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LA minimum wage doomsday forecasts ‘unfounded’

Profile Photo By: Steve Shellum
April 4, 2016

LA minimum wage doomsday forecasts ‘unfounded’

Nine months into a minimum wage hike at some Los Angeles hotels, city leaders and other backers of the move are claiming victory, saying doomsday forecasts from hoteliers have proven unfounded, Reuters reported.
Confined to about 15 of the city’s largest non-union hotels and accounting for more than a fifth of all its hotel rooms, the increase was aimed at the segment of the service economy that city leaders saw as best equipped to absorb the extra cost.
Hoteliers say full data are not yet in and some layoffs have taken place, but champions of the raise say that the naysayers’ concerns appear to have been overblown.
“There have not been the wholesale layoffs or cutbacks that we were told would occur,” said Los Angeles City Councilman Curren Price, who co-authored the wage hike ordinance.
The pay rise for a small slice of an industry gives an early if limited glimpse into the drive for a $15 minimum wage, gathering pace in states from New York to the West Coast. The federal minimum wage has been stuck at $7.25/hour since 2009.
A phased state-wide raise to $15, ultimately affecting 5.6 million workers, was approved by the California legislature last week and Governor Jerry Brown, a Democrat, is expected to sign it into law on Monday.
Pushing wages to just over $15 from as low as $9 an hour for an estimated 3,000 hotel workers began last summer as the first phase of a hike for the second-largest US city, largely run by Democrats. It affects about 8,000 rooms, or half of Los Angeles’ large-hotel room inventory.
Hotel operators had warned the hike would force them to cut staff and services, put the brakes on new hotel projects and would drive away customers.
Because of the increase, Julie Robey, a general manager at the Holiday Inn Los Angeles Gateway, south of downtown, told Reuters she had to lay off seven employees, cutting her staff to 95 full and part-time workers.
Robert Amano, executive director of the Hotel Association of Los Angeles, which opposed the increase, said the hike has led to some job cuts, but that an overall tally is not available.
Many hotels have chosen to absorb the increase by upping restaurant food prices by 15 to 30 percent, he said.
And he warned that smaller hotels, which do not have the same profit cushion, could face bigger challenges when they have to implement the increase this summer.

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