New Living Wage Proposal Bashed By Big Business Despite Little Leverage

The LA City Council released the new living wage proposal last week and it was immediately attacked by big business interests.

This is not an us vs. them issue. Economic growth should mean better quality-of-life for workers as well as CEOs. Unfortunately, that has not been happening as of late. It was something Sen. Webb addressed in his response to the State of the Union:

When one looks at the health of our economy, it's almost as if we are living in two different countries. Some say that things have never been better. The stock market is at an all-time high, and so are corporate profits. But these benefits are not being fairly shared. When I graduated from college, the average corporate CEO made 20 times what the average worker did; today, it's nearly 400 times. In other words, it takes the average worker more than a year to make the money that his or her boss makes in one day.

It's generally a good idea to invest in economic development and it's an even better idea to invest in quality education, health care and other quality-of-life issues that are the sign of a productive workforce.

If the business lobby wants to view this as some sort of quid pro quo, then I don't see what they're whining about. While we should not prejudge this plan, it looks like a significant investment in business. So, how much does the business lobby want from LA taxpayers? In exchange, all they have to do is just do the fair, smart thing by their lowest-paid workers, which is actually good business as well as good for families and LA.

Interestingly, an column in the LA Business Journal (sub. req.) basically said the same thing in yesterday:

Los Angeles business leaders should applaud this action and not just because they averted a costly campaign to defeat an ordinance with, according to one recent poll, support from 74 percent of likely voters. (Last month, business leaders reached a deal with community members to drop a referendum campaign to defeat an earlier version of the law after the poll was released.)

The business community should applaud the City Council because the hotel living wage law is good for business. The new law will apply the city’s living wage rate of $10.64 per hour (or $9.39 for those with employer-provided health insurance) to 3,500 workers at Century Boulevard hotels.

This will help the hotels directly by reducing turnover, absenteeism, and increasing productivity. A 2005 study we co-authored, along with two University of California economists, found that the Los Angeles living wage ordinance reduced absenteeism and turnover – while having minimal impacts on employment.

It is refreshing to see an industry publication concurring with us. The poll referenced was ours and evidently, it played a crucial role in the formation of the final proposal, as an earlier article (sub. req.) in the same publication makes clear.

Huffman and other business leaders were left confused by the rapid turn of events last week. One business negotiator said he left the negotiating table on Tuesday night believing business had secured a quarantine, only to find out five minutes before the deal was announced that “the language did not reflect the entirety of what we agreed to.”

But it appears that business’ hand may have been weakened by the results of two polls on the issue conducted in mid-January. One, commissioned and loudly trumpeted by labor, showed 74 percent support for the living wage ordinance.

The other, commissioned by the hotels, was not made public, and there were differing comments on the results. Publicly, hotel consultant Harvey Englander said “our poll did not show that we could not win the campaign.” But privately, one business leader who said he had seen the poll said the results were not favorable for the hotels and that a lot of effort would have to be made to switch many voters’ views.

“The poll results really took away a lot of the leverage that the hotels thought they had gained by placing the referendum on the ballot,” this business leader said. “It meant that when they were at the negotiating table, they didn’t have much to bargain with, and the Council folks knew this.”

Now, the business lobby still has not completely ruled out taking it to the ballot box. That'll be a pretty expensive campaign to fund, if they want to try and overcome the fact that 74% of LA voters support a Living Wage with some health coverage for LAX-area hotel workers. LA would benefit greatly from a citywide public debate over the Living Wage, especially since 65% of LA voters believe that the main problem with the current approach is that it's too narrow.

The City Council and the Mayor clearly understand those facts and are thus far doing their jobs representing the people of LA.

Like Councliwoman Janice Hahn says:

"Living wage for these workers is not something we were prepared to back down on. With all we are doing at the airport, this area is getting some major economic benefits - more than any other part of the city."

LAX is undergoing modernization expected ultimately to cost $4 billion, and city officials tied that work to the requirement that the hotels increase their pay for workers.

Additionally, a court case is still not out of the question. We will just have to wait to see the business lobby's next move.