OpEd: Highest minimum wage in the country is bad for WeHo

Councilmember John Erickson speaks to the media regarding WeHo’s minimum wage increase

Residents will pay more at their local shops. Local businesses will have to charge more than similar businesses across the border. Most workers who receive the benefit do not live in West Hollywood.

Beverly Hills follows the state law, and their minimum wage is $15 per hour with no CPI (cost of living increase) and up to 24 hours paid vacation time/sick leave. Los Angeles minimum wage is $15 with one CPI increase annually and 48 hours of paid vacation. West Hollywood’s ordinance calls for $17.64 plus two cost of living increases calculated every six months and 96 hours of paid vacation time. The City Staff report presented at Friday’s meeting pegged the minimum wage at $18.77 beginning Jan. 1, 2023.

In addition, the plan has not been properly thought out. Our City Hall has no method of enforcement. West Hollywood will have to create a new layer of code enforcement to listen to hearings from employees and businesses. The WeHo Labor Board will need to oversee all the businesses. The California Labor Board is not in charge of enforcing this local West Hollywood ordinance. There will be a tremendous cost to the City of West Hollywood and this ordinance will produce zero additional revenue. At the current level of management structure there will need to be a head of the ‘labor board’ who will be making in excess of $250,000 plus pensions. Then there is Code Enforcement, and outreach. City Hall will be the de-facto ‘Manager’ of all the employees in the City. One business owner called this ‘communism’, in West Hollywood. The businesses in our 1.9-square-mile city will be at a big disadvantage to our neighbors.

We have a city council without the benefit of business experience. At the City Council meeting, Councilmember Erickson was absolutely perplexed that the wages are tied to workmen’s compensation and employer matching funds. Councilmember Horvath, a candidate for County Supervisor, asked how the wages are tied to workmen’s compensation, trying to figure out if employers can follow the state law anyway. Not a single council member understood that an employer pays matching payroll taxes, unemployment insurance, and other taxes that are based on the wage, and then workmen’s compensation and insurance liability based on that all added up together.

A simple example of the cost on a $19 wage to the employer. a) add one hour vacation for each 30 hours worked, or an additional .65 cents per hour. One would also add in the unemployment insurance 6.1% of the wage as well as other federal matching funds and other state and federal taxes on wages. The total compensation is the basis for the employer’s workmen’s compensation insurance and other liability policies. Together, West Hollywood businesses are paying more across the board and will be at quite a disadvantage to our neighbors.

David Reid, a resident who lives just outside West Hollywood borders, often shops in West Hollywood. Today he was shopping for two iPhones. He went to T-Mobile at Target Center in West Hollywood and the sales tax was 10.25%, so then he went to T-Mobile on Sunset in Hollywood and paid a half a point less in the sales tax. City Hall policies are forcing business outside of the West Hollywood borders.

It’s going to cost local residents more and more to shop in our city with current tax policies. The minimum wage increase is a giant tax on local residents who have to shop in West Hollywood or are forced to travel outside of West Hollywood for more affordable options.

Just yesterday Alexandria Stafford from Fiesta Cantina and Cabo Cantina announced that Fiesta will close for lunches and save 25 shifts per week and cut out 6 jobs. At the open Chamber meeting businesses discussed their plans. Kitchen 24 discussed moving into technology to keep staff low and evolving to a night-bar type setup limiting staff during he slow days. A number of speakers mentioned The Abbey plans on paring day shifts and cutting back on slow nights. Many discussed moving forward with adding technology that will eliminate jobs. “It’s a job killer” was the catchphrase of the day.

Two businesses cancelled plans to open in West Hollywood. A number of businesses at the weekly business meeting held between the Chamber and City Staff, reported they were looking at leases outside of West Hollywood to move staff. One kitchen is moving its new facilities to Beverly Hills instead of expanding their current kitchen in West Hollywood. Beverly Hills wages and vacation and sick leave follow the State of California minimum wage laws.

Employers have no say on when employees call in their sick or vacation time. It would be possible for an entire staff to want Christmas week off. Part-time employees are also required to get vacation pay. A number of businesses were moving to eliminate all part-time staff due the the extra costs. An employee working 12 hours per week would be required to get a month of vacation and sick pay leave. Most businesses were confused as to the lack of understanding as presented and the rushed process. City Staff was also learning ‘on the go’ and said they would come back with answers to the many questions proposed.

Another problem with the ordinance is that it asks businesses to use employment records from 2019, pre-Covid pandemic. One restaurant owner stated he had 60 employees in 2019 but only 40 in 2021. How can we bring all those people back to work in this economy and with the labor shortage?

