Hicks released a statement praising the City Council’s decision on May 19:

“We are one step closer to making history in Los Angeles by adopting a comprehensive minimum wage policy that will change the lives of hundreds of thousands of hard-working Angelenos. The City Council’s action today creates a path for workers to succeed and gives our economy the boost it needs to grow.”

But early last week, Hicks released another statement following his request for union exemption:

“With a collective bargaining agreement, a business owner and the employees negotiate an agreement that works for them both. The agreement allows each party to prioritize what is important to them. This provision gives the parties the option, the freedom, to negotiate that agreement. And that is a good thing.”

The L.A. Times came out in full swing against the request, calling the request “stunning” and “hypocrisy at its worst”:

“No, employers with a unionized workforce should not be allowed to pay less than Los Angeles’ proposed minimum wage. It’s stunning that after leading the fight for a $15 citywide minimum wage and vehemently opposing efforts to exempt restaurant workers, nonprofits and small businesses from the full wage hike, the Los Angeles County Federation of Labor is now lobbying for an exemption for employers with union contracts. That’s right — labor leaders are advocating that an employer should have the right to pay union members less than the minimum wage.

 

“This is hypocrisy at its worst, and it plays into the cynical view that the federation is more interested in unionizing companies and boosting its rolls of dues-paying members than in helping poor workers.”

Diana Furchtgott-Roth, the director Economics21 at the Manhattan Institute, provided insight on why union would campaign aggressively for a minimum wage hike and then request to be exempted:

“Although the union-funded Raise the Wage campaigned so vociferously in favor of a $15.25 minimum wage, unions are seeking exemptions from the higher wages for their members. The exemption, or escape clause, would allow them greater strength in organizing workplaces. Unions can tell fast food chains, hotels, and hospitals that if they agree to union representation, their wage bill will be substantially lower. That will persuade employers to allow the unions to move in. …

 

“Once the higher minimum wage bill is signed into law, with the exemption for unions, then organizing becomes a win-win for employers and unions. Unions get initiation fees of about $50 per worker and a stream of dues totaling 2 percent to 4 percent of the workers’ paychecks. Employers get a lower wage bill.

 

“The losers in this scheme are employees, who have to pay union dues out of their paychecks. Jobs become more scarce as wage levels rise and some less-skilled workers become unemployed.”

The wage increase is to be phased in over time, so the immediate impact may not be felt. But businesses ought to keep score when the effects hit so that officials will be cognizant of the consequences. If the wage increase does not cause economic disruptions and businesses do not actually leave Los Angeles, the business community’s credibility will suffer in the face of a mere exercise in rhetoric.

The vote to pass the minimum wage increase was 14 to 1. The council gets to vote once more on the measure after an ordinance is drafted by the city attorney, but the lopsided vote indicates there is no turning back. The council even set the wage above the recommended level offered by Mayor Eric Garcetti, who initially proposed an increase to $13.25 an hour.

The city council’s version contains an inflation clause and offers an extra year for small businesses and nonprofits to comply.

However, the business community does not consider these admissions enough. Ruben Gonzalez of the Los Angeles Chamber of Commerce said, “There is simply not enough room, enough margin to absorb a 50 percent increase in labor costs over a short period of time.”

The chamber’s president and CEO Gary Toebben wrote to his members about the many small business owners who testified in various hearings on the measure. He wrote, “They also talked about the likelihood that in order to provide a wage increase for some employees, they would have to reduce hours for others.”

Toebben noted wryly, “Last week, there were banners hanging throughout City Hall celebrating Small Business Week. There are many small business owners in L.A. who don’t feel like the city is celebrating them today.”

Earlier on the day of the vote, the Los Angeles County Business Federation (BizFed) released a survey on business conditions in the area. According to a release from BizFed, “The city of Los Angeles stood out again as being cited most frequently by employers as unfriendly.  Santa Clarita and Glendale were ranked in the top 5 most business friendly cities, which is notable because officials from those two cities are actively courting city of Los Angeles businesses in light of the proposed city of Los Angeles minimum wage increase.” (Author’s emphasis.)

So what will Los Angeles businesses do? Once the minimum wage law takes effect will there be jobs lost or hours cut? How many businesses move to a different location? Business credibility is on the line. Crying wolf and not acting will damage efforts to turn around what many decry as unfriendly business policies.

