City Sets Framework for Living Wage Debate

By Jorge Casuso

Setting the framework for what promises to be a heated and perhaps historic debate, the City of Santa Monica has sent out a request for proposals to study the economic impact of an unprecedented living wage ordinance.

More than fifty consultants -- nearly all of them from universities and research institutes -- received copies of the proposal, which outlines what city staff believes are the essential questions raised by a proposed ordinance that will require large businesses in the city's coastal zone to pay their employees the living wage. The city is not required to contract the lowest bidder.

"We're looking at expertise and qualifications and references and methodological approaches," said assistant city manager Susan McCarthy, who will be city manager when the issue is debated. "We didn't rule anybody out. We're not looking for a particular approach, we're looking for a sound approach."

The proposed ordinance, the first of its kind in the nation, requires that businesses with more than 50 employees along the 1.5-square-mile coastal zone pay workers a minimum wage of $10.69 an hour. It would be the first time a city imposes wage restrictions on private businesses that do not receive municipal contracts and subsidies.

The study will attempt to answer the following questions:
•Who is the target workforce? What is their income? How large are their families? Where do they live? Do they receive public subsidies or private charity? Do they work part-time?
•How will the proposal affect these workers and their families? Will current workers benefit from the proposed ordinance or will they be displaced? Will the proposal change the number or nature of the jobs available to low-skilled workers?
•Will there be a ripple effect that hikes the wages of workers with incomes above the poverty level? How will it affect workers outside the Coastal Zone?
•How will employers respond? Will they reduce the number of employees? What kinds of businesses are likely to fail and which will be able to absorb the higher wages? Will technology supplant the existing workers? How will the proposed ordinance affect job opportunities for students, interns, the elderly and persons with disabilities? Will employers use more part time workers or raise prices? Will the responses be temporary or lasting?
•What are the methods or costs of enforcement?
•Will the ordinance reduce the amount of money the city spends on housing subsidies and social services?
•Will the ordinance affect property values, business sales and hotel occupancy rates, which in turn affect tax revenues?
•Is the proposal compatible with other city policies and plans?
•What are the implications for city government and private sector investment in the city?
• What alternative approaches might better meet the objectives of the ordinance?

Answers to these questions will help clarify a debate that began this spring when Santa Monicans Allied for Responsible Tourism unveiled the proposal at a spirited rally at the Church in Ocean Park.

SMART estimates that the proposed ordinance would significantly improve the lives of 3,000 workers and their families, reducing the need for taxpayer supported services.

The local business community reacted quickly, vehemently opposing a measure they said would hurt those it intends to help and force businesses to shut down or move out.

But both sides agree that the questions raised in the proposal are non-partisan and will lead to important information the City Council can use to base their decision.

"The questions are straightforward," said Stephanie Monroe, the director of SMART. "It's professionally done. There's no politics surrounding it."

"I thought it looked fairly complete and well-balanced," said Tom Larmore, an attorney who heads the Chamber of Commerce's task force on the living wage.

Larmore said the business community will hire an economist to serve as an advisor during the public process.

After a consultant is chosen by the end of the year (proposals are due by Dec. 10), a public workshop to gauge the scope of the study will be held, followed by up to five oral presentations to the City Manager and staff, the general public and the City Council.

The final report is expected to be submitted to the city by April 1.