There’s one upside to every hotel and airport worker at Los Angeles International Airport (LAX) making at least $30 per hour: we should feel far less of a need to tip.
Might LAX Minimum Wage Ordinance Finally Temper Out-Of-Control Tipping?
The Los Angeles City Council is considering a proposal that would guarantee airport and hospitality workers a minimum wage of $30/hour. If passed, the minimum wage would rise from $25 to $30 at a rate of $1 per year between now and 2028. The proposal would cover every worker at LAX, no matter the capacity, and every hospitality worker in the city at hotels with 60 or more rooms.
An economic impact analysis is currently underway and a full council vote is expected later this year, with six of 14 members already on the record in support of this wage ordinance.
My Thoughts
My thoughts on this are nuanced. I am against minimum wages in general and view such arbitrary controls as hurting the very people they intend to help. The “minimum wage” of an unemployed person is $0 and our low US unemployment rate does not factor in those who give up looking for jobs. Furthermore, artificial wage floors that do not factor in productivity lead to inflation, which is already too high.
But theory does not always meet the real world (hence the futility of libertarian model). And while I may be conceptually against minimum wage, at the same time I am also against employers transferring the cost of labor onto taxpayers (no full-time worker should need government assistance) or consumers (via tips and gratuities, which constitute hidden costs). I would tax the heck out of companies whose workers need government assistance to make ends meet. That’s conceptual too and difficult to enforce…hence I understand that minimum wages represent a practical solution, even if not the ideal one.
I’m looking at you WalMart…
One Mile At A Time wonders to what extent we will see additional incremental pay for managers or even loyal employees. He’s right. Will there be any incentive to work harder for only a small bump in wage or salary? Furthermore, I don’t have to recite a parade of horribles for reasonable people to see that when you pay Starbucks workers $30/hour, you are going to pay a lot more for your coffee.
Anyway, that’t not even the point of this post. I recently complained about our culture of tipping in the USA and I do wonder if there might be an upside to what looks like an inevitable increase in the minimum wage in Los Angeles: no more tipping.
Think about it: these days, tipping in the USA tends to be a guilt-driven process because we feel sorry that workers are not paid enough absent the augmented income that comes via tipping. The idea of tipping for extraordinary service has been replaced with tipping 15% 20% 25% as a baseline, regardless of the service actually received.
But when workers make $30/hour (~$60K per year full time) and we see that reflected in higher costs of hotels, food, drink, and even facility fees and therefore airline tickets, can we at least stop the obligatory tipping? Isn’t $30/hour for making coffee enough without feeling the need to tip $1 for a $4 cup of coffee? Do we really need to leave money on our nightstand for hotel housekeeping if they are paid $30/hour? Can we reserve tipping for truly extraordinary service?
We should feel far less compelled to tip if we know workers are making $30/hour. That’s something to celebrate.
Oh, and stay tuned for the baristas and hotel housekeepers of the future: robots. It’s coming. Those with jobs will be paid more, but those who are laid off because their value no longer equates to $30/hour will hardly be beneficiaries of this move.
CONCLUSION
Los Angeles is considering a minimum wage of $30/hour for all hotel and airport workers. Issues of minimum wage are complex and their practical effect is often difficult to quantify. But one upside to an abnormally high minimum wage at LAX and at city hotels might be a reduced need to tip, even though the tip jars and housekeeping envelopes certainly will not disappear. Frankly, I’d rather have that model than one that transfers wages onto customers via obscene tipping expectations.
Bingo.
Nailed it. Will be interesting to see if this includes Valet parking staff, bellman, and hotel bar and restaurant staff at hotels, as this is where the tipping gets out of hand. Any wait staff making $30 an hour I will only consider a 10% tip IF the service was over the top. For everyday normal service, forget it. Nothing. Zilch. Nada. Because you can bet everything else will increase in price and I’m not paying twice.
Wait for the fights breaking out in the places that are automatically adding service charges as well.