[row][double_paragraph][accordion][acc title=”L.A. Wage Increase (on July 1 of each year)”]2016: $10.50 per hour
2017: $12.00 per hour
2018: $13.25 per hour
2019: $14.25 per hour
2020: $15.00 per hour[/acc][/accordion][/double_paragraph][double_paragraph][accordion][acc title=”Small Businesses Increase (on July 1 of each year)”]2017: $10.50 per hour
2018: $12.00 per hour
2019: $13.25 per hour
2020: $14.25 per hour
2021: $15.00 per hour[/acc][/accordion][/double_paragraph][/row]

L.A. Mayor Eric Garcetti praised the actions of the City Council and said in a press release:

“Today, help is on the way for the 1 million Angelenos who live in poverty. I started this campaign to raise the minimum wage to create broader economic prosperity in our city and because the minimum wage should not be a poverty wage in Los Angeles.”

The approval of the wage raise is a success for people like Albina Ardon, a McDonald’s employee from Los Angeles and an active member of the Fight for $15 LA. She wrote in a press release:

“By voting to raise the minimum wage to $15 an hour, the Los Angeles City Council has just shown what workers are capable of when we stick together. People used to think we had no chance, but we are steadily winning the fight by demanding $15 an hour to lift our families out of poverty.

 

“People like me, who work hard for multibillion-dollar corporations like McDonald’s, should not have to rely on food stamps to survive. My life would be completely different if I were paid $15 an hour. I could afford groceries without needing food stamps, my family could stop sharing our apartment with renters for extra money, and I’d be able to provide my daughters with some security.”

Anna Chu, vice president of policy and research at the Center for American Progress Action Fund, said raising the minimum wage “is one of the most direct actions that policymakers can take to raise wages for low-income workers.”

“While the sample size is still relatively small, cities that raise their minimum wages have seen drops in unemployment more often than not, belying the doomsday claims of those who oppose such increases. Cities have led on the issue of raising the minimum wage, and they are seeing the benefits of workers having more money in their pockets and more economic security.”

But not everyone views the increase as a positive change. The California Restaurant Association said in a press release yesterday that they were “disappointed the Los Angeles City Council voted in favor of an extreme approach to a minimum wage increase.”

“The California Restaurant Association has advocated for a comprehensive minimum wage increase that ensures the higher wage is targeted to those that need it most.

 

“Unfortunately, the City Council voted in favor of a policy that:

• Excludes total compensation, which would provide owners the ability to create wage equality between tipped and non-tipped workers.
• Limits a teen wage to ages of 14-17, for only 160 hours, thereby restricting access to entry-level jobs that teach youth the skills they need to succeed.
• Attaches further wage increases to the Consumer Price Index, which is the equivalent of putting the minimum wage on auto-pilot and ignoring any economic impacts or other factors.”

Economic Professor David Neumark of UC Irvine wrote in an L.A. Times article on Sunday that “[s]imply requiring employers to pay $15” per hour would not solve the market forces at hand that cause low wages and a lower standard of living:

“In fact, data indicate that minimum wages are ineffective at delivering benefits to poor or low-income families, and that many of the benefits flow to higher-income families. That’s because minimum wages target low wages rather than low family incomes. And many minimum-wage workers are not poor or even in low-income families; nearly a quarter are teenagers who will eventually find better-paid jobs. …

 

“Yet another reason to be wary of raising the minimum wage is that modest job loss overall may mask much steeper job loss among the least skilled. Economists use the phrase “labor-labor substitution” to describe employers responding to a higher minimum wage by replacing their lowest-skilled workers with higher-skilled workers, whom they are more willing to hire at the higher minimum.”

So how is the city dealing with this mess? With a transparent ploy. Two weeks ago, almost certainly at the behest of new Mayor Eric Garcetti, City Administrative Officer Miguel Santana and Chief Legislative Analyst Gerry Miller recommended that the City Council put a half-cent sales tax hike on the November ballot to “pay for repairs of the worst streets and sidewalks.” This would raise $4.5 billion over 15 years.