Managers on salary are required by state law to make double the minimum wage, which puts a minimum salaried worker in West Hollywood at about $85,000 per year. Many businesses are now looking at moving their offices outside of WeHo. Some with delivery services are moving right across the border so they will not be bound by the West Hollywood disadvantage.

The businesses are now exploring options including a tax similar to San Francisco. (The SF Mandates tax). The WeHo surcharge tax would appear on your receipt as a cost of doing business in West Hollywood. Soon to be the highest in the nation.

The sellout of West Hollywood was evident in the press conference held by Unite Here, Lindsey Horvath, John Erickson and Sepi Shyne. All politically ambitious and without regards to West Hollywood’s unique business community. Business were described as evil predators. Councilmember D’Amico gave a pre-written speech at the last City Council meeting about the ills of capitalism. It was clear he did not come to the meeting to listen to the concerns of the local businesses.

Sadly, it was pointed out by many that the new City Manager David Wilson had no valuable input into this discussion.

—-

Below are some questions and comments made by local businesses during the public comment period at Wednesday’s City Council meeting and during the business roundtable this past friday.

Will extensions of COVID-related policies will continue into 2022? So this are these increases compounding? City Staff Paolo Kespradit  replied that yes these are on top of the other increases and on top of the hazard pay.

Was there outreach to the Russian community, Design District or along the corridors? The City Staff answer was very weak. “The business roundtable was a large factor, we asked for data, tried to put that into the staff report. But this item went faster; there was not a lot of time to do outreach that we would normally do in our normal course of action. But with back to back council meetings on this item we did not have the time to do the normal outreach. “

“The CPI is 4.5 %, and if you’rE adding 2 CPI increases a year this will get out of control. Nobody has calculated this. It’s a runaway train. They are hiding the actual number. Businesses have cap on their leases 2% or 3% now we are adding 2% CPI increases per year. Thats crazy. Businesses cannot calculate.” Then a speaker said to Simon Mani, If I were you I’d annex your property to Beverly Hills.”

One commenter mentioned, “If you’re in Beverly Hills or Los Angeles, there is no union carv-out, as in West Hollywood. There is no CPI in Beverly Hills. Both Beverly Hills and Los Angeles follow the state minimum wage of $15 per hour. “We are now looking to move our business outside of the West Hollywood borders to Melrose Avenue in Los Angeles. We can still serve West Hollywood residents but at a much lower cost.”

One speaker commented they asked Councilmember Horvath how many residents are impacted by this, and she answered that she had no idea.

Sick time and vacation time, is considered delayed compensation and would need to be paid out on termination. City Staff was unprepared and did not have the answer. The employer must provide a payout for each 30 days worked upon termination. Paid sick leave is not paid out on separation. Paid vacation time is considered earned and is paid upon separation. The City Staff was not knowledgable of these issues and replied, they would like to clarify their statement, and in West Hollywood that it’s now compensated and uncompensated time. Council was not aware of these rules during the deliberations.

“Forced service charges must go to the persons that provide the service. For example, if we collect $100 in service charges and have to pay $10 in the tax the restaurant loses money on each charge. ” City staff replied they did not know the answer and would have to get back to the business owner.

“Historical CPI is a low inflation over a 10-year period, but is increasing quickly. So the wages as presented are not clear, and can continue. There would need to be a cap on CPI increases. The part-time employee issues are very confusing to many of us. The 96 hours of paid time off, should not be getting vacation pay and benefits. A 12-hour employee will be getting 2 months paid free. To implement changes like this are expensive and then twice per year increases, and overlapping increases between payroll periods is hard to manage. In fact, you can’t split the payroll into two calculations.” City Staff had no knowledge of how implementing CPI increases would affect employers.

A question was asked about the study done to support this data. City staff representative which Paulo Kespradit “We kind of pulled from a couple of different studies, the MIT study that looked at the living wage calculator that gets posted every year. It’s an average of spending by an individual without children in LA county, but it doens’t count for the more expensive costs of being in our region on the westside.

Tara Worden answered that they took the study from Seattle, San Jose and Boston to presented to council. That is the extent of the information that was provided. There was no money provided for an economic study as related to West Hollywood. In fact John Erickson commented at the city council meeting that he had no desire to see an economic study.

“We just completed our budgets for next year and this leaves us little time to implement. How can a city implement this in 60 days?” That is just 3 pay periods away and the final ordinance has not been codified.

“A done deal before we got there. We need clarity on sick pay, vacancy tax, alot of our businesses are not aware of what’s going on.” There is a concern on a minimum wage study study session for hotel workers. It expanded without notice.

