Dec 12, 2024, 5:35 PM
Dec 12, 2024, 5:35 PM

Los Angeles tourism wage hike sparks hotel closures and homelessness crisis

Highlights
  • The Los Angeles City council unanimously approved a $30 minimum wage for hotel and airport workers with phased increases leading up to 2028.
  • Local businesses expressed concerns that the wage increase could lead to job losses, hotel closures, and a negative impact on the city's budget.
  • The decision has sparked a debate between the need for fair wages and the economic implications for the hospitality industry in Los Angeles.
Story

In Los Angeles, California, the city council voted to implement a significant wage increase for hotel and airport workers. This decision mandates that the minimum wage will rise to $30 per hour by July 1, 2028, with intermediate increments starting from February 1, 2025, when it will first increase to $25 per hour. This legislative move also includes an additional healthcare benefit of $8.35 per hour for workers whose employers do not provide health insurance. The ordinance, which was passed amid opposition from local businesses, aims to improve the financial situation of hospitality workers but has raised concerns about its potential impact on the local economy and job market. Businesses including hotels have voiced strong opposition, declaring that the sudden rise in wages could lead to closures, layoffs, or a potential conversion of their properties to shelters for the homeless due to unsustainable operational costs. The Los Angeles Chamber of Commerce highlighted that the payroll costs would increase by over 70% from existing levels by the time the new rate is fully implemented in 2028, which poses a threat to the sustainability of many existing businesses in the city. They also noted that the Transient Occupancy Tax, which is a vital source of revenue for the city’s general fund, is already declining and that this ordinance could exacerbate a projected half-billion-dollar deficit. The law has been criticized for possibly harming the hospitality sector, an important driver of the local economy and revenue. However, a city-commissioned analysis from Berkeley Economic Advising and Research claims that the ordinance would result in job creation rather than loss, estimating a boost of around 6,319 jobs by 2028. This contentious debate has not only brought up the issue of workers' rights and fair wages but also raised broader questions about the balance between enhancing employee earnings and ensuring the economic viability of businesses in Los Angeles as they prepare for the upcoming 2028 Summer Olympics. City council members Traci Park, John Lee, and Monica Rodriguez were the only votes against the wage increase measure, reflecting a split among officials on the issue.

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