It doesn’t take a genius to figure out that this is about getting new revenue into L.A. City Hall by any means possible. This is a city that can’t pay its bills.

It’s all about roads and sidewalks — not pensions. Huh?

But insanely enough, Los Angeles Daily News City Hall reporter Dakota Smith and her editors continue to buy the spin that this is about potholes and not pensions.

“A proposal to raise Los Angeles’ sales tax to pay for road and sidewalk repairs received its first public hearing Wednesday night, as city officials gingerly laid out a $4.5 billion plan before a gathering of neighborhood leaders.

“About 50 people attended a City Hall hearing on the measure, which would raise the L.A.’s sales tax to 9.5 percent if endorsed by the City Council and approved by voters in November.

“Armed with a PowerPoint display, the city detailed why federal dollars are unavailable to help fix L.A.’s worst streets and sidewalks and how the additional funds raised would be used. At least 8,700 lane miles of street would be repaired under the proposal, officials said.”

If naivete were a crime, the reporters and editors on the L.A. Daily News politics team would be facing life imprisonment. Dumb de dumb dumb.

“Remember when tech startups like Lyft, Sidecar and Uber fought California regulators and won, getting designated as a new class of transportation that was deemed legal?

“Turns out Uber didn’t like that. It filed today a petition for rehearing with the California Public Utilities Commission, saying the transportation regulator shouldn’t have jurisdiction over technology companies.

“What’s going on here is that Uber is trying to play the long game. The previous decision may have been harmless enough, but Uber being Uber, it doesn’t want the CPUC to get the idea that it can tell Uber what to do.

“More specifically, in September the CPUC established a new category called “transportation network companies,” where drivers use their personal vehicles to provide rides for pay.

“That applied to the peer-to-peer businesses of Lyft, Sidecar and Tickengo, and to Uber’s own competitor in that space, UberX. It was a highly important decision that helps legitimize the larger idea of a sharing economy, where non-professionals share their resources and time for a fee. And it was hailed as such by the peer-to-peer companies. 'We made history today!' tweeted Sidecar CEO Sunil Paul. …

“What Uber is clearly concerned about is the CPUC extending its regulatory interest deeper into the Uber business — for instance, saying Uber needs to register as a 'transportation charter party,' or TCP, which covers the commercial license for black cars and limos. That hasn’t happened yet, but it’s possible that it’s on the table.

Here's hoping Uber gets its way. As the Reason folks have pointed out for decades — here's a recent iteration — licensing and regulation have long been used not for safety reasons but to protect entrenched business interests from competition.

If Uber and similar firms wipe out taxis, so be it. Survival of the fittest, and no more ripoff $33 fares for four-mile drives to and from the airport.

By Chris Reed

The longer I’ve lived in California, the more governance here seems to resemble organized looting of taxpayers. It’s not just the showy and ridiculous things, like the longtime president of the CalPERS governing board being a top official in the California Federation of Labor, or the public safety workers in a bankrupt town winning automatic raises. It’s stories like this one, about a defeated Assembly member getting a $128,000 part-time state job:

“Allen, defeated by Marc Levine in his reelection bid for a state Assembly seat representing part of Sonoma County and Marin County, was appointed on Thursday to the state Unemployment Insurance Appeals Board.

“The five-member panel, which meets monthly, is the final arbiter in appeals of unemployment and disability claims involving workers and employers.

“The job pays $128,000 a year. That’s a hefty bump from an Assembly member’s base pay of $95,300.”

Assemblyman aids aide and is aided in return

And it’s stories like this one, about a termed-out Assembly member helping his aide win a narrow election to his old job, and then getting a $102,000-a-year job from his aide until his next elected gig starts paying him:

“Voters in northeast Los Angeles picked former state Assemblyman Felipe J. Fuentes III (D-Sylmar) in March to represent them on the City Council, but that job won’t begin until July, seven months after Fuentes’ term in Sacramento ended. He won’t be struggling to make ends meet, however: Fuentes is bridging the gap by working for his former chief of staff and longtime friend, Raul Bocanegra, who was elected in November to fill Fuentes’ seat in the 39th District.

“Assembly records show that Fuentes went on Bocanegra’s payroll Dec. 3. His title as of February 28 was principal assistant in Bocanegra’s district office; his monthly salary of $8,500 was the second-highest among Bocanegra’s aides. In fact, it’s more than the salaries paid to either Bocanegra or his chief of staff.