Craig Susser from Craig’s: “I’ve always found West Hollywood to be a reasonable place to do business. We stand with our employees, our services are making in excess of $45 an hour, busboys are making $36. The ordinance is trying to solve a problem that does not exist.

Catch, Cecoonis, Boa, – we are only as good as our staff. we would not have employees here 8-10 years – and we value them. There are supply chain issues, labor shortages, covid issues and this is an in=opportune time to enact this ordinance. The green ordinance that forces all restaurants into sustainable packaging is also making it hard to secure supplies and adds rising costs.

Alexander Stafford representing the Cabo Cantina and Fiesta Cantina spoke at the City Council meeting. “We have lost five restaurants due to the pandemic and already eliminated 200 jobs. I live in West Hollywood since moving from New Orleans in 2017. After this takes place in two or three years you will see the effects and our community will not look the same. Many businesses and residents will be pushed out of West Hollywood to find affordable services. ”

“We need to be on the same level or Beverly Hills or Los Angeles. With tips all make more much more than this proposal. This will destroy many businesses in West Hollywood.

We don’t want to go away from West Hollywood but with this proposal we need to look at other options outside of West Hollywood.

“We cherish our employees and our family. We have experience bumping up our prices. We have tried this over the past increases. Last time we raised prices it hit a threshold. This will push a price of our burger over $20. People are going to LA, its just a few blocks away. The other option is to turn the K24 model into a bar and less of a restaurant. This has less costs to operate. “

Cary Mosier from Gracias Madre: “When you say you want a level playing field with LA and Santa Monica you are talking about hotels. This will be the highest mininum wage in the country. The policy is trying to bring people out of poverty, servers are making $40-50 per restaurant. The only people who get this increase is only going to the top earners. All the cost are going up. I implore you to slow it down and carve out tipped employees.

Chris Bonbright spoke of the concept of paid time off. “In the restaurant business everybody has a specific position. So if someone is out we have to pay a second person for that position. So with 96 hours time off, we are paying double that replacing. Then 80 hours of unpaid time off, so we have to recruit and train someone for that posotion. For 34 years we have had an incredible city based on an incredible relationship with the city. We have always worked together to create a relationship that works.

David Juarez: “The Russian community has been devastated from the Covid pandemic. Adding these increases many businesses will not be able to sustain. All the costs tied to the wage, payroll taxes, workman’s compensation are all increasing. The total compensation model that includes tips makes sense.

The road to recovery is steep. Questioning the severity of the losses, you need to only look at your own experience, the city experienced significant and financial hits. Revenues dropped 22% in 2020 with only 4 months of Covid. A decrease in 21% in sales taxes. The city has a 17 million dollars deficit. This also is how the hotels and restaurants too. Please give these business time to get on their feet. Why give an advantage to the surrounding cities?

Walter Shild: “If this is implemented on our medium size restaurant would impact us to $400,000. Across the street is LA, and they have a $15 minimum wage. To have West Hollywood businesses who are in this community and want to stay pay 20-30% more does not help West Hollywood residents or businesses. We have 24 hours paid sick leave in Beverly Hills, 48 in LA. We cannot absorb 96 hours of paid sick leave and another 80 hours of uncompensated leave. I just ask the city council to keep us competitive.

Brett Latteri, owner of the Den on Sunset. “We are still in a pandemic and businesses are still struggling to survive. The Delta variant has screwed up any progress that was made. September and October have been the slowest months in 12 years. Our small business will have to absorb $200,000 per year expensed as a direct result of this ordinance. We are still large loans and paying back rent. We will respond by raising prices, reducing service, cutting positions, cutting hours or closing. People will be out of work. The ordinance will harm the people who need it the most. Restaurants will also have to raise prices. We are giving a significant advantage to the businesses outside of West Hollywood.

David Anawalt, owner of Anawalt Lumber has been on Robertson since 1948. “My concern is the minimum wage will change the attributes of the city. Free thinking small businesses that are interesting we are going to stifle entrepreneurism. I beg you to please slow down. you are going to drive small businesses out of our community.

Is anybody listening?

This item was first appeared on the November 1st agenda and is expected to come back to the city council for its second read on November 15th. If you have questions email the city council at council@weho.org.

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BASIL ALEXANDER
BASIL ALEXANDER
23 days ago

Maybe the city council should worry about a 90+ % increase in crime in the city and do the job they were elected to do, instead of trying to get their names on news outlets.

whereareourresidents
whereareourresidents
24 days ago

Why aren’t any of the residents speaking out about this? seems to be only HER friends that speak. What happened to all our neighborhood activists or even those on this trail speaking about their wasted voted for new blood! where are you?

