The West Hollywood City Council on Monday will take up the contentious question of whether or when to require businesses in the city to increase the minimum wage they pay to their employees.
Mayor Lindsey Horvath, Councilmember John Heilman and many of their supporters are backers of an increase in the local minimum wage to $15 an hour by July 1, 2020, an increase that already has been adopted by Los Angeles County, the City of Los Angeles and Santa Monica. Currently those working in West Hollywood are paid a minimum wage set by the State of California. On Jan. 1 that wage increased to $10 an hour. The West Hollywood Action Committee (WHAC), an organization whose only publicly identified figure is Amanda Smash Hyde, has emailed residents to ask them to attend the Council meeting.
“This week, strong opposition emerged to extend the denial of a livable wage for workers of West Hollywood,” the WHAC email message said. “Like you, we believe current starvation wages are unacceptable in our prosperous, progressive city …” The email also linked the minimum wage increase to the infamous Triangle Shirtwaist Fire, a factory fire in 1911 in New York City that killed 143 workers, 123 of them women. “Women have been the most exploited and hit hardest by the failure of the business community to care for their workers,” it says.
Many owners of local businesses and the West Hollywood Chamber of Commerce are not opposing a minimum wage increase, but they are raising questions about the timing of it and the impact it will have on local businesses. The Chamber has held several meetings of local business owners and residents to hear their concerns about the impact of a minimum wage increase. Yesterday Chamber CEO Genevieve Morrill emailed its members urging them to show up for Monday’s Council meeting. Morrill repeated a complaint she has made in the past that “the city conducted NO STUDY or specific outreach to the businesses to properly assess our business community and its concerns or possible impact.”
Owen Ward, the chamber’s government affairs chair, said: “This is a devastating scenario for West Hollywood businesses, and many of you have shared in our community meetings that you will be out of business even before we reach the $15/ hour rate.” Ward also was critical of the groups that have emerged to support the minimum wage increase.
“What dismays me even further is that ad-hoc committees are already sending incendiary messages through email and social media saying your concerns about this plan are ‘rooted in fear and corporate greed’,” Owen said, referring to the recent WHAC email blast. “I know many of you are working to get by, as even I am in my business at times through this economic environment. This tells me these individuals do not know (or care to know) you or the blood, sweat and tears you pour into your business every single day.”
In an analysis of the impact of a minimum wage increase, Maribel Louie, the city’s Arts and Economic Development Division manager, recommends that city delay implementing it until July 1, 2017, with a minimum hourly wage of $12 then. In successive years the minimum wage would increase to $13.25, $14.25 and then $15 on July 1, 2020. Louie also notes that there are two possible measures on the November 2016 ballot that would increase the state minimum wage beyond its current $10 rate and that it would be useful to see if either of those is adopted.
“Given that West Hollywood businesses are already paying above the minimum wage, setting an implementation schedule beginning 2017 will allow businesses that are currently acclimating to the $10 per hour state-mandated minimum wage — which went into effect January 1, 2016 — to adjust and will also allow businesses to adjust their pricing models to better absorb future increases,” Louie said.
In her memo to the Council, Louie reviewed information gathered by UCLA’s Labor Center that included an economic impact report by UC-Berkeley’s Institute for Research on Labor and Employment (IRLE). Other reports analyzed included one from Beacon Economics and one from the Economic Round Table. The IRLE report found that lower wage industries such as food service and retail sales, which are major employers in West Hollywood, and health care and social services and administrative and waste management services will feel the greatest impact from an increase in the minimum wage. Sixty three percent of West Hollywood workers are in those low-wage industries.
In West Hollywood, restaurant and hotel workers make up 26% of all workers and retail employees make up 16%. But on average, the weekly pay of West Hollywood restaurant and hotel workers ($755 according to a 2014 state survey) is 35% higher than the average weekly pay for those in Los Angeles, meaning a minimum wage increase, while having an impact on WeHo businesses, will have less of one that it will have on LA businesses. Retail employees in West Hollywood are paid 42% more than their peers in Los Angeles ($861 a week according to the 2014 survey). In WeHo, 15% of employees work in health care and social services ($755 a week) and 6% work in administration and waste management services ($1,273 a week).
Another major issue is how to consider tips paid to restaurant employees. Some states allow a “subminimum wage” system for restaurant servers in which the employer can take credit for an employee’s tips in meeting the minimum wage. That system is not legal in California. One approach would allow an employer to take into account money paid for an employee’s medical benefits in meeting the minimum wage. Another approach would be to set a service charge that would go exclusively to the server. Finally, restaurant owners could eliminate tips and increase the prices of their food, using the increased revenue to help pay the increase in the minimum wage.
The City Council will take up the issue at its meeting at 6:30 p.m. Monday at the City Council Chambers, 625 N. San Vicente Blvd., south of Santa Monica.