements.
Exempting hotels with union agreements from the wage hike would provide financial incentive for nonunion hotels to allow organizing. That’s because collective-bargaining agreements could allow some workers to be paid less than the proposed $15.37-an-hour minimum wage.
“We think it’s unfair and inappropriate to place on the table a mandated wage increase that only applies to nonunion hotels,” Toebben said. “Make no mistake: This would represent a strategic move by labor to create a new playing field for organizing industry groups throughout Los Angeles.”
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