Businesses all over Los Angeles from the South Bay to the San Fernando Valley are angry. The Los Angeles City Council has once again proven that it does not understand why the city of Los Angeles has lost 50,000 jobs during the last 25 years.
Last month, the City Council voted 11-3 to extend its living wage ordinance to businesses that have no contractual relationship with the city. This is in direct violation of the promises made by the council nine years ago that this ordinance would never extend beyond city contractors or those who leased city land. Not only does this violate the public's trust, the action shows a complete lack of appreciation for history, business and economics.
Council members justify extending the wage requirement to 12 hotels along Century Boulevard, claiming that they derive a benefit from their proximity to the airport. Bear in mind that none of these hotels contract with or lease land from the city. Some members of the City Council also argued that the city has invested millions of dollars in the airport. That is incorrect. All funding for LAX is derived from fees and rent paid by travelers, airline carriers and concessionaires not one dime comes from city taxpayers.
Nine years ago the City Council agreed to pay more in taxpayer's dollars for the products and services they purchased when they required city suppliers to comply with their new "living wage" ordinance. Now, the City Council has mandated that 12 hotels near the airport do the same. The difference, of course, is that the City Council isn't paying for the increased cost out of its budget; the City Council is forcing these hotels to pay for the increase out of their pockets and the pockets of their customers.
Why is the rest of the business community angry about this ordinance? Because the ultimate goal of the labor groups who initiated this ordinance is to mandate private business wages citywide. The City Council's reasoning is that they have the right to set wages for businesses that derive a unique benefit from the city. The business community sees no end to the use of that logic if it becomes a precedent.
Politics, not economics
Let's be clear. This is about politics, not economics. Labor unions have spent months trying to organize workers at these hotels. Hotel management offered to make an election available pursuant to the National Labor Relations Board. When the unions lacked the requisite number of votes, they called on their friends at the City Council for help. Three of the City Councilmembers who voted on this ordinance were arrested during a union-staged protest at the hotels. Just read the fine print of the "living wage" ordinance. Businesses that unionize their workforce are explicitly exempted from the living wage requirement even if some of their unionized workers make less than the "living wage" or less than their non-union counterparts. Can the motives and transparency of that language be any clearer?
It is past time for the City Council to stand up and take real steps toward improving our economic climate and creating new jobs. Claiming you are business-friendly on one hand while adding more regulation and costs to business on the other hand does not wash. The city of Los Angeles has lost 50,000 jobs during the past 25 years while the population of the city has grown by 1 million people. Many fast-growing, job-creating businesses shun Los Angeles because the City Council continues to pass laws that make it more expensive with more regulations to grow your business in Los Angeles.
No one disputes the importance of strengthening our middle class and lifting more Angelenos out of poverty. In fact, that should be a guiding principle of all efforts to create new jobs and improve our overall quality of life. Enacting misguided economic mandates in order to score political points will continue to take us down the wrong path.
The Save L.A. Jobs Committee, a coalition of business advocacy groups and concerned citizens, seeks to repeal the ordinance through a citywide referendum in May. We are doing so because our city is heading down the wrong path, one that guarantees the loss of more jobs in the future. How can that possibly be good for our children or for any Angeleno, rich or poor?
Gary Toebben is president and chief executive of the Los Angeles Area Chamber of Commerce.
For reprint and licensing requests for this article, CLICK HERE.