With benefits, the effective wage is $38.35. This is inflationary.
New Minimum Wage AI Overview
Los Angeles is moving towards a $30 minimum wage for hotel and airport workers by 2028, a move supported by unions and some council members who believe it will benefit the local economy. The city council passed an ordinance to implement this wage increase, and the law is expected to take effect in stages, reaching $30 per hour by 2028. This increase will impact hotels with over 60 rooms and businesses at LAX, including airlines and concessionaires.
Los Angeles Throttles Its Tourism Industry
The Wall Street Journal comments Los Angeles Throttles Its Tourism Industry
The 2028 Summer Olympics are three years away, but host city Los Angeles is already on track to miss the podium.
The law requires not only a $30 minimum wage by 2028, but also $8.35 hourly in required benefits spending—for an effective wage of nearly $40 an hour. An Oxford Economics study on the mandate found that 15,000 hospitality and construction jobs would be eliminated, with $342 million in construction spending halted and nearly $170 million in tax revenue lost.
Los Angeles’s Olympic bid was contingent in part on having enough hotel rooms for athletes, spectators and officials. Hotels signed agreements guaranteeing a certain number of rooms at a given rate during the Games.
Those agreements are now at risk: Eight hotels have said they will pull out of the room plan, citing the unworkable economics of the new minimum-wage law. A hotel development that would have created 395 rooms for the Olympics was canceled. More-severe consequences are expected.
Los Angeles relies on the transient occupancy tax revenue it receives each time a hotel room is booked. Fewer visitors mean less city revenue, which comes at a precarious time as Los Angeles has cut constituent services and 600 city jobs to close a $1 billion budget deficit.
Don’t tell that to the hotel union, whose co-president Kurt Petersen has dismissed the evident consequences of the wage mandate as a “Chicken Little” mentality. His own members might feel differently: The union shed almost 10,000 members last year, perhaps in part to earlier wage hikes he championed.
Mr. Petersen is looking to 2028, threatening a potential strike when current contracts expire months before the Olympics. Many hoteliers aren’t waiting around to find out. “Frankly, the market, from a broad-based buyer perspective, has been crossed off the map by investors,” one hotel executive told the Los Angeles Times.
The state has asked Congress for $40 billion to help Los Angeles recover from the fires. Legislators should consider conditioning that aid on a moratorium on any mandates, including the $30 minimum wage, that would put recovery and taxpayer dollars at risk.
Give the Cities Nothing
The last paragraph above is ridiculous. Congress should give cities nothing because all they will do with the money is waste it.
And then once they waste it, they will continue their union and DEI pandering anyway.
Soaring Minimum Wages
Does anyone recall the fight for $15?
It’s now a fight for $30 plus another $8 in benefits.
Rising wages for hotels will increase the pressure for rising wages elsewhere. And if wages rise, so will prices at hotels and restaurants.
So far, this madness is local to LA, but don’t expect it to stay there.
Treasury Yields
Every day I watch yield on long-term treasuries.
The 10-year treasury note yield is 4.47 percent.
The 30-year long bond yield is 4.99 percent, and keeps flirting with a breakout higher.
Inflation Pressures
These wage increases are inflationary. So are Trump’s new steel and aluminum tariffs.
If China halts rare earth exports, the supply constraints will be highly inflationary.
Will jobs slow fast enough to counteract this inflation?
I do not have the answer, now does anyone else. But the reprieve, if so, is more likely to be temporary than not.
Related Posts
May 31, 2025: Trump Will Double Steel and Aluminum Tariffs to 50 Percent
Tariff madness continues.
June 2, 2025: Senators Ron Johnson and Rand Paul Say No to One Big Beautiful Bill
According to Senator Johnson, the current bill debt will add an additional $22 trillion to national debt over the next 10 years, from the current level of almost $37 trillion.
Since that does not factor in recession, expect things to be worse.
June 2, 2025: Government Free Money Accounts for 19 Percent of All Personal Income
Free money includes Medicare, Medicaid, SNAP, Social Security, and more, discussed below.
May 25, 2025: What Should We Do to Get Government Spending Under Control?
That’s the question I was asked today. 12 Ideas.
My expectation, as always, is that alleged fiscal-hawk Republican will cave in.
This post originated on MishTalk.Com
Thanks for Tuning In!
Mish
Read the full article here