Santa Monica Makes a Notably Aggressive ‘Living Wage’ Proposal

Has Santa Monica, long regarded as a spawning ground for flaky notions, come up with another crazy idea? It’s looking into lifting the legal minimum pay for several thousand workers in one section of the city to a relatively lofty $10.69 an hour and requiring their employers to provide health insurance.

But this time around, Santa Monica might not be quite as off-the-wall as many people think. Its so-called living-wage proposal reflects a trend already gathering momentum nationally.

At the same time, the Santa Monica plan marks a more aggressive approach than most other localized efforts by labor unions, community groups and advocates for the poor to advance the cause of low-skill, low-wage workers.

In the 38 U.S. communities that have adopted living-wage programs since 1996--including the city and county of Los Angeles--the laws mainly apply to employers doing business directly with or receiving aid from local governments.

The Santa Monica proposal stands out because it would apply to purely private commercial activities in a major section of the city, instead of focusing on firms with municipal business ties. As a result, some critics say, it could place a tougher burden on business in the city than living-wage laws have in other communities.

In this case, the section of town involved is a 2-mile-long oceanfront zone that includes much of the city’s lucrative tourism industry. It would exempt employers with fewer than 50 workers.

If a law in line with Santa Monica’s current proposal is approved, the city would probably have the top-paying living wage in the country, at least temporarily.

Stephanie Monroe, an organizer with the Santa Monica living-wage campaign, said the rationale for the effort is that millions of dollars in public funds have been spent to reinvigorate tourism and retailing along the oceanfront in the city.

“The city is getting a lot of revenue back from it, and corporations are making incredible profits there. The only ones left out are the workers,” she said.

Living-wage laws around the nation cover relatively small numbers of workers. Even in Santa Monica, it would benefit only an estimated 3,000. Federal and state minimum wage laws, by contrast, protect nearly all nonagricultural wage earners, but they ordinarily are far lower than so-called living wages.

(The U.S. minimum wage currently is $5.15 an hour, and California’s is $5.75.)

Despite gloomy predictions by employer groups, experts generally say there’s no conclusive evidence to date that living-wage laws badly hurt lots of businesses.

In communities with living-wage laws, “the overwhelming majority of businesses that they affect face tiny overall cost increases and so the business adjustments they have to make are correspondingly small,” said Robert Pollin, an economics professor at the University of Massachusetts at Amherst and coauthor of a book supportive of living-wage campaigns.

More than 40 communities across the country, including Philadelphia, Denver and San Francisco, have living-wage campaigns underway.

The campaigns have benefited from the nation’s long-running economic expansion, much the way recent state minimum wage campaigns and a current proposal to boost the federal minimum wage increase have been helped.

“Where you have a booming economy, people look at it and say, ‘Things are good. We ought to be able to pay more money,’ ” acknowledged Tom Larmore, a lawyer advising businesses opposing the Santa Monica proposal.

In the absence of extensive academic research on the impact of living-wage laws, employers’ arguments against them have been undercut by the fact that they apply to relatively few workers. Living-wage campaigns are “an easy-to-achieve political statement that don’t have much impact, in benefits or costs,” said James P. Smith, an economist with the Rand Corp. think tank in Santa Monica.

Even in Santa Monica, Monroe conceded, the campaign “is more symbolic and consciousness-raising than an attempt to cover every worker in the city.”

Employers covered by living-wage programs are often able to ignore the law in the face of lax enforcement. Until Los Angeles stepped up enforcement of its minimum wage law this year, many city contracting officers and contracting firms “just blew it off,” said Richard H. Sander, a UCLA law professor retained by the city to study its program.

In Santa Monica, a living-wage plan in some form is considered very likely to pass, albeit not before a study due April 1 is completed. If a plan with the proposed $10.69 an hour plus benefits is adopted, it probably would push Santa Monica past San Jose as the community with the top-paying living wage.

San Jose’s program, adopted last November, provides an hourly living wage of $9.50 with health insurance or $10.75 without benefits. It covers workers at firms that have received financial aid or contracts from the city.

By comparison, Los Angeles’ living wage provides for an hourly minimum of $7.51 with health insurance or $8.76 if no health coverage is provided.

The political arguments in Santa Monica, however, will be altered by the novel nature of the city’s proposal. Santa Monica’s proposal exempts employers with fewer than 50 workers and would apply mainly to oceanfront hotels, along with some stores and restaurants.

Larmore concedes that the hotels may be able to absorb a living-wage plan by passing along higher prices to some customers, particularly free-spending tourists. But business travelers, he said, may find that their companies’ travel departments start steering them to cheaper hotels.

Larmore said he didn’t want to take the “alarmist position” that the ordinance could severely hurt Santa Monica’s tourism industry. But the plan, he said, makes him nervous because “it’s not comparable to anything that’s been done before.”

* PUSH FOR FEDERAL INCREASE: Prosperity is aiding the campaign to raise the federal minimum wage. A1

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‘Living Wage’ Areas

A sampling of U.S. cities and counties that have enacted living-wage ordinances. Most apply only to city contractors and subcontractors. Santa Monica’s proposed ordinance would affect employers within a specific zone along Ocean Boulevard.

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Community With health benefits Without health benefits Baltimore $7.70 $7.70 Boston 8.23 8.23 Chicago 7.60 7.60 Detroit 8.35 10.44 Hayward, Calif. 8.00 9.25 Los Angeles 7.51 8.76 L.A. County 8.32 9.46 Miami-Dade County 8.56 9.81 Oakland 8.00 9.25 Pasadena 7.25 8.50 Portland, Ore. 8.00 Benefits required San Jose 9.50 10.75 Tucson, Ariz. 8.00 9.00 West Hollywood 7.25 8.50 Federal min. wage 5.15 5.15

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Sources: AFL-CIO Public Policy Department, Assn. of Community Organizations for Reform Now