Surprised with the high price of a croissant at New York City’s LaGuardia airport, New York Democratic Rep. Alexandria Ocasio-Cortez (AOC) had an insight. So, on Monday she tweeted that:
"Croissants at LaGuardia are going for SEVEN DOLLARS A PIECE Yet some people think getting a whole hour of personal, dedicated human labor for $15 is too expensive??"
It may (or may not) come as an even bigger surprise to the charmingly irrepressible AOC that, ironically, LaGuardia’s minimum wage is part of the reason those croissants cost so much in the first place.
Let’s start with a point of agreement. Clearly, $7 is a lot to pay for a croissant. Any traveler can tell you that even food products without a fancy French name are expensive at most airports, including LaGuardia. But, the question should be: Why does a simple croissant cost so much?
For one thing, there is a captive audience at airports – so to speak – and little competition from offsite vendors. It’s not like it’s easy to leave the airport to get something to eat at a reasonable price while waiting for your flight. Could the real problem be greedy capitalists taking advantage of a situation with limited competition and overcharging for products while they oppress the working class in their spare time? Well, no; that’s not it.
The actual explanation is far less nefarious. As someone who ran a company with airport restaurant locations, I can tell you that airport rents are high; really high. Airport owners know they are leasing sites with a captive and generally more affluent audience. The rents reflect that reality. LaGuardia, one of the busiest airports in the country, is no exception.
But LaGuardia isn’t owned by greedy capitalists. It's government owned. New York City owns LaGuardia and leases it to the Port Authority of New York and New Jersey for operations purposes. Airport owners – in this case, a government – are well aware of their superior negotiating position and that the busier the airport is, the higher the rent they can charge. So, to justify opening a retail business at LaGuardia, or any busy airport, businesses have to charge more to cover their costs. Otherwise, they lose money and it makes no sense to keep the business open.
But rent isn’t the only reason a LaGuardia croissant cost AOC $7 hard- earned dollars. Another reason is the very policy AOC juxtaposed to the $7 croissant – the minimum wage. According to the Port Authority’s Amended Rules for Implementation of Minimum Wage Policy for Non-Trade Labor Service Contracts – LGA/JFK/EWR, airport concessionaires at LaGuardia have to pay their entry-level workers $13.60 an hour. That’s just the starting wage. Experienced employees surely make more than entry-level employees, and they should. They are generally more productive. But when operating expenses increase, so does the price of a croissant.
When a government – any government – sets the costs of doing business, inevitably those costs increase and so do prices. In September, the starting wage at LaGuardia will rise to $15.60, an amount in AOC’s wheelhouse. So, expect the price of those darn croissants to be even higher come the fall. But no one should be surprised. As the costs of doing business increase, so do the prices businesses have to charge to survive, let alone profit.
Respectfully, it might be wise to withhold complaints about the high price of a product while simultaneously arguing to increase the cost of providing it. But then again, I’m not a Socialist.