Staff Reporter

Advocates for Santa Monica's "living wage" proposal contend it would raise the standard of living for thousands of workers at some of the busiest restaurants and hotels in the city, while opponents rail that certain establishments would face prohibitive labor costs that would result in layoffs and possibly in financial ruin.

They're both right. And wrong.

While no comprehensive studies have been done on the effects of the living wage laws now on the books in cities like Los Angeles, San Jose and Baltimore, studies on minimum wage increases indicate that a dramatic jump in low-wage workers' paychecks doesn't necessarily translate into a reduction in the number of people living in poverty.

On the other hand, businesses find ways to survive, and aren't likely to go under because they have to pay more for menial jobs. Of course, one of the ways they survive is often by trimming staff.

"There's no doubt that, if you keep your job, you are better off. And people who are using $6-an-hour workers will still need some of them at $10 a hour. But not all of them," said David Neumark, professor of economics at Michigan State University who has done studies on the impact of minimum wage increases. "But we're not talking about big hotels closing their doors and moving out (of Santa Monica), that's absurd."

While Neumark is convinced that boosting the minimum wage results in job losses, not everybody sees it that way.

Robert Pollin, an economist at the University of Massachusetts at Amherst, asserts in his book "The Living Wage: Building a Fair Economy" that when demand for a company's product or services is high, the company will work to keep up with that demand, regardless of whether minimum wages are rising.

The economy, and thus demand for products and services, was expanding during the last hike in the federal minimum wage in 1997, and the unemployment rate was unaffected, he argues.

Further, he maintains that living wage measures such as the one being considered in Santa Monica end up boosting employee productivity and result in less absenteeism and turnover, helping businesses.

But the living wage measure being proposed in Santa Monica in some ways is harsher than those instituted by the cities of L.A., Baltimore and San Jose. Those other cities' living wages apply only to city contractors, and only for workers who are working on city contract jobs. In that sense, they are voluntary. Any business wishing not to pay the living wage need merely not bid on those cities' contracts.


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