Mischa Irwin
Mischa Irwin
24 days ago

I support the increased minimum wage.
If you can’t afford to pay MINIMUM wage, you don’t have a viable business.

Steve Carry
Steve Carry
24 days ago

I guarantee this will prove to be a disaster for West Hollywood and will once again prove, when it comes to sound economic policies Liberals have no clue. They would surely flunk out of Worton.

Rudi Logan
Rudi Logan
24 days ago
Reply to  Steve Carry

I don’t pretend to know anything about economics, but I do know your spelling deficiency wouldn’t get you into Wharton.

Steve Carry
Steve Carry
24 days ago
Reply to  Rudi Logan

That’s what got your attention? OMG!! Your right. You don’t know much.

Rudi Logan
Rudi Logan
24 days ago
Reply to  Steve Carry

I know a great deal about a lot of things. I don’t claim expertise in areas out of my purview. When it comes to spelling and grammar, I’m very knowledgeable. Being able to communicate accurately increases the potency of one’s message. Just ask Kellyanne “alternate facts” Conway.

Lo-rise Living
Lo-rise Living
26 days ago

Businesses have budgets. When the government tells businesses what to pay employees then the budgets must be adjusted. That means less employees and/or higher prices. When the marketplace is not able to decide what to pay employees and how to price products/services then communism is the norm (FYI this is bad). And this on top of the biden/harris hyperinflation (soon to be stagflation) will induce more poverty, more bums on the streets and more chaos. The idiocy of these policies is astounding and against all logical sense of business and accounting. The exodus out of this state will accelerate and… Read more »

Rudi Logan
Rudi Logan
24 days ago
Reply to  Lo-rise Living

If nothing else, you needn’t worry about “bums on the street” sleeping at the bus shelters because Metro is removing all the benches. That should keep you warm at night.

WehoFan
WehoFan
29 days ago

Hi John Erickson! Can you ask your friend Greeneyedguy to stop insulting people on wehoville?

greeneyedguy
greeneyedguy
28 days ago
Reply to  WehoFan

Please stop harassing me. I would appreciate if Wehoville stopped approving comments like this targeting other commenters.

WehoFan
WehoFan
29 days ago

Hi John Erickson! Can you ask your friend Greeneyedguy to stop bullying people on wehoville?

WehoQueen
WehoQueen
29 days ago

If an employee was making about $17.64 per hour before this dumb law went into effect, and a brand new employee starts at that salary, isn’t there some pressure for the employer to raise the salary of everyone, to be able to distinguish the difference in compensation for different levels of experience? If a coffee business has say 20 employees, and now all of them get paid a few dollars more per hour, and that business has to sell say 20 coffees more per hour to make up for it, but no new customers are coming, cause they are now… Read more »

Steve Carry
Steve Carry
24 days ago
Reply to  WehoQueen

Beautifully said.

Back to school
Back to school
1 month ago

These council members should be required to pass a class in business 101. They want affordable housing but not affordable stores.

JF1
JF1
1 month ago
Reply to  Back to school

LOL. Yup. The stupidity of it all. We’ll provide you with affordable housing but you won’t be able to afford anything else in the city. LOL

No affordable aging in place
No affordable aging in place
1 month ago
Reply to  Back to school

And the city promises “Aging in Place” but how are they planning to do that? The city funds $5 million to an agency that connects one to other agencies but provides no real care unless one pays. Another pipe dream.

Buzzcuts
Buzzcuts
24 days ago
Reply to  Back to school

Affordable housing? In Weho? Lol! Weho city council is full of it. Weho was created and is run by rich developers. They got rid of the “affordable” housing decades ago. This ridiculous wage increase really benefits no one, as small business owners will most likely move away. Once West Hollywood was affordable and a great place to live. That day is gone.

Minimum Wages.
Minimum Wages.
1 month ago

For quick comparison, the minimum wage for a Licensed Practical Nurse I California is $ 20.60 a vast difference in education as well.

greeneyedguy
greeneyedguy
1 month ago
Reply to  Minimum Wages.

Average salary for a nurse right out of school is like $40/hr. Not sure where you’re getting your info.

Minimum Wages
Minimum Wages
1 month ago
Reply to  greeneyedguy

$40. is the “high” in a range. The statement was “minimum”. Well researched, surely you can find it.

greeneyedguy
greeneyedguy
29 days ago
Reply to  Minimum Wages

no, $40/hr is the AVERAGE in the range. And there is a severe shortage of nurses right now.

Even med techs are making well above $20 an hour. Please do your research.