Yet strangely there is no historical evidence to back up your “25% of the staff getting laid off”. If you look back throughout history every time a minimum wage was introduced it only had positive economic benefits. A minimum wage is basically a company’s way of saying “if we could legally pay you less, we would but we can’t”. It is also one of the few ways aside from unionizing to shift some of the revenue back to the people who actually earn it.
Assuming this was meant for some other’s comment. As it has nothing to do with what I said?
@John lol. If that is true why not make minimum wage $100/hour. Then the economy would really get a boost!
It’s a zero sum game. You increase cost of labor then either cost of goods/service increase for consumers or the amount of labor is replaced with something more efficient (robots, kiosks) to offset that.
If you had a hotel vote on increasing their minimum wage to $30 in exchange for 25% being laid off, would you have a majority voting for it?
That’s what senior flight attendants do. I would say the majority would vote for it and the expense of the juniors.
Senior flight attendants, looking at you Delta FAs, historically voted against unionizing or minimum wages. They were brainwashed by management that it would be harmful to them so they continued to vote against it. All the while complaining that they wish they had it as good as the pilots. My father was a captain for Delta, long retired now, and he told them to “get a union if you want better terms”. They never did
Mark, you are pointing out the problem. My pay is between me and my employer. Why the hell does anyone else get a vote?
Not just Walmart. This was 2018 so not exactly a recent source but not finding that much has changed either:
-Starting pay for Envoy passenger service agents, about 500 of whom work at DFW Airport, is as low as $9.48 per hour.
-As many as one in four rely on public assistance, including food stamps, to make ends meet
-After 18 years with Envoy, Gower makes $15.71 an hour, half what someone with similar duties makes at American’s mainline operation
-Gower’s pay still tops that of many of her co-workers, 75 percent of whom earn less than $13 an hour
https://www.dallasnews.com/business/local-companies/2018/02/21/airline-workers-on-food-stamps-union-targets-american-airlines-subsidiary-in-fight-for-livable-wage
Yep. Good example. Thanks for sharing.
The best thing about left wing politics is that it always harms the lefties first and the hardest. Which is why we should let them do what they want.
Maybe you should get a job at LAX… you would instantly triple your salary and maybe wouldn’t be so bitter
Deltas minimum wage is $600 per hour
I don’t quite follow your argument. If minimum wage is $25 today and $1 increase per year would follow inflation, why would you tip today and not in 2028?
I wasn’t even aware that wages were $25/hour already. We should not tip today either.
This is hardly the restaurant loophole in which workers make less than $5/hour in anticipation of tips.
Hahahahahahaahaha, wow. What a silly post. You seem to understand that wage floors equate to inflation, but you have some pie in the sky nonsense that taxes don’t? I love people who claim the “libertarian model doesn’t work” with no objective evidence. Then you claim government distortions to the market are not also allowing companies to pay less…..again to the detriment of “taxpayers”. You really should have thought this through a little more. But nah.
Here, let me break it down for you:
Taxes create a social safety net so people don’t die in the street. You know, like Yemen or Sudan.
Your is family guy? Really?
Response*
Shows how little I regard the seriousness of the libertarian argument on collective action problems.
Shows how little you understand of their argument. Maybe you should spend less time whining about them and more time listening to them. Or keep being a petty partisan. That’s always worked out well for society.
It’s a system that fails to capture how stupid people are. In a sin-filled world, libertarianism (and communism) sound so elegant, but they utterly fail because people cannot care for themselves or make rational decisions. And therefore our imperfect system (indeed, our flawed system) represents a lesser evil.
“I would tax the heck out of companies whose workers need government assistance to make ends meet. That’s conceptual too and difficult to enforce…hence I understand that minimum wages represent a practical solution, even if not the ideal one.”
You didn’t comment on taxes?
So in your world people starve if they don’t make enough money to buy food?
The US “minimum wage earners” are in the top 10% wage earners globally. (see howrichami)
The “poor” in the US have nearly the same number of big/flat screen tvs as the “middle class and wealthy” (per cnn money, 2012). It’s funny seeing people who are so insulated in their own bubble and have never actually met a person claim they know what they can and can’t afford. I grew up dirt poor. I know what poor is. I am no longer poor. People in this country that are “poor”, largely speaking with some exceptions, are there by choice.
