Business Took It In the Teeth

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When the compromise over the living wage ordinance was announced, both sides labor interests and business interests declared victory.


But the truth is, labor came out ahead. Way ahead.


The reason is simple. The compromise ratifies the principle that the living wage can be imposed on whatever businesses the Los Angeles City Council chooses.


In the past, the city could instruct a business to pay its employees the living wage, which is a wage scale higher than the minimum wage, when that business worked for the city or leased land from the city. The important feature is that such an arrangement is voluntary. If a business chooses to bid for a city contract, that business understands going in that it must pay its employees the living wage.


But the matter at issue is quite different. The City Council selected a dozen hotels and forced them to pay their workers the higher wages. The hotels are not city contractors. They did not volunteer to pay the living wage.


It’s as if you woke up one morning to discover the City Council has decreed that parents in your neighborhood and only in your neighborhood had to pay kids a greater allowance.


After the City Council voted to impose the living wage requirement on the hotels, business interests got riled. They gathered twice the number of signatures they needed to force the matter to a public vote.


But the matter got compromised away recently. Very basically, the public vote got canceled. In return, the city agreed to establish a special zone around the hotels in the area of the Los Angeles International Airport that’s supposed to benefit businesses there. The city agreed to what was described as a quarantine of the living wage. Significantly, the hotels still must pay the living wage.


Both labor and business initially claimed victory, but the business side is clearly smarting. (For more on the compromise, see the op-eds on the opposite page.)


Business interests lost on the bedrock issue. Since the hotels still must pay the living wage, the compromise establishes the principle that businesses that haven’t volunteered to pay the living wage must pay it if the City Council says so. The business community, in effect, has approved that principle. There’s been a breach in the wall, and business interests basically gulped and said, “OK. We can live with that.”


Now, I know some business types object to my line of reasoning. They say the quarantine should insulate the rest of the business community from a runaway use of the living wage. They say we must wait until the compromise ordinance is written before we judge whether the overall deal is good or bad for business.


Here’s the problem with that logic: Next time the City Council decides to impose the living wage on a group of businesses whose situation is similar to the hotels and you know they will the business community cannot stand on principle. The business community cannot say the City Council has no right to do that, because the business community in effect just agreed that it does have that right.


So, from now on, the business community likely will be fighting a rear-guard action as the City Council locates more and more districts in which to impose the living wage.


There is, however, one possible answer for the business community. That’s a lawsuit.



Charles Crumpley is editor of the Business Journal. He can be reached at

[email protected]

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