The Los Angeles City Council voted last week to raise the minimum wage for Los Angeles area hotels to $15.37 per hour. The minimum wage will increase for hotels with 300 or more rooms in July 2015, and for hotels with 150 or more rooms in July 2016.
Of note, this minimum wage increase was championed by organized labor. Indeed, the victory is publicized on union websites. So, why would unions want a higher minimum wage at non-union properties? One reason is that hotels with a current collective bargaining agreement in place are exempted from the required wage increase. Therefore, one goal as stated by many pundits is to pressure more hotels to unionize so they have the option to pay less than the required minimum wage.
But why would a hotel worker at a union hotel take less money? Why wouldn’t they just move to another hotel that pays $15.37? The stated theory seems to be that it would be hard for union hotels to justify paying less than the required minimum wage when their contracts come up for negotiation. So, over time, the new minimum wage may become the new floor, and organized labor can take credit for making that happen.
Indeed, news articles report that the ultimate goal is more about expanding the ranks of union members than improving wages for workers. Apparently there are about 60 Los Angeles area hotels that will be impacted. If those hotels feel they can get some concessions from unions and avoid paying the minimum wage (perhaps in exchange for better benefit plans or other negotiated employment terms), or if the wage differential between union and nonunion hotels goes away, then there will be less resistance to efforts to unionize. At least that seems to be what the unions are hoping for.
Will the wage increase mean less workers hired as businesses suggest? Some argue that up to 20% of workers will be laid off. Or can the hotels absorb the wage increases and still make a profit? Will the unions come out ahead as they hope? Will more Los Angeles hotels be unionized a few years from now? It will be interesting to see how this all plays out.