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Living the Living Wage

By Frank Gruber

Next Tuesday evening the City Council, barring a continuance to a later date, will adopt a precedent-setting living wage ordinance, unique because of how it will affect workers and businesses that do not have a contractual relationship with the city.

On March 27, the council voted to adopt an ordinance, but did not specify the amount of the minimum wage, and instructed staff to return with information regarding various significant open issues.

I hope the City Council takes the time necessary to craft a good law. Not only one that will stand up in court, but also one that does the job without too much collateral damage. A bad law will do more harm than good to the workers who are its intended beneficiaries.

When I was on the Planning Commission, I hated it when, after spending hours listening to opposing sides rant at each other, it would be late at night by the time we would start discussing how we might actually solve the problem. The debate would be rushed. Although my colleagues insisted they had heard enough of my views, I often felt that I had not heard enough of theirs.

Before voting, the City Council should give itself time to debate the law, then give the public time to respond to the debate, and then give itself more time to debate.

The plight of the low-income worker, the region's biggest social problem, is complex. It involves just about every other big issue -- the decline in manufacturing, the rise of the service economy, immigration, sprawl, transportation, education, and the need for investment, both public and private. Commendably, Santa Monica is trying to solve a small part of the problem, and, perhaps symbolically, to do more than that.

Devising a good law, however, has not been easy. The difficulties begin with the origin of the living wage movement in Santa Monica as part of a drive to unionize big hotels. Nothing wrong with that: if unions could organize the big employers, then their better wages and labor standards would ultimately become the standard for their smaller, non-unionized competitors in the market for low-skilled labor.

But a local minimum wage is not an obvious tool for union organizing. No matter how the proponents of the ordinance try to juggle district borders, exceptions, hardship-exemptions, and the like, unless the council is careful, the end result will be a complicated law, a cumbersome enforcement apparatus and potentially more unintended consequences than unionized hotel workers.

The response to the proposal from the business community -- both the hotels and local businesses as represented by the Chamber of Commerce -- has been hysteria. Ignoring the real efforts of the living wage proponents to exempt smaller businesses and restaurants, the business community declared from the start that a living wage ordinance in any form would spell doom.

The hotels' execrable Prop. KK killed any chance of constructive dialogue, and the Chamber of Commerce's proposal to solve the low-wage problem with a new welfare program illustrated its lack of understanding not only of the problem but also of what was motivating the living wage movement.

Businesses have the attitude that somehow workers are uniquely unentitled to raise the price of the services they provide. Take restaurants, for example. Several restaurants have recently gone out of business in downtown Santa Monica, not because of high labor costs, but because of high rents. No one jokes about "Soviet Monica" when property owners all raise rents. Why is it the end of the world if workers agitate for more money?

If it costs more to do business in the Santa Monica, if businesses can't survive here, then rents will decrease. As it is now, restaurateurs who make good in Santa Monica must give their profits to the landlord or move on when it is time to renew the lease.

Yet the proponents of the living wage have been disingenuous, too. One of the rhetorical pillars on which they have justified implementing a living wage ordinance in the "Coastal Zone" is the alleged investment the City has made in the district to benefit the tourism industry.

Yet assessments on property owners and businesses paid for the improvements on the Third Street Promenade, and regional, state and federal monies largely paid for beach and park improvements so that these regional resources could better serve not tourists, but the millions who live in nearby communities.

Not only that, but the City encouraged tourism to pay for social services. The City's budget for 2000-01 counted on receiving more than $20 million from the hotel bed tax, about one-sixth of the City's total revenue from taxes.

The data consultant Robert Pollin himself collected in his report to the City on the living wage showed that between 1985 and 1999 the City spent only 4.7 percent of its operating budget and 12.1 percent of its capital budget in the Coastal Zone, a district that represents 18 percent of the city's total area.

The City has not subsidized the tourism business, tourism has subsidized the City.

Yet because of a nearly unlimited supply of workers, hotels and other businesses can externalize their costs by paying a sub-living wage without benefits. Taxpayers bear the additional costs of these workers' lives.

Professor Pollin made a point that is certainly correct: all Santa Monica hotels have benefitted greatly from Prop. S, the ban on building new hotels near the beach, and the City's other no growth policies. If the City would use this fact to focus its ordinance on hotels, I believe the result would be a stronger law with fewer unforeseen consequences.

Workers do not benefit from the City's no-growth policies. Because of Prop. S, hotels have not only fewer hotels to compete with for customers, but also fewer to compete with for workers. No-growth policies have also prevented the building of housing so that housing costs in Santa Monica are among the region's highest, even as our population has decreased.

(Irony alert. Santa Monica is planning to spend tens of millions of dollars to subsidize affordable housing in the Civic Center area, near the hotels. While workers should be able to afford their own housing, which is the goal of the living wage, if they price themselves out of subsidized housing they will never find a place to live in our fair city.)

As of my deadline Thursday afternoon, I have not yet seen the city's staff report. Nor have living wage proponents released their latest proposals, which I am told will address many specific concerns raised by the business community.

My suggestion: proceed with caution. Ultimately the biggest problem with the proposed ordinance is that Santa Monica is so small. Its economy is not independent of the region's, let alone the world's. What we do will not be much more than an example, but that means we need to get it right.

Symbolic gestures are all well and good, but if the law does not work, then no one will try it anywhere else.

Meeting notes: In addition to City Council meeting Tuesday evening on the living wage (and other issues as well), there are two other important meetings next week.

The Civic Center Working Group meets Monday evening, May 21 at 6 p.m. at the DoubleTree Hotel to discuss infrastructure, circulation (presumably including plans for a light rail station) and parking.

The Downtown Parking Task Force meets Thursday evening, May 24, at 6:30 p.m. at the Ken Edwards Center.

The views expressed in this column are those of Frank Gruber
and do not necessarily reflect the opinions of The Lookout.
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