Some business owners – even though they might dislike ordinances mandating higher minimum wages – are backing a statewide measure to do just that.
The reason: One uniform wage schedule would put all businesses on a level field and simplify operations, especially for companies with multiple outlets such as retail chains.
The dramatically increasing minimum wage – coupled with the uncertainty of which city might raise its rate next – is causing some local businesses to put off hiring and postpone expansion plans.
“Everybody’s scrambling right now as there’s so much anxiety and uncertainty about what’s going to happen with the minimum wage,” said Genevieve Morill, chief executive of the West Hollywood Chamber of Commerce. “While it’s clear the wage is going up, we just don’t know how much or when. This uncertainty is impacting business plans and expansion plans right now.”
Particularly flummoxed are those with businesses in multiple cities. That’s the case with Angel Orozco, founder and co-owner of Cafecito Organico, an organic coffee retailer with stores in Los Angeles, Malibu, Anaheim and Costa Mesa. Among those cities, so far only Los Angeles has approved a plan to hike its minimum wage – to $15 an hour by 2020.
“It’s difficult to implement different wages at our different store locations,” Orozco said. “A statewide measure would definitely be easier to implement, and that’s a major reason why we support it.”
Multiple measures
Last month, backers of one statewide ballot initiative to hike the minimum wage to $15 an hour by 2021 – chiefly the Service Employees International Union – Healthcare Workers West – submitted 600,000 signatures to registrars across the state, nearly twice the required number to qualify for the November ballot. Orozco is backing the initiative.
Supporters of another statewide measure backed by a separate faction of SEIU are still out gathering signatures. It would raise the wage to $15 an hour by 2020 and includes a mandate that all employers provide six days of paid sick leave for their employees, double the current state mandate.
A spokesman for SEIU – Healthcare Workers West said the two union factions have held preliminary discussions about trying to coalesce around one measure, that presumably would have a greater shot at passage.
Locally, the city and county of Los Angeles passed measures last year to raise the minimum wage to $15 an hour by 2020 (with a one-year extension for small businesses). The first wage hike required in each of these ordinances will take effect July 1.
So far this year, Long Beach, Santa Monica and Pasadena have passed wage hikes, with Beverly Hills in the process of drawing up an ordinance. An effort in West Hollywood to raise pay has stalled as officials are still conducting studies.
If a statewide measure passes, it would supersede local measures that don’t go as high. Long Beach and Pasadena passed wage hikes to $13 and $13.25 an hour, respectively, with options to go to $15 an hour pending the outcome of future studies.
It would also likely eliminate special carve-outs, such as Santa Monica’s exemption for employers with collective bargaining agreements. In addition, it would negate any delayed phase-ins for small businesses and nonprofits that extend beyond the timetable of the statewide law.
Split views
But, most importantly for many local businesses, it would force the minimum-wage levels in cities that haven’t enacted their own increases to go up to $15 an hour.
That’s likely to prompt business opposition in those cities to the statewide measure, according to Gary Toebben, chief executive of the Los Angeles Area Chamber of Commerce.
But some business owners say a statewide measure would eliminate market distortions where businesses on one side of a street pay a much higher minimum wage than businesses on the other side that happen to be in a different city.
That’s a major reason why some businesses support a statewide measure. Others say a statewide measure makes sense, but they have other overriding concerns.
“Yes, a major issue for us is the patchwork of wage ordinances from one city to the next,” said Walter Schild, managing partner of Culinary Lab, which operates restaurant locations in Century City, West Hollywood, Hollywood, Costa Mesa and soon in North Hollywood. “It’s completely illogical to have one set of rules in one city and across the street the rules are completely different.”
Schild, whose restaurants include Hinoki and the Bird in Century City and 33 Taps in Hollywood, said a statewide initiative would stop what he termed this insane patchwork approach.
But he said he’s even more concerned about the speed with which the wage hikes are set to take effect.
“Going from $8 an hour just 18 months ago to $15 an hour by 2020 or 2021, that’s an 87 percent increase in our biggest cost component. It’s the speed and the scope of this that’s the biggest issue for us,” Schild said.
He said the combination of the complex patchwork of ordinances and the rapidity of the wage hikes has forced him to put on hold future expansion projects after a new restaurant location in North Hollywood is finished later this year.
“We have to know what the wages will be and whether we can afford them if we have to build a budget five to 10 years out before signing a lease,” he said. “So, for now, we’re not expanding in California other than things already committed to before the wage increases began.”
The huge jump in the minimum wage is also a concern for Susan Polifronio, co-owner of Counterpoint Records & Books, a used-book and record store in Franklin Village, northeast of Hollywood. Polifronio said now that Los Angeles has raised its minimum wage to $15 by 2021 for small businesses like hers, a statewide measure brings no advantage.
“We’re not competing against businesses in neighboring cities; we’re competing against the likes of Amazon and just keeping our doors open is a challenge,” she said. “We can’t raise our prices, so this huge wage increase will really hurt. If it becomes too expensive, given the state of the industry, we would just go out of business.”
Seeking tip credits
Another concern for restaurateur Schild and business organizations is the lack of wage credits in any of the measures – state or local – for workers who receive tips.
“Generally, one statewide minimum wage is better for compliance and competition,” said Tracy Rafter, chief executive of the Los Angeles County Business Federation, or BizFed, which represents more than 100 local business organizations. “But the details matter. And we believe in a statewide solution to allow for employers to be given consideration for total compensation (including tipped wages) when calculating minimum-wage increases. This vital part of the issue simply needs a legislative fix and we’re working to make that happen this year.”
