LA Hotel Workers Win $15.37 Minimum Wage: a New Day for Labor in the United States?

The Los Angeles City Council’s vote to raise the minimum wage for hotel workers is another herald of big changes coming in the way the United States deals with low wages and inequality. The Council voted 12 to 3 to raise the minimum wage for workers at large hotels to $15.37 an hour by 2017, which is more than the national median wage for women ($15.10 in 2013). Mayor Eric Garcetti will sign the bill after it receives a confirming second vote next week.

The LA County AFL-CIO, UNITE HERE Local 11 (the LA area union of hospitality workers), and the Los Angeles Alliance for a New Economy, which led the campaign, don’t intend to rest on their laurels and will push for an across-the-board minimum wage increase to $13.25 an hour, far above the national minimum wage of $7.25 an hour. Mayor Garcetti strongly supports that bill, too.

As in Seattle, where a union-led coalition won a $15 minimum wage, the people of Los Angeles realize that many businesses will not share revenues fairly with their workers unless they are required to do so. Even businesses that want to pay their employees a living wage feel constrained by their competitors: How can they compete with a competitor paying its workers $5.00 an hour less? The only way to break through these constraints is to reset labor standards to a level that provides a decent living. As Franklin Roosevelt said when he first sent minimum wage legislation to Congress in 1933: “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country… By living wages, I mean more than a bare subsistence level. I mean the wages of decent living.”

We have gotten so used to employers paying lousy wages in the United States that $15 an hour or $15.37 an hour might seem like a lot for the minimum wage. But $15.37 an hour for full-time workers hardly guarantees a lavish lifestyle. The Economic Policy Institute’s Family Budget Calculator estimates what it would take to provide a modest-but-adequate lifestyle for families in every metropolitan statistical area in the United States. We estimated that the family budget for two working parents and one child in Los Angeles is $69,000 a year. Between health reform (which should significantly lower health care costs in our family budget when it’s updated) and the new minimum wage, these families will be a lot closer to meeting this—but they still surely won’t be living on easy street. The annual wages for a full-year, full-time worker making $15.37 an hour are still less than $32,000 a year.

The fact that even as big a win as the LA hotel workers’ minimum still leaves lots left to do just underscores how poorly the U.S. economy has been delivering for most American families in recent decades. Hopefully this is starting to change. The victories in LA and Seattle are an important start to a critically needed transformation in the way we address the labor market. The activists who organized those victories recognize the truth that employer-by-employer change is too slow and might as well be impossible. The status quo has resulted in an ever-declining share of national income paid to employees, and of that smaller share, an ever-increasing part has gone to CEO’s and other top executives. The median wage, the wage of the typical worker, has declined since 2009 even as national income and productivity have increased.

EPI has documented the many causes of these inequality-worsening changes. Because identifiable policies, from too-low minimum wage rates, to unbalanced trade treaties, to anti-union labor laws and court decisions are responsible for wage stagnation, we have no doubt that the squeeze on working class and middle class incomes is ultimately reversible through political change and actions like those taken in California and Washington. Breaking free of the notion that we are all better off if employee compensation is held down and corporate profits are maximized is the starting point for an economy that works for everyone, and not just for the top one percent.