Jeff Zarrinnam scanned the ground-floor cafe at the Hollywood Hotel and longed for its former bustle.
Tourists from around the world once packed the tables, sipping lattes and thumbing through brochures for celebrity-home bus tours. But one morning this summer, a lone couple vacationing from Tijuana, Mexico, sat in a corner, nursing coffees and scrolling their iPhones.
“We don’t have the customers,” Mr. Zarrinnam said. “It’s becoming difficult to run this business.”
The Hollywood Hotel’s troubles aren’t unique. A report from the nonprofit Visit California, which tracks tourism in the state, forecast a decline in international tourism of around 9 percent in 2025, driven in part by negative sentiment toward the United States as a result of the Trump administration’s trade policies. Los Angeles has seen a 5 percent decline in international air arrivals this year.
On top of it all, payroll for owners like Mr. Zarrinnam could go up more than 40 percent because the city passed a measure to increase wages for hotel and airport workers to $30 an hour over the next three years.
It would be among the highest minimum wages in the nation and apply to workers at hotels with at least 60 rooms.
A coalition of businesses, including a major hotel association, has submitted petitions to pause the wage increase and put it before voters on a referendum next year. The businesses argue the measure could lead to job losses and hurt small hotel owners like Mr. Zarrinnam, who is already in a tough spot.
His predicament — wanting to pay his workers a fair wage, but also struggling to make a profit — points to a question at the core of the American labor debate: What is a living wage in costly cities like Los Angeles, and how should it be achieved?
The answer is complicated, despite the fact that minimum wage is among the most studied topics in economics. Over the past decade, as “Fight for $15” activists began pushing states and cities to increase the minimum wage to something livable, labor economists have pored over, and debated, the results. Even conservative states have raised minimums; in 2022, Nebraska voters approved a 67 percent increase over four years.
The closest to a consensus view is that modest increases lead to very few, if any, job losses. The Los Angeles measure raises hotel wages from $21 to $30 in just three years. The overall current minimum wage in the city is $17.87. Chris Tilly, a professor at the University of California, Los Angeles, who studies labor markets and inequality, said that wages needed to increase to keep up with inflation. But he notes that raising them too high, too quickly can lead to job losses. The trick is identifying the tipping point.
“There is no good way to predict how large a wage increase it would take to trigger this effect,” he said, adding that any effect of the Los Angeles wage increase is tempered by the fact that it applies only to certain service industry workers.
‘The Math Just Doesn’t Add Up’
Despite its name, the Hollywood Hotel isn’t in Hollywood proper, but in East Hollywood, a densely populated, working-class area. But it is a short drive or quick Metro ride to Hollywood and Highland, a popular area along the Walk of Fame.
Mr. Zarrinnam bought the 131-room hotel in 1994, and, until 2009, he ran it as a franchisee of Ramada. He found a niche offering deals to international travelers. Now 62, he has worked every position — front desk, housekeeping, maintenance, food services and management. “This work has been my life,” he said.
His mother, who emigrated from Germany after World War II, met his Iranian-born father in California. She worked as a housekeeper in some of the city’s popular hotels, and Mr. Zarrinnam sometimes tagged along for her shifts.
He remembered how hotel guests sometimes looked right past her, as if she were a shadow.
For years, the hotel was successful. Mr. Zarrinnam survived the economic downturn in 2008 and was originally exempted from paying a 2016 minimum wage increase to $15.37 that applied to hotels with at least 150 rooms.
The Covid-19 pandemic, however, struck a blow from which the hotel never fully recovered. He shuttered the bar and restaurant and cut his staff from 50 workers to around 30. Then in 2022, local lawmakers required hotels with at least 60 rooms to pay the city-mandated minimum wage. He trimmed his staff and raised his rates.
“I understand when people want better wages,” he said. “But at the same time I am a hotelier and you have to have stability, and raising the minimum wage every year hurts that stability.”
As he passed through the halls of the dimly lit hotel, Mr. Zarrinnam acknowledged that his establishment lacked some of the aesthetic appeal of newer chain hotels in the city.
“This is a family-owned hotel, not a big chain,” he said. “There are newer hotels that have lower rates, and it has become very competitive.”
Even after raising prices — on an recent weekend, a one-night stay in a queen room totaled around $250 — Mr. Zarrinnam said revenue was down 8 percent compared with last summer. On the walls of his office are blueprints for a new rooftop deck project that are on pause.
He’s on a never ending quest to trim costs, considering cuts to the housekeeping team or outsourcing laundry services.
“The math just doesn’t add up,” he said. “We cannot keep all of these services.”
Dueling Economists
California has been a testing ground for a number of minimum wage measures. In 2023, the city of West Hollywood increased its minimum wage to $19.08, at the time the highest wage in the country. In 2024, a California law raised the hourly wage for all fast food workers to $20.