“The unofficial tally from the March 5 election showed Fuentes with 51% of the vote in Council District 7, almost twice the percentage of runner-up Nicole Chase. The only candidate in the district to raise a significant war chest, Fuentes spent almost nine times as much in the campaign as all his rivals combined.”

That’s from the L.A. Times.

Question the looting, and you’ll get insulted

Here’s another version of governance as looting involving another Democratic Assembly member, Ben Hueso, and the San Diego City Council. Note that Hueso’s aide characterizes questioning the looting as being “obnoxious.”

What’s obnoxious is this status quo, and how government watchers are so used to it that it’s barely considered news any  more.

Here’s more from the Times story on Fuentes:

“Fuentes has tapped public funds at least once before while moving from one public-sector job to another. He was chief of staff for Padilla in the 7th District until Padilla won a seat in the state Senate in 2006. Fuentes then ran for and won a special election to replace Assemblyman Richard Alarcon (D-Panorama City), who had won the seat Padilla vacated on the council. The day after Fuentes won that election, he obtained a $7,500 contract from the [Los Angeles] City Council to brief Alarcon’s council staff. Not that Alarcon was new to the council; he’d represented the 7th District before heading to Sacramento.”

Showing it’s not just Sacramento and San Diego. It’s L.A. It’s all of California government.

Great, just great.

By Brian Calle and Josephine Djuhana

Paper or plastic? Residents of Los Angeles soon may no longer hear that question at grocery checkout stands as the City of Angels has taken steps to ban certain grocery bags, effectively determining the kinds of bags shoppers are allowed to use when carrying groceries.

Recently Los Angeles’ City Council committee on Energy and Environment unanimously passed a recommendation to effectively ban the use of plastic bags within the city. Arguing that the decision would encourage residents to use reusable, “earth-friendly” shopping bags instead, the committee moved to prohibit more than 7,000 stores in Los Angeles from giving customers plastic bags for their purchased items. Additionally, grocery markets are required to charge customers 10 cents for paper bags; within six months, paper bags will be banned as well, if the plan goes through.

Based on the recommendation, the City Council is expected to vote on the ordinance in the coming weeks.

The plastic bag manufacturing industry supports more than 2,000 employees in Los Angeles alone. Workers at Crown Poly, a plastic bag manufacturer, protested the ban, stating that the move would result in dozens of unnecessary layoffs. Cathy Browne, general manager at Crown Poly, said, “Banning our product will harm our company and could put our local industry out of business and put these long-term employees on your unemployment rolls.” Elicia Ortiz, a single mom of three, stated that her job at Crown allowed her “to provide for her family” and help with medical costs for her special needs daughter. Their protests fell on deaf ears.

Other bans

The committee’s move was largely expected considering other unincorporated cities in Los Angeles County have already moved forward with bag bans.

Effective July of last year, stores in cities belonging to unincorporated Los Angeles County were no longer allowed to provide plastic bags for their customers. Legal attempts to fight against the ban made by plastic bag manufacturers and other petitioners were shot down in court last week, when Superior Court Judge James Chalfant upheld Los Angeles County’s bag ban.

Los Angeles Supervisor Gloria Molina said the ruling was a “huge victory not only for Los Angeles County, but for all jurisdictions waiting to see what happens in the case so they can implement similar laws.”

Los Angeles has plenty of problems to tackle—what with its crumbling infrastructure, dilapidated neighborhoods, a high unemployment rate, and more—yet the city instead seems poised to pick on shoppers, bag makers and stores.

“At a time when unemployment in Los Angeles County is 12.1 percent, the City Council should be looking at ways to support industry; instead the Council is considering banning a useful product without regard to the workers employed by the industry or potential economic harm,” said Jay Beeber, who is the government affairs chair for the Sherman Oaks Neighborhood Council.

The Los Angeles City Council should probably worry less about plastic bags and think more about its $72 million budget deficit for fiscal year 2011; and its estimated $150-$250 million budget shortfall for fiscal year 2012, not to mention unfunded pension liabilities. Let’s hope the council votes the proposed ordinance down.