Battle Lines Drawn for Monday’s City Council Minimum Wage Debate

Food service workers account for xx% of West Hollywood workers.
Food service and hotel workers account for 26% of West Hollywood workers.

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.

  1. With an increase in the minimum wage and the sky-high rents of WeHo… pretty soon the only retailers that will be able to afford to be here are going to be chains…oh wait, WeHo is thinking of banning those…empty store fronts..yup. At least if they have pretty posters in the empty windows it will make it look like there’s life.

  2. We agree with the sentiments put forward by Jeffery, Mike, and Alison. Although we can understand the concerns raised by some members of the business community. We all agree that there is more the city could do for the businesses of West Hollywood and WHAC is ready to support innovative ideas that boost tourism, increase local domestic traffic and improve our city for all. However delaying a raise in the minimum wage is not a way to achieve that goal.

    Larry provides a great example. The majority of West Hollywood workers do not live here. But it also begs the question of “Do the majority of WeHo Businesses Owners live in Weho?,”… the point Larry makes is this increase will go towards other parts of town. If the other parts of town are in the L.A. City, the larger unincorporated L.A. county, Santa Monica or where “Hollywood or Mid-City” is located, then their local minimum wage will increase no matter which way the WeHo winds blow. By Larry’s argument then West Hollywood directly benefits by the surrounding cities that have already passed the increase to minimum wage.

    If our workers’ wage remains the same and prices rise, as we are told, then we as a community are dooming our workers to be hit hardest. And if our surrounding communities are already paying this better wage, who are we getting as workers in this city when better paying jobs are literally right across the street?

    This argument’s fallacy is that prices should not rise because of this or any legislation, drafted or implemented, which effects the variable cost of a business. Price is set by a correlation between the number of consumers vs. price. Cost is not part of the model and while we can see that some business owners may feel the impulse to effect price in relation to cost, they base their judgement on erroneous assumptions.

    However opponents to an increase to the minimum wage are correct in that prices will rise. Prices will rise as demand increases. Demand will increase as wages increase for a portion of our consumer base who spend from 90% to 100% of their salary. This higher demand brings more jobs and increases the velocity of money. Former Secretary of Labor, economist Robert Reich calls this boost “a virtuous cycle” and we agree with him.

    An increase in the minimum wage will result in an increase in the velocity of money and thereby the number of consumers on a local level. We at WHAC look towards exploring innovative ideas to help the business community and bring the expanded consumer base to join us as we live, work and play in a community we all love! But not at the expense of the workers who cater to our beautiful city. We are solid in our support for West Hollywood to #RaiseTheWage

    In Solidarity,

  3. Thanks for attempting to shed some light on an issue that has been approached with an almost religious self righteousness. The staff report is certainly deficient in providing a full picture of all the implications and is devoid of meaningful impact from our local businesses. We will hear a lot about “greed” and “exploitation” on Monday but when we see the empty store fronts and the loss of jobs we might regret moving forward in our rush to be politically correct with so little information about all of the impacts. Simple “answers” are often simplistic and fraught with unintended consequences.

  4. In my “vetting” process (?); it seems we are paying substandard wages and will continue too! $15 per hour is still not a living wage and really should be enacted and effective immediately. This phase-in of a higher sub-standard wage is not progressive.

    I agree with Jeffery Ward! West Hollywood can never be the oppressor to a living wage. This is a type of indentured servitude to even think this action needs vetting. A living wage, as stated, sounds right at $21.16.

    More wages in means more commerce and spending. This benefits the employee, small businesses… Better quality-of-life and business for all, or at least moving in that direction.

    Stranger things have happened, but I hope for one the entire council supports increasing the MINIMUM wage to a higher MINIMUM wage but progressively acts to do this at once. No phasing. We lead by example not follow.

  5. According to the Bureau of Labor Statistics the real minimum wage should $21.16, if it had kept pace with inflation and productivity and if it were going to have the same purchasing power as it did in 1967! If your business model depends on paying substandard wages then your business model doesn’t really work, does it! Raising the minimum over a period of years to just $15 bucks an hour is still wage theft in my book.

    1. we are in business for over 30 years and doing amazing, i would love to pay people $21.16 but we must take a look at the support system we get from our city hall.
      the rent for commercial is so high in most areas in WEHO.
      it can not be that we keep loosing so many businesses every year, and they are all doing something wrong. at one of my store we do amazing business they other location same street on SMB, we do just O.K but far from what we used to do, 4 years ago, when we had so many tourists, coming visiting our city. SMB is definitely becoming a place to eat, drink and dunce. as far as retail, not sure anymore.
      most of our businesses do not have parking after 6pm and only few parking on the street.
      we can not even get parking passes for our employees to park even that we are willing to pay for each one. no one want to drive for 20 min to find parking and we all know about our city “parking police” they love to give us those $53.00 tickets.
      i will agree that most of west hollywood retail stores windows displays are not a reflection of a success and this should be each owner responsibilities.

  6. i agree with Larry Block 100%.
    it must be a win win for everyone.
    i know lots of small business owners,
    will be forced to close or reduce the store hours operations.
    we must have a way to make sure that we as store owners
    can keep paying our bills and make some profit.
    i had a talk with few of my friends, business owners,
    they only make enough to pay the bills,
    they stores are beautiful mid to high price point,
    they spend lots of money and again,
    no foot traffic on our streets.
    one of them have a store own a store on ventura blvd / laurel canyon and he make more then double in the valley then here in WEHO.

  7. PS to clarify, a single employee working 16 hours a day.. meaning, one person on the staff. There are 3-4 employees that comprise that 16 hour day. Open from 10am-2am.

  8. While I support an increase in the minimum wage, as do most of my peers, this increase has not been vetted. Waiters and bartenders who make tips are not included in the ‘wage considerations’ While all of my employees make above the minimum wage the net effect will be to raise their hourly wage and lessen the commissions earned. The net effect of these increase will be an increase in prices that hurt our local residents on a fixed income. 85% of West Hollywood residents work outside of the city bounds, and most of my employees are from outside the city bounds. While they make more working here they spend it in Hollywood or Mid-City, as they cannot afford the cost of housing in WeHo. On the other hand the local residents who are retired or on fixed incomes will be paying $5 for a slice of pizza.. etc.

    Another example is the net cost to the employer of an increase. A single employee, working 16 hours a day, with an increase from $10 to $15 dollars a day equals $80 a day, or $560 a week, plus payroll taxes.. etc, add 35%, and the cost will be an extra $3000 per month. Thats per employee. Add a second employee and the increase is close to $600 per month. Thats enough to push the prices up across the board and push the middle class out. And the shopkeeper out of business.

  9. As a owner of few retails stores in West Hollywood i would love to raise the Minimum Wage, i must say between paying the high rent, utilities, worker comp and i can keep going on and on… my biggest concern is our foot traffic in our Santa Monica Blvd. our tourism drop more then 50% in the last few years. most our foot traffic are men and women they go to get drunk and “high” those people are NOT retail customers. during the day our streets are empty, only local workers that do not shop in our city. The sad part our city council members and our mayor with all the respect to them do nothing to support our small business owner.
    if we put a sign outside our retail store we get a big “fine”.
    If we want to do a sidewalk “sale” or event we have to pay hundreds of dollars to get a permit.
    Again, The only “winners” are those big corporates that “run” with they big money our city.
    this is our tomorrow, the rich get richer the middle class are going away and the poor will always stay poor. the “good” news Our “leaders” make sure they “look good” when the media around or the “RED CARPET” is ready.
    Welcome to WEHO.

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