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Santa Monica Businesses to Weigh in on Proposed Wage Hike

Santa Monica Real Estate Company, Roque and Mark

Pacific Park, Santa Monica Pier

Harding Larmore Kutcher & Kozal, LLP  law firm
Harding, Larmore
Kutcher & Kozal, LLP

Convention and Visitors Bureau Santa Monica

By Niki Cervantes
Staff Writer

August 6, 2015 -- A city known for both its wealth and its political progressiveness, Santa Monica is about to be tested for its attitude towards its business community when that sector weighs in next week on a proposed minimum wage hike.

City officials, whose business policies have sometimes clashed with business interests, could get an earful at a meeting Wednesday when business owners will have a chance to air their concerns about the City’s plan to hike the minimum wage to $15.37 by 2020.

Santa Monica’s proposed minimum wage hike is modeled on Los Angeles’ new law, although the L.A. law tops out at $15 by 2020.

Wednesday’s meeting, the first of two, will led by Michael Reich, professor of economics and director of the Institute for Research on Labor and Employment at UC Berkeley, who analyzed L.A.’s minimum wage legislation and found no “significant” impact on the business sector.

The meetings are meant to gage the impact of the proposed law on local businesses before the City Council takes final action, probably sometime in September.

Mayor Kevin McKeown has said that all sector’s input is crucial and that all voices should be heard equally.

“What I hope we all realize is that the time has come to address income inequality, and minimum wage adjustments are happening all over the country,” McKeown has said. “Yes, we are going to put more money in the pockets of the working poor, and no, this will not suffice to destroy capitalism as we know it.”

Like in Los Angeles, some Santa Monica business owners are worried that the minimum wage hike will cause financial hardship, and even lead to a loss of hours – or jobs – for employees.

Reich’s research for Los Angeles, for the most part, did not bear out such concerns.

“Our analysis of the existing economic research literature suggests that most businesses will adjust to modest increases in operating costs through reduced employee turnover costs, improved work performance, and a small, one-time increase in restaurant prices,” Reich’s report of the impact on LA businesses concluded.

In LA, the change is expected to impact an estimated 567,000 employees overall, with the average worker earning an additional $3,200 a year once the law is fully implemented in 2020.

“A few industries might experience slower growth or some relocation of jobs outside the city,” Reich wrote. “These effects would be far outweighed by the income increases of the low-wage workforce as a whole.”

Reich’s analysis found that restaurant prices might rise about 4 percent due to the minimum wage hike, which might in turn “have a small effect on restaurant industry growth.”

The report goes on to say it could not be estimated how low-wage manufacturing industries such as apparel might be affected but determined “the effect on employment overall in Los Angeles is not likely to be significant.”

In Santa Monica, City workers and contractors already receive a minimum wage of $15.37 an hour.

Like LA, Santa Monica has a large tourism-related industry, much of which is populated by minimum wage workers.

The August 12 meeting will take place from 9 a.m. to 11 a.m. at the Santa Monica Main Library, 601 Santa Monica Blvd.  A second session is set for August 18 from 2 p.m. to 4 p.m. It also will be at the Main Library. More information can be obtained by contacting Stephanie Lazicki at (310) 458-2201, ext. 2062.

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