Proposed Living Wage Study Sparks Rally, Heated Debate

By Jorge Casuso

September 8, 1999 -- You'd never know it from the vibrant rally and the TV cameras, or the vocal crowd that packed the council chambers, spilling down into the main lobby and out the front door, but all the City Council was doing Tuesday night was commissioning a study.

The subject of the study, however, - the effects of imposing an unprecedented $10.69-an-hour living wage that would affect 3,000 workers at 35 businesses along the city's coast - had already set off heated debate, fundraising efforts and media blitzes. And so, Tuesday night was a chance for low wage workers to publicly air their hopes and business owners to state the fears sparked by a proposal first unveiled at a union rally in early June.

It also was the first time to publicly hear from the council members who ultimately will decide if Santa Monica breaks new ground in a growing national movement to raise the wages of the lowest paid workers. While a living wage has been approved by more than two dozen cities nationwide, the wage has only applied to businesses that received direct city subsidies or contracts. Santa Monica's proposal would apply to any business with more than 50 employees in the coastal zone, which stretches from the ocean to Fourth Street north of Pico Boulevard and to Lincoln Boulevard south of Pico.

After hearing from more than 60 speakers, the council voted 6-0 to commission a study of the proposal crafted by the local hotel and restaurant workers union and Santa Monicans Allied for Responsible Tourism, and to look at alternatives.

"It's the best of times. We hear it all the time, but the statistics are really shocking about how a sector of our society is being left out," said Councilman Paul Rosenstein, a union electrician who made the motion to commission the study. "We're looking for a study that will lead us to make intelligent decisions. It's very discouraging to see the polarization developing around these things."

"We're facing something of an emergency not just in our city or region but the nation," said Councilman Richard Bloom. "One in three children (in the country) are being raised in poverty. We need to find a solution that works for the business community and for the employees that are on the bottom rung. But we should not do something that destroys our thriving economy."

"Let's start working at the issues," said Mayor Pam O'Connor. "It is a community debate. I have a little sense of the tip of the iceberg, but what's all that below?"

The workers, who staged a spirited rally on the City Hall lawn before the meeting, told the council in Spanish how the proposed wages would help them move out of poverty.

"My work is hard," said Cesar Olecio, who works at the upscale Jonathan Club. "I make $6-an-hour. This is not enough to survive."

"Those who oppose the wage should step in our shoes for a minute and imagine supporting your family for $440 a week," said Claudia Torres, a single mother who makes $6.50-an-hour at the Jonathan Club. "I work hard and have another part time job to survive."

Supporters of the proposal argued that the current wages force many to turn to public assistance, a form of corporate welfare that picks up the slack from wealthy employers who refuse to pay decent wages.

"Many of the workers work for wages so low they need public support," said former Mayor Dennis Zane. "This is not acceptable in Santa Monica. I ask the council to have the courage to break new ground to move forward. That should be your mission - justice as well as prosperity."

One after one, owners of Santa Monica restaurants and hotels - who are the primary targets of the proposal - publicly worked out the math they said added up to the same bottom line: They would be forced to shut their doors if they had to pay their workers at least $10.69-an-hour.

"I would go out of business," said restaurant owner Jeri Gilliland. "I could not afford to pay these wages. I'm currently looking at another city to move my business."

Herb Astri, the president of Yankee Doodles, a restaurant on the Third Street Promenade that employs between 65 and 70 workers, said the proposal would cost his business half a million dollars a year.

"There are some comedic aspects in this proposal, if it wouldn't be so frightening," Astri said. "We'd be out of business, period. No more Yankee Doodles. It's impossible for us to meet that level."

The proposal, business owners predicted, would backfire, hurting the estimated 3,000 workers it is intended to help.

"There will be no more entry level jobs," said Paul Hortobagyi, the general manager of the Georgian Hotel, who said he learned to "roll with the punches" growing up behind the iron curtain. "We'll hire fully skilled workers, instead of hiring an unskilled worker. Now an unskilled worker will stand in the unemployment line."

Prices, said Santa Monica Chamber of Commerce president Dr. Jim Haljun, would double because higher wages would mean higher state and federal employment taxes. "An $8 deli sandwich becomes $19 and $23.47 after taxes," he said. A $187-a-night hotel room would jump to $409.

"The economics speak for themselves," said Dan Ehrler, executive vice president of the chamber. "They just can't survive. The people you are hearing from tonight are not mean people. It would be horrible to believe these people don't care about those who work for them."

Proponents of the measure argued that the business owners' fears are always expressed whenever a government-mandated wage increase is proposed.

"This is deja vu," said Madeline Janice-Aparicio, who as leader of the Los Angeles Living Wage Coalition has testified before 30 government bodies across the nation. "The same kind of debate is going on around the country."
The dire prognosis of business owners, she said, "has not happened anywhere in the country, and this won't happen here."

"The drums of fear are already beating loudly," said Jim Lafferty, an attorney who provided legal advice on the proposal. "Every time the issue comes up, we hear about how businesses are going to move out, about how hot dogs are going to be $18 on the bun. It's the same drum, the same drum."

Before casting a unanimous vote to green light the study, the council members emphasized that the proposal was just that -- a proposal. Changes would likely be made before any ordinance is approved. Several council members indicated that they might consider raising the employee threshold to 100, instead of 50. But most said they were troubled by the fear and polarization the proposal has wrought.

"There is a genuine level of fear and I think that's understandable because the unknown is always fearful," said Councilman Ken Genser. "We need to have some objective information."

"I think some of the fears out there are a little bit extreme," said Councilman Kevin McKeown. "We need to come up with something that works for the benefit of the entire community then stick with it. If we set aside the anger and the fear, this is something we can accomplish together. This is a special community."