‘Living Wage’ Plan Cost Is Pegged at $130 Million a Year

The growing debate over a proposal to boost wages and benefits for some bottom-rung workers in Los Angeles heated up on two fronts Wednesday: Opponents of a proposed “living wage” ordinance released their cost analysis, while proponents chose an offbeat round of holiday “caroling” to rally support.

The Coalition to Keep L.A. Working, a broad spectrum of business groups that recently joined to battle the wage ordinance, released a report by a Northern California research group that says the measure would cost the city $130 million a year.

Commissioned by the Los Angeles Area Chamber of Commerce, which is spearheading a fund-raising and public relations drive to defeat the wage measure, and performed by Palo Alto-based Spectrum Economics Inc., the report bolsters contentions that the measure would drive up costs, eliminate jobs and harm the area’s recovery from a deep recession.

In addition, the analysis by Spectrum Chairman Richard C. Carlson says the primary benefactors of the proposal would be the state and federal governments, as workers would lose eligibility for public assistance and pay higher income taxes. The measure proposed for Los Angeles is especially risky, Carlson says, because it would be more comprehensive than any such ordinance now on the books anywhere in the nation.

“The intentions are basically good, but the proposal is seriously flawed,” Carlson said, describing the proposal as “bad news for small business and low-income, unskilled workers.”

The report, which was largely a critique of a more positive analysis by a UC Riverside economist who supports efforts nationwide to improve pay and benefits for impoverished workers, drew immediate fire from ordinance backers.

“This is not a study, this is a critique of a much more comprehensive study,” said Madeline Janis-Aparicio, a leader of the coalition of labor unions, clergy and community activists that is pushing for the ordinance.

“It takes none of the benefits of the ordinance into account, nor does it address the very serious problems” caused by high poverty rates, she added.

At issue is a proposal, sponsored by Councilwoman Jackie Goldberg, to require that certain private firms pay their workers at least $7.50 an hour plus family health insurance and other benefits or $9.50 an hour with no benefits. As now written, the proposed rules would apply to most firms holding city service contracts of at least $25,000 or receiving grants, low-interest loans or forms of financial aid of $100,000 or more.

Proponents say the measure would improve life for all in Los Angeles by raising a minimum-wage worker’s earnings to $15,600, the federally defined poverty line for a family of four, enabling workers to provide for their families without public assistance, thus saving taxpayer money. Foes, however, including Mayor Richard Riordan, say the measure would force tax hikes or cuts in city services, eliminate entry-level jobs and hurt small firms, important elements of the region’s recovering economy.

The council’s Personnel Committee, which Goldberg heads, has commissioned its own analysis from economists at UCLA and Carleton College in Minnesota. Goldberg’s chief deputy, Sharon Delugach, said that study should be ready toward the end of January.

Meanwhile, ordinance proponents have kept up their lobbying efforts at City Hall. On Wednesday, they showed up at council offices and the mayor’s suite to sing seasonal songs with decidedly different lyrics.

“Dreidel, dreidel, dreidel, I would have one today, but Mommy couldn’t buy one, ‘cause no one raised her pay,” went the group’s rendition of one Hanukkah song. “Oh Little Town of Bethlehem” surfaced as “Oh little town of old L.A., how still we see thee lie. The workers toil, their lamps burn low, we hear their children cry. . . .”