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Thursday, Mar 28, 2024

Valley Business Officials Angry Over Living Wage

Gordon Luster, general manager of the Warner Center Marriott, doesn’t mince words about his feelings toward the Los Angeles City Council in light of its recent vote to extend the living wage ordinance to include a dozen hotels near Los Angeles International Airport. “I’m appalled,” he said. “I’m very angry with the city feeling they can just inject themselves with private enterprise.” Luster is far from alone. In fact, he’s among a growing number of Valley business owners, industry groups and hoteliers concerned that the ordinance, signed into law by Los Angeles Mayor Antonio Villaraigosa Nov. 27, goes too far. The law requires 12 hotels along Century Boulevard near LAX to pay workers a “living wage” starting next year, or $9.39 an hour to workers with health benefits or $10.64 to those without benefits. The move is the first time the city has stipulated a wage scale for businesses not under contract with the city and some fear it could set a dangerous precedent, opening the door for similar living wage ordinances to pop up in other industries and areas of the city. With enough support from the city council, which voted 10-3 in approval, the ordinance could expand to any “business anywhere in the city if they’re located close to a city-owned facility,” said Los Angeles Area Chamber of Commerce President and CEO Gary Toebben. In response, the LA Area Chamber of Commerce, Valley Industry & Commerce Association, Central City Association and Hotel Association of Southern California are among the groups calling for a referendum to be placed on the March ballot allowing voters to decide whether the living wage ordinance is just. Supporters would have to gather 49,000 signatures of support in order for the measure to be placed on the ballot. In the meantime, Valley hotels are waiting it out in hope the ordinance won’t be expanded to other areas of the city, Toebben said. “They’re pretty helpless right now,” he said. A living wage Los Angeles has required businesses with city contracts to pay workers the prevailing living wage since the mid-1990s. The measure was introduced initially for concession workers at LAX. Then-councilwoman Jackie Goldberg argued that since the city owned the airport, its tenants were by proxy city beneficiaries and thereby should be paid a living wage. The latest motion expanded that definition to include hotels along Century Boulevard because, the motions said, those facilities similarly benefited from LAX. While not a first for hotels San Francisco, Washington, D.C., and Emeryville, Calif., have passed similar ordinances it does raise new questions about whether a city should have a say in the inner-workings of private companies, said Richard S. Rosenberg, a longtime labor and employment attorney based in Universal City. “How can a local municipality pick and choose and burden a business with a huge tax?” he said. “What made this so extraordinary is there are no city contracts.” Rosenberg said the motion passed because the city council caved to union pressure. “This is not something the city dreamed up. This is clearly an effort by the hotel union,” he said. Another telling sign is that the motion passed with just three members in opposition Bernard Parks, Dennis Zine and Greig Smith and that some members who usually align with business interests voted in support, mainly Tom LaBonge, Jack Weiss and Wendy Greuel. Officials with Weiss and LaBonge said the council members would not talk about the vote, but Greuel said she felt comfortable voting in support because the legislation was limited to the Century Boulevard corridor. “This is a specific case where they benefit from the airport,” said Greuel, who represents the bulk of the eastern Valley. “This is unique.” Greuel said a separate ordinance introduced by her and City Council President Eric Garcetti specifically states the current ordinance applies only to LAX. She said that was the council’s way to make sure it could not migrate. “Living wage ordinances will not be expanded to other areas,” she said. Additionally, Villaraigosa has said that he will stop any expansion plans. Despite those pledges, Rosenberg said, unions could easily shift pressure to other areas of the city. “The only thing that’s stopping it right now is the union hasn’t tried to get political traction in other areas of the city,” Rosenberg said. Brendan L. Huffman, president of the Valley Industry & Commerce Association, added that Villaraigosa’s promise is also flimsy. “He won’t be mayor forever. This had enough council support to overturn any veto,” he said. In the end, the best recourse may be letting voters decide, Rosenberg said. He pointed to 2002, when the Santa Monica City Council passed a similar living wage ordinance. The measure caused controversy among business interests and was eventually put to the voters, who voted it down. That may work, but Warren Cooley, economic director for the Valley Economic Development Center, questioned whether the impact of the living wage rule is as significant as imagined. He contends businesses always readjust to new market conditions. “If you enact that into law, business would find a way and continue to be profitable and pay a living wage to people,” he said. Regardless, Huffman thinks the Valley business community dropped the ball. “After the grocery strike, this ordinance should not have come as a surprise,” he said. “I think a lot of Valley businesses were unaware of the ordinance until it was voted on. We knew it was coming.”

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