L.A.’s New Battleground: Capital Versus Labor

Politics in Los Angeles may be undergoing a sea change. For three decades, race and ethnicity have largely shaped the city’s political battles. Now, another defining force may be forming that could recast old battles and create new ones. Increasingly, the clashing interests of business--led by women and minorities--and labor--spearheaded by public-employee unions--will redirect city politics.

The lines of the emerging conflict have surfaced most clearly in the current fight over the “living wage” ordinance sponsored by City Councilwoman Jackie Goldberg. The measure would set a wage floor of $7.50 an hour, plus benefits--or $9.50 without benefits--for all workers contracted by the city or employed by businesses that receive substantial financial benefits from municipal sources.

Until the living-wage issue, the City Council faced little pressure to factor in the interests of Los Angeles’ businesses when considering legislation. With the local business community largely fragmented and lacking a strong lobbying voice, a pro-labor council majority has encountered virtually no opposition, save for Mayor Richard Riordan, in enacting ordinances to protect its union allies. The mayor’s ambitious plan to privatize city services is among the major victims of the pro-labor bent of the City Council.

But Goldberg’s steady push for a living wage, which is backed by the national AFL-CIO and a host of activist community groups, may have succeeded, ironically, in arousing the city’s moribund business leadership.

What alarms business is not so much the living-wage provisions covering direct city-contract workers, but those extending its proposed wage floor to recipients of city loans and tax subsidies. To many, this seems just one step away from a general effort to impose uniform, mandatory wage rates throughout the city, or even the county. Goldberg denies any such grand design. But some of her key allies, among them L.A. County Federation of Labor Executive Secretary-Treasurer Miguel Contreras and the Living Wage Coalition, do not rule out this larger goal.

The prospect of ever-increasing local regulation of wage rates has brought together the broadest--and, certainly, the most diverse--coalition of L.A. business interests in years. This new alliance, called the Coalition to Keep L.A. Working, not only includes remnants of the city’s once-potent Anglo corporate establishment, led by the Central City Assn. and the Valley Industry and Commerce Assn., but also a host of small- and minority-business groups that have been virtually voiceless at City Hall.

Co-chaired by Toytown founder Charlie Woo, the coalition brings together the African American Business Assn., the Latino Business Assn., the National Assn. of Women Business Owners and the Mexican American Grocers Assn. These business groups, whose members increasingly represent much of the new economic growth in the city, worry that the increasingly bold pro-labor tilt of the council could accelerate the flight of businesses to such neighboring cities as Burbank and Culver City, if not out of Southern California altogether.

Business owners in Goldberg’s home district in Hollywood, including many of her strongest admirers, have broken with her on the living wage. Opposition to a living wage is as strong among Eastside and South-Central businesses. Gil Ray, the African American chairman of the recently established Community Development Bank, says very few of its loan applicants could meet the living-wage requirements for all their employees.

The prominent positions of small companies and minority and women business owners in the Coalition to Keep L.A. Working reflect the city’s changing power politics. Until the 1970s, the old-line business leadership, chiefly drawn from construction, real estate, banking, oil and aerospace, did much as they pleased. Often ruthless, even racist, they nevertheless laid the foundation for turning the often-derided “tinsel town” into the nation’s premier industrial, technological and trade powerhouse.

In the aftermath of the Watts riots and with the ascendancy of Tom Bradley to the mayor’s office, this business clique and its monopoly on power were broken forever. In its place evolved something of a brokered state, in which the business elites, minority group leaders and unions negotiated, under the leadership of Bradley, a consensus on dividing up the city’s spoils. Since the economy was growing rapidly, providing excellent jobs for unionized workers in construction and aerospace, and federal funds continued to flow into minority communities, there seemed enough “juice” to keep the partners to consensus relatively contented.

The region’s recession in the early 1990s, followed by the 1992 riots and the election of a Republican Congress in 1994, as well as President Bill Clinton’s own rightward turn, undermined this cozy regime. Any hopes for a federal “Marshall Plan” for cities have all but dissolved with the conservative ascendancy nationally.

As a result, hopes for improving urban conditions increasingly lie in boosting the local economy. But many of the key players in the city’s old corporate elite--First Interstate Bank, Security Pacific, Carter-Hawley-Hale, Lockheed, Unocal--have either disappeared or relocated. Many of those remaining seem indifferent to the city’s welfare.

But even as the corporate structure and economy of the old brokered regime faded, the city’s economic leadership did not shift strategy. Throughout the recession, for example, the L.A. Chamber of Commerce was a virtual no show, particularly on local issues, whenever the city’s business interests were affected by this or that ordinance or regulation.

Labor quickly filled the power vacuum. Militant public-employee unions have successfully blocked all major efforts to downsize government to levels more appropriate to economic realities. This militancy extends to service-worker unions, such as those in the hotel and restaurant industries, which, although modestly successful at organizing workers, have proved wondrously gifted in generating sympathetic media coverage and political allies, especially on the City Council.

The result has been a more radical and activist labor movement dominated by public employees and the poorest of organized workers. Its leaders, unlike those who headed up construction and aerospace unions, are prone to disregard or discredit private-sector efforts to restore economic growth in the region. “We used to have very sophisticated leaders who were not very militant,” explains one prominent economist with close ties to organized labor. “Now we have very militant leaders who are basically lacking in any real economic sophistication.”

Yet, the rise of a more militant labor movement is not entirely negative. The issues raised by the living wage are important; throughout the country, and particularly in Los Angeles, the plight of impoverished working people has received only token attention from officials. The major problem has been that the people advancing their cause lack an appreciation of the potentially counterproductive effects, especially on the working poor, of imposing ever higher costs on business in an era of more mobile capital and corporations.

But with the rise of a new L.A. business leadership partly anchored in the ascendant minority, immigrant and small-business communities, the unrealistic nature of a bid to create a “social democracy” in one city may become evident to all. This new leadership is also spreading the word that, in contrast to the “get along” traditions of the Chamber of Commerce, business interests may now be more willing to open their wallets to finance grass-roots campaigns to unseat unsympathetic council members.

This new activism by a vastly broader and more diverse business community represents a much needed counterbalance to labor’s current near-monopoly on political power. Like any successful polity, Los Angeles can best meet the needs of its working poor if all participants, capital and labor, engage in a dialogue.