If you want to debate, sure. I’ll be glad to upend many of your assumptions on the poor, including the ones about people working “p/t” at Walmart on food stamps.
Genuine question, do you know what the median wage of Europe is? Africa?
Either way, one doesn’t arrive at libertarianism with no basis. Unlike fitting in with social groups to be “republican” or “democrat/liberal”. (Nevermind the hypocrisy anymore about the term “liberal”)
Now, you can ban me again to not debate. That’s fine.
Again? You’re the Brandon who hates kids with a new IP and email address today?
My previous question stands. I’ve been to 144 countries. I’ve seen what true poverty is. Medium wage means nothing if purchasing power is not factored in. But as pathetic as I may find certain aspects of the western welfare state, we don’t turn people away from hospitals. We don’t ignore 911 calls. We don’t let children starve in the streets. And yes, the paternalism that civilized the world is the same paternalism that is needed to help people who are too stupid to take care of themselves. That is the tradeoff of living in a first world nation and the price we pay for social order.
Someone who has been to 144 countries should realize that “first world nation” is an antiquated term and its usage should have stopped with the collapse of the Soviet Union.
@nate nate: Your point is true that the terms have fallen out of use, but my own travels very much reveal first world, second world, and third world nations, even if more arbitrary in 2023 than during the Cold War. That said, I could have just used “developed nation” and made the same point – I was not trying to make a political point.
@Brandon: That’s all? Nothing else?
This proposal does nothing but create a false economy. Unilaterally raising wages just cannot work. Paying a new hire the equivalent of an experienced worker would be unacceptable. Therefore all wages need be adjusted costing much more and inevitably impacting the future of hospitality industry. When the pinch is felt by the consumers, there might be a shift in disposable income spending. I personally have soured on service fees and mandatory tipping. Enough already!
When there’s a minimum wage, there is not a minimum productivity.
In India, wages are so low that there are plenty of people to greet you at a office, both outside and inside. People have their own driver. People have maids. In the US, the costs are so high that no ordinary person has a driver or maid. Yard work has become so expensive that I do it myself.
In economics, things work, until they don’t. To the false economy point, yes, kind of like our false fiat currency.
Fiat money (from Latin “let it be done”) is a type of money that is not backed by any commodity such as gold or silver. It is typically declared by decree from government to be legal tender. Fiat money does not have intrinsic value. It has value only because the people who use it as a medium of exchange agree on its value and agree to accept it. They trust that it will be accepted by merchants and other people.
The US Dollar is often called a Safe Haven, especially in times of global unrest and uncertainty. Some say the dollar is backed by the presumably overwhelming power of the US military. Some cynical observers say that US foreign policy aims to increase global unrest and uncertainty to drive demand for US Dollars, while pretending otherwise.
–in economics, things work, until they don’t. Hope that the global financial house of cards is reinforced soon.
The entire argument is missing the part about skill. If you have have zero skills other than a warm body, you simply can’t commend a living wage, whatever that is. You can’t pay McDonalds order takers 60,000 a year plus another 20,ooo in govt mandated benefits. Those jobs will be eliminated. No one wins.
And we see the increasing use of automation replacing clerks at both fast food restaurants and grocery stores.
The slow self-immolation of California continues and I’m here for it.
And what do you think is a better model for America? Mississippi? Alabama?
Isnt there a robotic-Barista machine in SFO between E and F gates?
I dont have a picture, but have walked passed it a few times – but never felt the need to try it out
looks a little like the taxi driver from Demolition Man
however – begs the question…what is cheaper?
paying someone to make you coffee or paying someone to fix the machine that make coffee when it breaks?
Yes there is – I’ve walked by it many times.
As to your last question, it’s a good one – I guess that remains to be seen.