The $30-minimum-wage effort gained momentum around the upcoming 2028 Olympic and Paralympic Games. The event is expected to bring tens of thousands of people to Los Angeles — many of whom will be staying in the hotels cleaned and repaired by the 28,000 workers in the region represented by Unite Here Local 11.
The Olympics were a convenient rallying point, but the real issue for the workers and for some members of the Los Angeles City Council, which overwhelmingly passed the ordinance in May, was the city’s high cost of living. One data point: The median rent on a one-bedroom apartment in Los Angeles — $2,148 — is 35 percent higher than the national average, according to Zillow.
“A lot of people don’t see how workers live, the poverty that they are living in,” said Hugo Soto-Martinez, a former organizer for Unite Here who is now a Los Angeles City Council member. “The cost of living is through the roof right now.”
He noted that since 2022 smaller hoteliers, like Mr. Zarrinnam, have been able to apply for exemptions from the higher minimum wage. As of last month, no hotels have applied, according to the Los Angeles City Controller’s office. (Mr. Zarrinnam said he did not apply because he did not want to open his books and deal with a cumbersome bureaucratic process.)
Rosanna Maietta is the president of the American Hotel and Lodging Association, which is part of the coalition against the new law. Her group represents the interests of, among others, major hotel chains like Marriott and Hilton, which did not respond to requests for comment. Last year, California voters narrowly rejected a proposition to raise the state minimum wage to $18 an hour. The coalition is hoping Los Angeles voters will do the same in a referendum next year.
“We care about our work force,” Ms. Maietta said, but “Los Angeles has suffered extensively from a lack of tourism, and that is hurting not just hotels, but everyone in the city who relies on tourism.”
The Olympics will certainly boost tourism, but larger economic questions loom.
Two economists, Christopher Thornberg, the founding partner at the Los Angeles consulting firm Beacon Economics, and Michael Reich, a professor of economics at the University of California, Berkeley, have issued dueling papers around a previous sectoral increase: The statewide $20 wage for fast food workers enacted last year.
In a report that Mr. Thornberg published with Pepperdine University, he found a decline of over 23,100 jobs, or 3.2 percent, in the limited-service restaurant sector over the past year, while the rest of the United States saw a growth of 0.8 percent.
Mr. Thornberg said he expected hotels would look to cut costs by closing bars and restaurants or shifting to more automation at check-in.
“All policies have impact,” he said. “You cannot change things like wage floors without impact.”
Mr. Reich, and a co-author, in contrast found that there had been no negative effects on employment from the fast-food wage increase, and they saw price increases of about 2.1 percent.
He contends that hotels “can easily absorb” the costs of the wage increases.
He noted that some of the major hotels in Southern California, including Marriott and Hilton, which have contracts with Unite Here, were already set to pay wages above what is currently being proposed by 2028.
One Expensive City
Small business owners like Mr. Zarrinnam and workers like Rolando Quintanilla, who does maintenance at the hotel, aren’t reading economic research. They are facing different, but daily, pressures of an increasingly unaffordable city.
“I’m happy to have work,” Mr. Quintanilla, 27, said. “But the city is very expensive.”
Mr. Quintanilla gripped a roll of blue paint tape and applied it to the edges of a door frame. In his right ear was an earbud, in case any calls came in to fix a television or air-conditioner. But he didn’t expect many. The hotel only had around a dozen guests that day. Last year, he was one of six maintenance workers on staff. Now, he’s one of two.
Mr. Quintanilla moved to Los Angeles from Valencia, Spain, where he also worked in maintenance at a hotel earning the equivalent of $9 an hour. Now he earns $21.01 an hour, the current minimum wage for hotel workers, but making ends meet is harder.
“It’s terribly more expensive here,” said Mr. Quintanilla, who is originally from El Salvador and said he was currently living in the United States on a work permit. A gallon of gas at a station up the street from the hotel costs almost $5.40, and Californians pay more for groceries than residents of almost any other state.
Mr. Quintanilla lives with his two cousins in a three-bedroom apartment in Koreatown, where the rent is $3,000 a month. He spends around $60 a week on gas.
“I split the bills with my cousins,” he said. “If I was by myself, it would be different. By myself, alone, it would be impossible.”
He is supportive of a higher wage.
“It would be great. We would all like to receive more money,” he said, but added that he sometimes worries about staff cuts. He enjoys his work, he said, and hopes to stay at the hotel.
As a floor fan hummed that afternoon, Mr. Zarrinnam entered to check on Mr. Quintanilla.
“I’ll start painting late this week,” he told Mr. Zarrinnam, who nodded in approval.
Ana Facio-Krajcer contributed reporting.
Kurtis Lee is an economics correspondent based in Los Angeles who focuses on the lives and livelihoods of everyday Americans. He has written about income inequality for nearly a decade.
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