A Bid to Widen ‘Living Wage’ Law

In an attempt to broaden Los Angeles’ “living wage” law, City Councilman Mike Hernandez wants to require a family-owned noodle maker to comply with the measure even though city officials say the law does not apply in this case.

The ordinance requires that city contractors or others receiving substantial city funding for economic development pay at least $8.97 in hourly wages. Wing Hing Noodle Co. is seeking City Council approval for a major expansion that would be financed by a $4.3-million industrial development bond issued--but not funded--by the city.

The bonds are funded by private lenders and offer a federal tax break to investors who buy them, enabling lenders to write down the interest rate on loans, which are fully repaid by borrowers. As the bond issuer, the city pays no money and takes no risk but has a say in whether to approve the projects, which are supposed to revitalize blighted neighborhoods.

The city’s Administrative and Research Services office said in a report that projects such as Wing Hing’s are exempt from the living wage law. But the council’s Community and Economic Development Committee, which Hernandez chairs, required compliance as a condition for approval last week.

The issue, which goes to the full council today, underscores the delicate balancing act of the ordinance, which aims to raise the standard of living for some of the city’s poorest residents but can unduly burden small employers that operate on thin margins in highly competitive industries.

Jasper Williams, director of industrial and commercial development for the city’s Community Development Department, which oversees the bond program, said as many as eight other companies have received the tax-exempt bond financing since the living wage law was passed in 1997, and none was required to comply with the ordinance.

In those cases, council members also raised concerns about wages. But they were satisfied that no more than 20% of the jobs fell below the living wage and so approved the bond issuances, Williams said. In Wing Hing’s case, as many as 80% of jobs fall below living wage, he said, although the company offers profit-sharing and retirement plans--benefits that are unusual for the industry.

Wing Hing general manager Kenny Yee declined to comment, but Williams said he believes the company has agreed to make changes that would satisfy the council.

Hernandez said Wing Hing was the first case of a company seeking bond financing where the majority of jobs to be created would fall below living wage. Although the ordinance may not technically apply in these cases, Hernandez said he believes that it should.

“If you’re talking about creating jobs using any kind of public financing mechanism, you should comply with the local ordinance because the intent of the ordinance is to deal with the quality of jobs,” he said.

Wing Hing, which manufactures fresh noodles, egg rolls and wonton wrappers, has operated at its South Los Angeles location for 23 years, and Yee’s family has done business in the neighborhood since the 1950s. The company qualified for the bond because it is in a state-designated enterprise zone and plans to boost its work force from 41 to 120 over the next two years as part of the expansion. Most of the employees are local hires.

Critics said applying the ordinance to Wing Hing could send a troubling message to others willing to create jobs and enhance the tax base in blighted city pockets.

“These people are about to plunk down $4 million [to expand],” said Michael Banner, president of the Los Angeles Local Development Corp., a community development lender that helped facilitate the deal. “To have the rules be a moving target, that’s not a good policy for economic development.”

Food processing is among the region’s most competitive industries--burdened by supermarket slotting fees and high distribution costs, said Los Angeles County Economic Development Corp. chief economist Jack Kyser.

“The city has to step back and ask what are the competitive pressures?” Kyser said. “They want living wage and that’s admirable, but what happens if the company feels it can’t pay for it?”