We just need a robot to fix the robots. Let’s make all human jobs obsolete. Then the real fun will start
Besides a sit down restaurant, who’s tipping at the airport? … And why?
Every time you buy Panda Express or Starbucks the payment portal offers you a chance to tip.
Serious question – is $30/hr actually enough of a living wage in Los Angeles?
Yes. You can’t buy a house with that, but you can rent.
Why not make it $100 /hour? If you are gonna do socialism, go big or go home.
I think you mean:
“There IS AT LEAST one upside to every…”
Paying workers a living wage has multiple upsides, some of which we can disagree on. I agree tipping is out of hand, but tipping also creates a wage disparity because some roles get tips (servers) and some don’t (cooks), and that usually correlates to racial/ethnic disparities. Tipping culture sometimes also leads to customers feeling entitled to disrespect female waitstaff. I think those are valid separate upsides to this proposal as well.
A lot of service workers at the airport or the large LA hotels can’t afford to live nearby, and their commutes are unpaid time. Yes, all of us have unpaid commutes, but white-collar workers (a) commute less often in the post-pandemic world and (b) can afford to live near their workplace.
I can’t comfortably live near LAX either – a tiny shack is $1.5 million in Westchester and if I am going to move my family, I’d need a lot more space. I tend to think artificially high wages drive up inflation which also leads to higher home prices.
I just had to check, and in my home country of Sweden, only 5% of the entire population makes more than $60K/year, and then you need to factor in a tax rate of ~50%. Sure, you (generally) don’t need to pay for health care, school, and so forth, but still 🙂
On that topic, Sweden don’t have any minimum wages at all.
But you also don’t have a bunch of welfare queens and corrupt government officials, % wise, like the US does, so the 50% tax rate isn’t wasted.
And 18% tipping isn’t mandatory
You also have to wonder what this does to someone’s willingness to go to school for a long time just to get a ”better” job. I personally would much rather work front-desk at a hotel for $60K than a super stressful office job where you can never truly relax for eg 80K (+ student debt).
Precisely. Ben made this point too. It pushes all wages up which pushes inflation up, giving no one an advantage except perhaps for existing homeowners.
I just ate at an Arby’s in a high cost city (but not NYC). It was $22! At that rate, I will not be buying from Arby’s in the future or only rarely. Here’s what I ordered…
Chicken sandwich – meal – roughly $13
Classic Roast Beef – sandwich only – roughly $6
regular Sprite – under $3
$22+
I’m more shocked that anyone actually eats at Arby’s. Is this for real? I thought they were long a vestige of past Americana.
@Derek: Which is why I eat at home most nights.
Throw in Uber Eats and you pay 25% more for the food plus a delivery fee, plus a “driver” fee, plus a tip and it really makes sense why I prefer to eat at home.
They are big down here in the southeast at least. I don’t know why. Mozzarella sticks are my weakness and I tried them recently. C- at best. I’m sure they are known for something else but I couldn’t tell you what
oops ^^ to Stuart re Arby’s
What’s better for workers than a higher minimum wage? A tax on vacant land and unoccupied premises. A higher minimum wage discourages hiring. But a vacancy tax on residential property makes the owners get residential tenants (and set the rents within reach of wages), while a vacancy tax on commercial property makes the owners get business tenants, who in turn will need workers, leading to higher *market* wages and more stable jobs.
What’s better for business than a lower minimum wage? A tax on vacant land and unoccupied premises! A lower minimum wage cuts the spending power of prospective customers, and makes it harder for prospective employees to afford housing within a manageable distance of your business. But a vacancy tax on nearby residential property keeps it populated with prospective customers and workers, while a vacancy tax on nearby commercial property keeps it populated with complementary businesses that will attract foot traffic to *your* business.
Notice that a vacant-property tax is meant to be AVOIDED, not paid. Moreover, avoidance of it would generate economic activity, expanding the bases of other taxes and allowing their rates to be cut, so that both workers and businesses would pay LESS tax!
How come the people who oppose minimum wages never get upset with wages like these?
