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L.A. council members to seek economic study before minimum wage hike

Los Angeles HotelsBusinessLaws and LegislationHotel and Accommodation IndustryBusinessRestaurant and Catering IndustryCrime, Law and Justice

Los Angeles City Council members opted Tuesday to seek an economic study before moving to enact one of the highest minimum wages in the country — $15.37 for workers at big hotels — a review that opponents hoped would slow or stop the proposal.

Council members Mike Bonin, Nury Martinez and Curren Price asked fellow council members to request a review of the economic effects of ordering a "living wage" for workers at hotels with more than 100 rooms. There are 87 hotels of that size in Los Angeles.

Bonin said in a news conference that he believes the hotels are in robust economic condition, with three consecutive years of growth following the great recession, occupancy rates above 75% and revenue per available room at a 12-year high.

If the council members' recommendation goes ahead, the city's chief legislative analyst would hire an outside consultant to review the "citywide economic impact" of a wage nearly double the California minimum of $8.

The council voted seven years ago — when it imposed higher wages on hotels near Los Angeles International Airport — to only expand such regulations after studying the potential effect on businesses and on consumer prices.

"This is a great victory," said Carol Schatz, chief executive of the Central City Assn., which represents downtown businesses. "We have been saying we understand the reasons you want to do this, but the question is, what are the possible unintended negative economic impacts? Now we will look at that and make an informed decision."

Gerry Miller, the council's chief legislative analyst, said his office would decide the parameters of the study, possibly considering suggestions from the public about what should be part of the review. Consultants will then be asked to submit proposals on how they would review the effects of the hotel wage law.

Some city officials, including then-Mayor Antonio Villaraigosa, suggested in 2007 that the wage controls at LAX and on city contractors should be extended only in rare instances. In setting wages for LAX-area hotels (now at $11.97, after increases for inflation) the city agreed to impose additional minimums only under one of two conditions: if the businesses to be regulated got as much benefit from a city asset as LAX hotels got from the airport or if the businesses employed more than 15,000 people and paid so little "as to have a significant negative effect on the city economy as a whole."

It was hard to tell Tuesday which of those conditions supporters of the hotel wage thought they could satisfy, or if they would justify the measure in some other way. Though some city officials at the time had described the 2007 law as a virtual "quarantine" on new wage laws, Bonin dismissed that action as the work of a "previous council."

"My feeling…is that you don't quarantine the cure, you quarantine the illness," Bonin said. "And the illness in Los Angeles is that we have a stagnant economy and we have income inequality. The cure is a better wage for people so we can grow the middle class and grow the economy."

Martinez said the proposal was "very personal" to her as the daughter of a dishwasher who took a second job as a custodian to make ends meet. She said the economic review would help the council frame the wage proposal and help satisfy the 2007 restraints on future wage controls.

But Bob Amano, executive director of the Hotel Assn. of Los Angeles, argued against singling out one industry's wage rate. He called it "inherently unfair and it will put our hotels at a competitive disadvantage with surrounding cities that are eager to capture our tourist dollars, tax revenues, and new hotel developments."

Among those speaking in favor of the ordinance at Tuesday's press conference was Diep Tran, owner of the Good Girl Dinette in Highland Park. Tran said "more money in the pockets of hotel workers means more money for them to invest in their families and to spend in their neighborhoods."

Tran acknowledged that she pays employees at her restaurant more than the $8 state minimum but not as much as the $15.37 proposed for hotel workers. She said she would "love" to pay more but does not have the scale that allows big hotels to manage higher payroll costs.

Amano said his members would be able to manage higher pay only by making cutbacks elsewhere. He said this might include "the closure of hotel restaurants and other amenities, including room service, and decisions to delay multimillion-dollar capital construction projects."

james.rainey@latimes.com

Copyright © 2014, Los Angeles Times
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