Measure JJ -- A Law Of, By and For the Union

By Tom Larmore

Last week I answered four myths being used by supporters of Measure JJ: the City has poured millions of tax dollars into the Coastal Zone (it hasn't); the large beach hotels must be forced to pay wages at the level required by JJ (they are already doing so); JJ affects only the largest and most profitable employers (it is much broader); and JJ is a proven method for addressing the needs of low-wage workers (it isn't).

Despite the inaccuracy of these claims, they are still being, and will no doubt continue to be, used in the campaign to pass JJ. In fact, Julie Lopez Dad employed at least two of them in her column ("Big Money Won't Stop Living Wage Campaign," Oct. 14)

Supporters of JJ like to pretend that the only employers who will be "forced" to pay a minimum wage of $12.25 (soon to be at least $13.00) are the large beach hotels and that these hotels can easily afford to do so. So let's look at some of the sub-myths involved in this argument:

First, the large beach hotels already pay wages at or above the level required by the law, except for bellmen, waiters and waitresses, and bartenders, all of whom make substantial tip income. Both Hotel Casa del Mar and Loews Hotel have calculated that over 90% of the additional dollars the law would require them to pay would go to workers already making at least $50,000 annually.

Second, wage levels at the second tier hotels, such as Four Points Sheraton and the Doubletree, are almost as high. However, by including tipped employees in the mix, the cost increases for these hotels will be so significant that major changes in labor practices will necessarily follow, such as reductions in work hours and increased productivity expectations.

Third-tier hotels, such as The Georgian and Holiday Inn, long-time businesses in our community, will be hurt the worst because not being luxury hotels, they cannot command the high room rates found at the Miramar just up the street. As a result, the cost impact to them will be disastrous, again bolstered by the irrational inclusion of tipped employees. How will they cope?

Supporters of JJ never talk about the impacted restaurants other than to vastly understate the number affected. (The current number is probably around 10-12, all of whom compete with neighboring restaurants not required to comply with the law.) There is no doubt about the fact that restaurants cannot pay wages at the required levels and remain in business, particularly when tipped employees are included. What will they do?

They also never talk about the impact on retailers, such as Macy's (which already lost money last year), Sears (which has advised the Council that it may well close if the law becomes effective), Robinsons-May and The Gap (which has stores both within and outside the Coastal Zone) or on senior citizen homes, such as Ocean House. How will these businesses adjust to the law?

The typical response is to refer to the hardship exemption in the law and say that any business that can establish its inability to survive will have a chance of obtaining an exemption. This provision seems to have been intended to include at least Pacific Park on the Pier; however, no one has any idea how it will work because no procedures or standards have been discussed.

Maybe all restaurants will be exempted; if they aren't, they will certainly take steps to keep their revenues below $5,000,000 so that they law will not apply to them. This tactic will, of course, result in a loss of jobs as the level of business declines. Maybe large retailers, such as Macy's and Sears, will be exempted, but don't bet on it.

The whole concept is bizarre, sort of like attempting to cure traffic problems by prohibiting anyone from driving and then granting hardship exemptions to those who can show a need to drive.

Why do we have a law that includes tipped workers at The Lobster already making $30 an hour on tips alone? Or forcing employers to pay salaries to youth and other part-time workers so high that it makes no sense to hire them? (Some believe there is an exemption for youth workers - there isn't.) Or forcing the City to pay many of its workers, again primarily part-time and "as neededs," at this high level when no one believes City workers are underpaid?

The bottom line is that JJ has been drafted, enacted and supported primarily for the benefit of Hotel Employees and Restaurant Employees Union Local 814. Maybe all businesses will be exempted except those the union wants to organize. Then the exemption for unionized businesses can be used to exempt them.

Has anyone ever stopped and wondered why a progressive city like Santa Monica does not have a typical living wage law, like 80 or so other jurisdictions? The obvious answer is that such a law fails to address the needs of Local 814. In order to use the power of local government to assist it in broadening its reach, Local 814 needed a law that established an unrealistic minimum wage for most businesses coupled with an exclusion for unionized employees.

This reality is clear by looking at the treatment of tipped workers. Supporters of JJ early in its history publicly, and frequently, agreed that tipped workers required special treatment. And the economic study conducted by the City assumed that they would be excluded from the law. However, when it became clear that wage levels for non-tipped employees at most hotels were at or above the law's levels, suddenly tipped employees were included. And it is now this factor which causes the major economic impact on most hotels and restaurants.

The fact is that JJ is, at best, an extremely blunt instrument to reach the problem of low-wage workers. If we are to address this issue, and I believe we must, we can do much better than to enact a measure which is of, by and for the union. When you read literature supporting JJ, just remember who's paying for it and who it will actually benefit. Just say No.

Tom Larmore is a representative of the Chamber of Commerce