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Friday, Jan 27, 2023
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City’s Living Wage Mandates Could Force Layoffs

This is the Valley Industry and Commerce Association’s monthly column for the Business Journal The City of Los Angeles lived up to its reputation as one of the most unfriendly cities for business recently when the L.A. City Council unanimously approved an increase to the health insurance allotment under the city’s Living Wage Ordinance (LWO). The clamoring for the increase was the result of a 2007 Los Angeles Alliance for a New Economy (LAANE) report that called benefits paid to LAX service workers inadequate. These workers are not city employees or even contracted by the city. Instead, they are contracted by the airlines to serve those who travel through LAX. This causes the business community to question why our local government is controlling the wages of non-government employees. The city’s LWO requires certain businesses to pay a higher salary than the state minimum wage, and either provide healthcare or increase the hourly wage if they do not provide coverage. VICA, and the rest of the business community, have been consistent and strong opponents of the LWO. The salary and benefits mandates are costly to business owners and make it difficult for them to compete with other companies who are not subject to the same regulations. The newest living wage motion recently passed by the council not only calls for an increase of the healthcare allotment, but also requests the L.A. City Attorney to revise the LWO to provide a periodic review and increase of the ordinance’s healthcare component. This means that the cost for businesses that do not provide healthcare insurance will be continually raised. Under normal economic circumstances this type of government interference in business operations is damaging, but in the current environment it is potentially devastating. Businesses are struggling to keep their doors open because consumers are cutting back on spending especially expenses like nonessential travel. Costly directives like the LWO healthcare allotment increase will cause further financial burden to the airlines that operate out of LAX. The fraught industry has already been forced to raise fares and add extra charges for checked baggage, refreshments and other offerings that were once included in the ticket price. Unemployment is reaching its highest rates in more than 20 years and jobs are being cut across the state at record numbers. In a turbulent economic environment like this one, government should be helping businesses create jobs not adding to employee costs. Increasing the operating costs for any business at a time when all companies are trying to reduce their expenses will lead to deep cuts that will very likely include layoffs. The airlines will not be able to afford to employ as many workers as they would have without the city’s interference. The same LAANE report that blasted LAX contract employee benefits also called into question the performance of those employees. If the increased financial burden on the airlines leads to a reduction in workers at LAX the service provided to LAX customers will likely suffer too. It is irresponsible of the L.A. City Council to pass an amendment to the LWO that would put the jobs of these LAX workers and the financial viability of the airlines at risk. Right now L.A. needs jobs, not strict regulations and labor cost increases. Tell us what you think. Does the government have a right to mandate benefits for private employees? Should the allotment for healthcare under the Living Wage Ordinance be increased? E-mail your responses to angela@vica.com.

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