Historic Wage Vote Tomorrow

Thousands of low-wage workers in Los Angeles are poised to receive a substantial pay bump, depending on a critical City Council vote scheduled for Wednesday. On the table: a $15.37 hourly wage for hotel employees at some of the biggest and most lucrative non-unionized hotels in the City of Los Angeles.

In June a Los Angeles City Council committee directed city staff to draft an ordinance that would require hotels with 300-plus rooms to meet a $15.37 hourly wage benchmark by July 2015. Hotels with more than 125 rooms would have to meet the standard in 2016. The full council is expected to take up the proposal Wednesday morning after a Tuesday hearing at the Economic Development Committee.

Business interests complain that the measure would cost jobs, but proponents argue that tourism and the hotel industry are experiencing record growth and creating local jobs. A study prepared by the Economic Roundtable, a Los Angeles nonprofit research organization,  estimates that the wage boost would pump $39.6 million annually into local businesses. The study is one of three reports being considered by the City Council.

There’s obviously a lot of money at stake in Wednesday’s vote. The Los Angeles Economic Development Corporation calls hospitality and tourism “the heart of Los Angeles economy” and calculates that 29.9 million overnight guests in L.A. spent $18 billion in 2013.

Yet the Economic Policy Institute estimates that some 40 percent of L.A.’s hospitality workers live below the poverty line.

“If an industry has been growing and experiencing rising profitability coming out of a recession, why can’t that be shared?” asks Patrick Burns, co-author with Daniel Flaming of the Economic Roundtable study. Problems emerge, he says, when you have workers or groups of workers that can’t afford housing and become increasingly mired in household debt. “If [the hotels] can’t make the economic model work, do we have a public interest in subsidizing the workforce?”

A robust revenue stream is exactly why hotels can afford to boost pay scales for employees that work at well-heeled hotels while currently earning scant hourly wages says, Raise LA, a coalition of labor, faith-based and community organizations (including the Los Angeles Alliance for a New Economy, which is Capital & Main’s sponsor).

Raise LA director James Elmendorf estimates that some 12,000 workers at local upscale hotels would benefit if the measure passes. More than half of those workers make well below the $15.37 hourly rate proposed in the measure.

Among them: workers at the Hilton Garden Inn near Hollywood Boulevard and Highland Avenue. Tourists who want a room within walking distance of the famous boulevard can pay a rate of $249 nightly, with lower-cost Hilton packages hovering at $169.

Not jaw-dropping, perhaps, compared to such nearby luxury hotels as the W, at Hollywood and Vine, with a high-end nightly rate of $639, or the Four Seasons in Beverly Hills, with a $525 to $765 price range.

Nevertheless, $9.23 billion in last year’s revenue put Hilton Worldwide 38th on Forbes‘ list of America’s top 100 private companies.

According to one Hilton Garden Inn housekeeper, the hotel’s day-to-day working conditions  hardly seem to reflect the company’s shiny Forbes status.

This woman, concerned about reprisals, requested anonymity to speak with Capital & Main. First on her wish list if she got a wage raise: “I want my kids to study, to send them to a university.” She and her husband still have one high school student at home; two of her other children attend community college—but that’s not the same as a university, she says.

Beyond these hopes for her kids, she also wistfully puts a car on her list. Her work commute via Metro buses from South L.A. to Hollywood takes 90 minutes and her low wages make car ownership out of the question. She and her co-workers clean 16 rooms during an eight-hour shift. That comes to a half-hour per room, although she claims she and her fellow housekeepers are constantly admonished to move faster.

Hilton’s Garden Inn benefits from the $1 billion that by year’s end, Raise LA claims, the City of L.A. will have marshaled to support the hospitality industry. This public investment, the coalition argues, has created an attractive location to hotels that should pass along their good fortune in the form of livable wages.

Prior to 2001, central Hollywood had become a blighted landscape of gum-spotted sidewalks and drug-dealing. It was transformed to its present day tourist-magnet status with support from $90 million in city investment that created the Hollywood and Highland Center, downtown Hollywood’s glitzy anchor development.

Raise LA doesn’t oppose the public investment but believes a subsidy tide should lift all boats—particularly those of the employees that propel the tourism industry and whose wages average $10.55 an hour. The Economic Roundtable puts the average hourly wage for L.A. maids and housekeepers at $9.03, desk clerk pay at $11.17, with $12.03 per hour (including tips) for bellhops.

The subsidies come from many directions, Elmendorf says. City funds that create attractive tourist destinations, the direct construction funds that create such venues as the downtown Marriott and L.A. Live, and deferrals of the “transient occupancy tax” (the “hotel bed tax”) are among the ways the public invests in the hospitality industry.

(A June story on KCRW’s Which Way, L.A.?’s blog reports the City Council is mulling offering close to $180 million in tax breaks for two new downtown hotel projects.)

Council members Mike Bonin, Nury Martinez and Curren Price authored the hotel worker wage proposal. A spokeswoman for Martinez calls the measure “part of the real movement to increase wages for a full day’s work.” The affected corporations are multinational, she says, not mom and pop shops, and the costs of the pay raise—estimated at $8 per room per night at the high end and $2-$4 per night at the lower end—will be absorbed by people from out of town, not Angelenos.

Martinez’s council colleague, Bernard Parks, stands resolutely against the measure. An email from his office said he “is opposed to one sector (in this case hotel workers) receiving higher wages than people in other sectors. The field should be even.”

Robert Amano, executive director of the Hotel Association of Los Angeles agrees.

“It discriminates against one industry,” he says of the proposed wage measure, adding his industry pays its way with the transient occupancy tax that generates $160 million annually for L.A.’s general fund. “And economic benefits go to the community—people who stay in hotels take taxis, go out to eat.”

Amano, who started in the hotel industry as a reservationist at the old Sheraton Grand in downtown Los Angeles, says that companies pay competitive rates because they want to keep good people. “We do competitive wage and benefit analysis—we pay well.”

He charges that the pay hike would result in job cuts. The Economic Roundtable study disputes this, saying that modest room rate increases would absorb costs, and the reduced turnover afforded by a stable workforce backed by dependable wages also saves the companies money, along with “scaled back profits to hotel owners.”

Echoing Nury Martinez’s spokeswoman, the study concluded that out-of-town visitors would pay three-quarters of the cost for the proposed minimum wage ordinance.

The housekeeper at Hilton Garden Inn has hopes for tomorrow’s council vote.

“We just want a decent wage that would cover our expenses,” she says.