LAANE Study Shows Century Corridor Hotel Living Wage Produces $23.9 Million in Economic Benefits

March 30, 2010 -- Los Angeles Alliance for a New Economy

by Los Angeles Alliance for a New Economy (LAANE)

A recently released LAANE study found that the Century Corridor hotel living wage ordinance, combined with the successful negotiation of collective bargaining agreements at four LAX-adjacent hotels, will produce $23.9 million in economic benefits. In 2006, a coalition of community members, workers and clergy leaders joined together as the Coalition for a New Century in an effort to transform thousands of low-wage hotel jobs into family-sustaining jobs and to upgrade a lackluster L.A. tourism district that is often the first glimpse visitors have of the region.

In the span of a few years, the Coalition—working with Los Angeles Mayor Antonio Villaraigosa and the Los Angeles City Council—has managed to transform one of the lowest-paying hotel submarkets in the region into one that is on the path to providing quality, middle-class jobs. These wage and benefit increases are the outcome of a living wage ordinance implemented in July 2008 and union contracts at four of the 12 Century Boulevard hotels. The 10% increase in wages constitutes less than 2% of hotels’ revenue.

The report estimates the benefit of the living wage policy and the union contracts over the first four years of their implementation for the 2,400 workers employed at the 12 hotels—and the increased economic benefit to the community overall.

The increased earnings and benefits—from the policy and from the union agreements—help communities as well, as workers spend their increased wages at local establishments and rely less on taxpayer-funded public assistance.

“Our study proves the benefits of a high-road, sustainable tourism model, which can certainly be replicated in other cities and states,” says Jasleen Kohli, LAANE Researcher/Policy Analyst.

“Transforming the Gateway to L.A.: The Economic Benefits of a Sustainable Tourism Model” can be viewed here.

  • The unionization effort, combined with the living wage law, will have a $23.9 million impact, including $18.5 million in direct improvements in compensation and $5.4 million in additional local revenue due to hotel workers’ increased spending in the region.
  • The increase in spending by hotel workers as a result of higher wages will generate an estimated 106 new jobs in L.A. County over four years.
  • Century hotel workers who are covered by union contracts are expected to see their wages increase by more than 14% in the first four years, boosting their average annual wage above the federal poverty line for a family of four. These workers will receive, on average, an additional $13,002 in wages and benefits over the first four years of implementation.\
  • The average worker affected by the Living Wage Ordinance is projected to receive an additional $4,141 in wages over the first four years of the law’s implementation.
  • By 2012, average wages paid to Century Corridor hotel workers are projected to surpass those paid to Anaheim hotel workers and to approach the average wages paid in Santa Monica and Downtown hotels.