Report Backs Latest ‘Living Wage’ Plan

Los Angeles’ top fiscal officials Thursday backed a scaled-down version of a measure that would require city contract holders and some other private firms to boost their bottom-tier workers’ pay and benefits, a triumph for supporters of the strongly contested proposal.

City officials said the latest version of the proposal, dubbed the living wage ordinance by its proponents, would cost relatively little and displace few workers.

In a report to members of the two City Council committees scheduled to consider the proposal next week, Chief Legislative Analyst Ron Deaton and City Administrative Officer Keith Comrie said most of the measure’s estimated $21.6 million cost would be borne by the city’s semiautonomous, revenue-raising departments or passed along to contractors and consumers.

“We believe that it would be appropriate for the City Council to adopt” the measure “based on the [limited] scope of the [proposed ordinance], and the city’s policy decision to provide fair and reasonable wages for those who serve the city’s residents, and our review of anticipated fiscal impact of this measure,” Deaton and Comrie wrote in the report.

The report should calm worries about cost and lend impetus to the months-long drive to get the living wage measure on the books, according to a top aide to Councilwoman Jackie Goldberg, the measure’s chief architect.

“This should assuage people’s fears,” said Sharon Delugach, Goldberg’s chief deputy. “As we’ve been saying all along, this won’t cost much, and it will help a lot of people.”

But Gary Mendoza, Mayor Richard Riordan’s deputy mayor for economic development, wasn’t buying it.

“The report doesn’t change our view that this is very bad medicine,” Mendoza said. “We believe that the ordinance is still too costly, still achieves too little and, as written, is illegal.”

The measure has pitted the pro-labor liberals who dominate the City Council and a coalition of labor, clergy and community activists against the Riordan administration and a broad segment of the city’s business community.

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The latest version of the proposed ordinance calls for private firms holding city service contracts worth more than $25,000 to be required to pay specified workers at least $7.25 an hour plus benefits or $8.50 an hour without benefits. Benefits would include 12 paid days off a year plus family health care insurance, for which employers would contribute at least $1.25 an hour.

Targeted employees include parking attendants, food service workers, janitors, security guards, nonprofessional health care employees, gardeners and clerical workers. With some exceptions, firms that receive substantial city financial assistance and nonprofit organizations with highly paid executives also would be covered by the ordinance.

Advocates say the ordinance would help solve the problems of low-wage poverty in Los Angeles and encourage private employers to provide decent wages and benefits to the city’s poorest residents. Opponents say the ordinance’s costs would outweigh its benefits and damage the city’s fragile business climate.

The Deaton-Comrie analysis, ordered by the personnel and budget and finance committees to help them in deliberations scheduled for Tuesday, draws on material from a UCLA study, data from the city’s contract files and the experiences of several cities that have enacted living wage ordinances.

Their analysis concluded that most of the costs--$14.7 million--would fall within the city’s three proprietary departments, Airports, Harbor, and Water and Power. (The city attorney’s office, however, has said it does not believe the ordinance can be applied to these quasi-independent departments.) The costs would be absorbed by the contract holders or passed along to consumers in higher food prices or other charges, it said.

About half the remaining amount could also be passed on, leaving about $3.6 million that would probably come from the city fund that pays for parks, libraries and other services. If the city cannot absorb the cost, it would be required to make service cuts taking about 70 jobs, the report concluded.

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As for its impact on the private sector, the measure would probably cause the elimination of about 1,000 minimum wage jobs, but Deaton and Comrie said about three-fourths of those workers would probably find jobs elsewhere.

About 3,800 workers would get wage increases under the measure and 4,800 would gain better benefits.

The report disputes opponents’ contentions that the ordinance would hit small and woman- or minority-owned firms especially hard. Few small businesses have contracts large enough to fall under the ordinance, it said.

But Deaton and Comrie urged careful monitoring of the measure if and when it is enacted, and they warned strongly against any expansion to cover all private employers within the city. As written, the measure would affect less than 0.5% of the total work force in the city, they said.

The report also recommended a plan put forth in the UCLA study--to encourage low-wage earners to make use of the federal earned income tax credit, thus boosting their take-home pay.