With L.A.’s controversial “living wage” ordinance set to take effect May 5, city contractors and concessionaires are scrambling to determine whether their businesses will be affected by the wage boost.
“We’re concerned about it,” said Warren Deasy, owner of the Griffith Park Carousel, whose concession agreement with the city comes up for renewal in about two months. “We’re not sure if it applies to us.”
The uncertainty is not limited to business-owners such as Deasy.
“We’re just as confused as everybody else,” said Julie Boxx, director of administrative services for the city’s Department of Recreation and Parks. “All of our concession projects are on hold until we get a better handle on it.”
Passed by the L.A. City Council, which on April 1 overrode a mayoral veto, the living wage ordinance calls for private firms holding contracts or concessions worth more than $25,000 to pay their service workers at least $7.25 an hour with benefits or $8.50 an hour without benefits. The law also will apply to companies which receive more than $100,000 a year in ongoing financial assistance, or more than $1 million in one-time aid, from the City of Los Angeles.
The ordinance will not be applied to existing contracts; instead, firms will have to factor in the higher wages when their contracts with the city come up for renewal.
While there is little question that the new law covers city contractors providing such services as parking attendants, security guards and janitors, a good deal of confusion exists about the ordinance’s reach into other areas most notably the concession agreements that city departments enter into with private companies.
The Bureau of Contract Administration in the Department of Public Works will administer the ordinance. The bureau plans to have the law’s regulations finalized by the end of May, said Jalal Sudan, the official who will oversee implementation.
In addition to the ordinance’s reach, other issues to be decided include: how to monitor compliance; the conditions under which firms may request exemptions from the living wage requirement; and how the new benefits packages will be purchased.
A May 1 meeting is planned to provide some guidance for city department officials who have questions about the ordinance, Sudan said.
In the meantime, a number of companies with city contracts or concessions are in a state of uncertainty regarding their futures.
“I don’t know what to believe,” said Don Gustafson, president of G.P. Recreations, a Burbank-based firm which operates the popular train ride in Griffith Park’s Travel Town and pays about $100,000 a year to the city in exchange for its concession.
Gustafson employs 25 people. If forced to pay the higher wage to his low-level workers, he said the train ride, which currently is open seven days a week, would be forced to cut back its hours of operation and its number of employees or else face a 75 percent drop in pre-tax profits.
But not all companies that do business with the city share Gustafson’s anxiety.
“We’re pretty enthusiastic about it,” said Neil Martau, contract administrator for Inter-Con Security Systems, which holds a $625,000 contract with the city to provide security guards. The contract comes up for renewal at the end of the year.
“As far as doing business as a contractor, it makes it easier,” Martau said of the wage boost. “It puts everyone on a level playing field.”
The new law forces companies to compete for city contracts on the basis of quality of service, rather than by attempting to cut costs by paying workers as little as possible, Martau said.
“The difference (between bids) becomes, ‘how well is your operation run?'”
In the weeks since the law’s passage, the Living Wage Coalition an alliance of labor, community and religious groups which backed the measure successfully pressured the City Council to delay consideration of eight new contracts until after the wage boost’s implementation, said Madeline Janis-Aparicio, the group’s leader.
The group also has been leafleting workers at the airport, harbor and city parks and golf courses, in an effort to let them know that they may be owed a pay raise.
Meanwhile, the Los Angeles Area Chamber of Commerce, which opposed the ordinance has been quiet since the city council overrode Mayor Riordan’s veto on April 1.
“We’ll take a look at it after they actually issue some regulations,” said Chamber President Ezunial Burts.