Minimum Wages
Minimum Wages
29 days ago
Reply to  greeneyedguy

A continuous stream of reactionary, less than credible comments devoid of fact on nearly every subject.

greeneyedguy
greeneyedguy
28 days ago
Reply to  Minimum Wages

https://www.indeed.com/career/licensed-practical-nurse/salaries/CA

Maybe do a google search next time before spreading misinformation.

Minimum Wages
Minimum Wages
27 days ago
Reply to  greeneyedguy

The figure quoted was from State of California standards not an obscure website seeking employees. The accepted validity of sources is important.

greeneyedguy
greeneyedguy
27 days ago
Reply to  Minimum Wages

Just link your source then.

Minimum Wages
Minimum Wages
27 days ago
Reply to  greeneyedguy

A waste of time as it appears you may be well past the level of accurate research and comprehension.

Gimmeabreak
Gimmeabreak
1 month ago

I look at this pic here of Erickson and the one of Sepi that is running now and I wonder what it is that qualifies them to them to make the life-changing decisions that they do? As I see it they have no qualifications but they managed to get elected. Sadly most voters cast their vote based on whose name they heard the most rather than anything they’ve learned about the candidate. And these two have a good chance of being reelected for the same reason. Most people don’t follow the issues, but only name recognition. I was bombarded with… Read more »

Do Your Homework
Do Your Homework
1 month ago
Reply to  Gimmeabreak

Would be interesting to know the demographics of those who voted for Shyne and Erickson Union members, alleged disenfranchised LGBTQ women following their purported Mother Hen? As for Horvath she was the novice who rounded up celebrity types while pandering to their causes, who was appointed to fill the seat of Sal Guarrielo, blessed by former Council members. Big mistake….do your homework and be very careful who you recommend.

JF1
JF1
1 month ago
Reply to  Gimmeabreak

This is so very, very true. That is why we MUST discuss their disastrous policies with all of our friends & neighbors that live in West Hollywood and encourage them to VOTE. THEM. OUT.

Gimmeabreak
Gimmeabreak
1 month ago
Reply to  JF1

I never encourage people to vote. If they aren’t motivated enough to do that without encouragement I don’t want them to vote because they will be acting on emotion. That’s why I hate these get-out-the-vote campaigns. I also hate when on election day I hear there was a big turn-out ….. because I know what that means. Too many people are just not going to do any research on candidates and issues, but they think they know all they need to. They don’t!

JF1
JF1
1 month ago
Reply to  Gimmeabreak

Very true. I was saying we must discuss these candidates’ policies (or lack thereof) with our friends and neighbors and encourge them to vote against them.

greeneyedguy
greeneyedguy
1 month ago
Reply to  Gimmeabreak

I will encourage more people to vote in 2022 in your honor!

Thanks for the idea!

Gimmeabreak
Gimmeabreak
1 month ago
Reply to  greeneyedguy

Seems to me you’re admitting that nonthinking people are more likely to vote as you do.

greeneyedguy
greeneyedguy
29 days ago
Reply to  Gimmeabreak

It seems to me that you are well aware that most people don’t vote with your beliefs. At least you’re honest!

Just look at any MAGA rally and see all the “nonthinking people” in droves.

greeneyedguy
greeneyedguy
1 month ago
Reply to  JF1

I can’t wait for the impending meltdown from you conservative MAGA folk again 🙂

Gimmeabreak
Gimmeabreak
1 month ago
Reply to  greeneyedguy

Right of center maybe but not MAGA.

greeneyedguy
greeneyedguy
29 days ago
Reply to  Gimmeabreak

Your past comments prove otherwise. You are full blown MAGA.

Gimmeabreak
Gimmeabreak
29 days ago
Reply to  greeneyedguy

You’re a really angry guy! You must be lots of fun at parties.

greeneyedguy
greeneyedguy
28 days ago
Reply to  Gimmeabreak

I’m angry because I pointed out you support Trump?

Gimmeabreak
Gimmeabreak
28 days ago
Reply to  greeneyedguy

No, every comment you make shows your anger. Always has.

Did I support Trump over Hillary? Absolutely! I voted AGAINST her not FOR him. Do I want him again? No, I’m hoping for DeSantis.

Buzzcuts
Buzzcuts
24 days ago
Reply to  Gimmeabreak

And that’s disgusting. The problem. In a nutshell.

Gimmeabreak
Gimmeabreak
24 days ago
Reply to  Buzzcuts

I don’t know what you’re talking about. What is it that you say is disgusting?

JF1
JF1
1 month ago

This council is totally inept. Thanks for pointing out just how much. VOTE. THEM. OUT.

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