Ed Bastian Delta $12.4 million
Scott Kirby United $9.85 million
Doug Parker American $7.24 million
Gary Kelly Southwest $5.8 million
Ted Christie Spirit $3.87 million
Year 2021
Why would you make such an assumption?
I find the great disparity between C-suite and worker pay disgusting.
You are so quick to attack front line workers pay but don’t address the corporate elites that make 100 times the front line workers. You are paying more for your coffee because of that, not someone making $60k in a city like Los Angeles where the rent alone is $25-30k after taxes!
As obscene as I find the outlandish wages of those at the very top, the idea that it is the top 0.01% executive wages driving up housing prices does not paint an accurate picture of the problem.
I’m sure Matthew is one of those high paid people who thinks tipping should not take place! It seems those with the most are the ones who wine about tipping! Tight as a drum!
Check your assumptions.
Mike great point!!!!!
While not against minimum wage increases, I wonder if tying CEO compensation to median wage at a company would be more useful. Several European countries do this. CEO wants more money? Raise wages or live in a normal mansion. On average in 2022 CEO was 399x of the average worker, across all industries. Get into Tesla and Elon Must was compensated mote than 1000x the median worker at Tesla. That was over and above the wealth created from his existing shares. In the 80s the disparity was closer to 60x. And, I don’t think an argument can be made for the majority of CEOs that they are 6 to 7 times more productive than their counterparts in the 80s.
But the typical worker didn’t single handedly move up car electrification 20 years. Nore reduce the cost of space launches over 90%, etc
Well this has all traveled down a predictable path.
My favorite comment is the one about how a minimum wage earner in the US is relatively wealthy in say Vietnam. While true, what a pointless comment that does nothing to speak of what one can afford in America making the minimum wage of this country. WTf would someone argue that?
If raising minimum wage causes inflation then why is inflation so high when minimum wage has not been increased in a significant amount of time? It simply is not true, at least not to the extent that it would wipe out the additional purchasing power.
When companies shipped jobs oversees by the millions did we experience rapid deflation? When productivity increased rapidly due to advancements in technology did we experience deflation? No, the top 1% just got wealthier.
In the 1970’s minimum wage in many places could afford you a nice car and a decent apartment in a nice location. That is often not the case anymore.
The fact is that there has been a massive transfer of wealth from the poor and middle class to the top 1%. They now control over 1/3 of all wealth in America, amd can easily resolve hunger, Healthcare, and many of societies problems but they have us sold so much on trickle down economics that we are here arguing about a few bucks.
“Furthermore, artificial wage floors that do not factor in productivity lead to inflation, which is already too high.”
Theoretically, yes but, in reality, various countries have introduced a minimum wage without there being an evident impact on inflation.
Expect this to backfire. Robots, and automated dining and hotel service are already rampant across East Asia.
The minimum wage for LAX employees that work for an airline (and certain other positions) is already $23.81, but both my partner and I work full time and he makes $21 an hour and we can barely afford to pay our bills. LA is so ridiculously expensive. Even at $30 an hour, you’d never be able to afford to buy a house here.
And what’s sad is that our “base pay” for working at American Airlines is a little over $14, so the city’s current LAX minimum wage adds over $9 to this. At $14, we’d be in poverty.
I support raising the minimum wage at LAX for certain positions that require qualifications, security training, etc. (raising all the janitors and certain other positions to $30 seems a bit of a stretch) especially since airlines pay notoriously low wages to begin with. Without the city mandating higher wages and guaranteed sick time (we are normally penalized for using ANY sick time), I can assure you the customer service you’d be dealing with at LAX would be even worse. It’s not an easy job to deal with customers at LAX, so paying people enough to worry a little less about their bills is absolutely appreciated. Especially since for airline employees, we don’t get tips (we are prohibited from accepting them)–since you wouldn’t be tipping the person that checks you in or boards your flight or even rebooks you.
For hotel workers or wheelchair agents at LAX that can supplement their income with tips, this $30 might not be as needed. But for some of us it’s a welcome perk.