The new ‘minimum wage’ is in effect —confessions of a small business owner

The clock was ticking toward July 1st, and there was a rush to implement the new hotel-worker-turned-all-city-worker ordinance fairly quickly. The vote was early May. Businesses on bi-weekly payrolls had just three pay periods to figure it all out. Businesses on a monthly payment schedule had to be set just about as quick as they learned about the policy.

The minimum wage would move from $15 to $16 per hour for all workers, including tipped workers who were making $50 or $80 per hour at reported by the owners of Catch, and that was going to affect all the restaurants and bars in the city and all the prices charged at every West Hollywood business.

There were two waiver applications. 1) to the minimum wage itself, and 2) to the vacation and sick pay pto side of the ordinance.

The banner of ‘minimum wage’ gets all the attention but thats like saying ‘gay.’

Imagine the word ‘gay’ that became the LGBT community, that became the LGBTQ community, that became the LGBTQI+ community.

So minimum wage is MW, then you have MW+V+S+FED+UN+MED+WC+CPI+.

That is minimum wage plus vacation and sick pay and federal matching taxes and unemployment insurance and medical benefits and workmen’s compensation all multiplied by CPI. Now do some of you get it? The discussion is not on the basic wage. The cost of a $20 wage is really $30. That worker at Subway will cost the employer $2 to make a sandwich if they make 15 sandwiches every hour,..that is 1 every 4 minutes for their whole shift. If they make less then 15 sandwiches an hour the labor cost alone per sandwich will be higher than that $2.. just labor, not the rent or the food or the health plan or the profit.

All the businesses would be required to give each employee up to 80 hours per year vacation time, and up to 96 hours a year paid sick leave. That comes out to about a month and a half of not working.

As an employer, I like to have employees who are indispensable. In my shop, BlockParty, I do not even know how to use the register and cannot see the screen. One of my opening lines in every interview is , “I’m the owner not the boss”. And I think my people are paid very well. Nobody has ever asked for a raise. Jim works with me almost 30 years, Ric is with us over 10 years while he still works at a showroom downtown, Nick is almost 7 years, Socrates almost 5 and JJ almost 4. Manny almost 4. Michael almost 3.

At BlockParty you don’t see more than three or four new faces a year. I love my staff and together we went through COVID delivering masks to residents when everybody stood 6 feet apart, when streets were shuttered, when sales were low. As a business we struggled and the wages all went up. But this ordinance, its vacation and sick pay waivers do not work for my business model. It did not work for Cedars-Sinai Medical Center either, who pleaded that this would affect the way they responded to emergency and trauma situations. They asked for a waiver. The City Council declined.

The reason I am not yet running for City Council is that I’m too angry at the stupidity of those people who think they serve all of us. Five of them never signed a paycheck. Three of them learning how workmen’s compensations affects the wages paid by employer. None of them (except Lauren Meister) concerned at putting West Hollywood businesses at a disadvantage. None of them (except Lauren Meister) concerned about localizing higher prices to residents, and giving higher wages to all those people who commute here and take those dollars back to spend in their own communities. Yes, that’s how we become Beverly Hills East and throw a few crumbs to the poor people stuck in their affordable housing or rent-controlled units.

First of all, some facts:

Businesses are still allowed to apply for a waiver of the minimum wage, or the vacation leave/sick pay provisions. If you did not apply and receive your waiver by July 1st you are required to abide by the rules till the waiver is issued. As of today, the City of West Hollywood has issued a total of two waivers on the minimum wage and 14 waivers on the vacation/sick pay. There are still 12 waivers in process being reviewed by City Staff or pending more information from the applicants.

That is not good news. The low number of waivers is because of the intimidating, threatening process where applicants are forced to send in tax returns, so City Hall can know how much your cost of goods sold, how much you make, how much you spend on meals. To apply for a waiver you might as well live in Russia and hand over all your information on how your business operates. And then you need to turn over three years of 941 forms. And then you need to humiliate your self and write a letter to all your employees divulging the blemishes in the business. Employers were treated like children who needed a sick note from the doctor to miss school. Few applied for those reasons.

While the Council had approved the first draft of the hotel worker ordinance in early spring, the rollout to other city businesses was not clear until mid-May, with an implementation date of July 1st. This rush to implement gave little notice to residents with home-based businesses and left most other businesses scrambling to adapt. While there were weekly Zoom meetings with Chamber members, a majority of the businesses in West Hollywood are not Chamber members. City Hall provided few at-large public meetings, very few communications city-wide that would help the City Council understand the impacts of the ordinance on all types of businesses.

The policy really penalizes the best employers, paying top dollar. If you pay an employee $100,000 all of a sudden you’re on the hook for an extra month and a half of vacation and sick pay. More than 10k per head. To be frank, if all employees are maids maybe that’s an answer. But people in key positions cannot afford to take a month and a half off vacation or sick … or they are not as important to that employer who has to figure a way out to replace them. And this ordinance forces every employer to find a way to make any employee replaceable. The policy invites employers to replace older, longer term employees who have worked their way up with lower-paid new workers who can do the same job.

One of the most ridiculous things about this new policy is that it applies to all home-based businesses. Are you an attorney working from home? Are you a real estate agent who has an assistant? Are you a caretaker for an elderly person? Are you a cleaning lady working for any West Hollywood homeowner? You are required by law to offer these same benefits. The penalty for non-compliance is $100 a day — a stiff penalty for somebody who was never in the loop. A senior who did not realize that she had to give her caretaker a month off paid. There were no waiver applications as of today for any of the above, not a single home-based business. Do you think this was properly noticed?

I think that when a City Council thinks commercial leases are the same type lease as their rental apartments. Three of our City Council members live in rent-controlled apartments. But that is not how commercial leases work. Sometimes the tenant has to put in the air-conditioning. Sometimes it takes two years to build out a place. At most all times the landlord is given a personal guarantee that can even have the deed to your house attached as collateral. Two weeks ago Council was discussing a vacancy tax on the landlord that would be placed after six months of vacancy. Why is it OK for it to take City Hall two years to process building applications but landlords should be penalized after six months? The idea went down but the whole discussion was ludicrous. The City Council just voted the highest sales tax in the nation, and the highest wage and vacation time in the nation, and was about to penalize a landlord for having an empty space. Really pathetic.

Anyway, applying for a waiver was agonizing. I had to face the truth. At first I told one manager about it and said that it wasn’t worth the effort, then I spoke to frustrated neighbors and other businesses and realized that everybody was just getting sick and cutting staff and raising prices.

One business owner told me about their letter to their staff which resulted in hurt feelings and dissention among their staff. Another told me that there were still paying back their rent from COVID and maybe it was time to shut their doors. The Chop Stop owner said it very well in his OP/ED. So I decided to apply and learn the ropes.

They forced my hand and didn’t give me the room to negotiate the obstacles in a timely manner. Sometimes the owner needs to keep a smile while road ahead has many obstacles. They took away my ability to have flex scheduling and provide incentives and forced us to lower our starting wage to offset the ordinance. We have to change the way we operate turning bonuses into vacation pay.

My letter to staff was posted for the past two weeks but has been removed – it is not meant to be a living document. I hope you had a chance to read about the hurdles owning a small business in West Hollywood.


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texasequipmentfinance
12 days ago

Thank you for all your help. Your service was excellent and very FAST. Many thanks for you kind and efficient service. I have already and will definitely continue to recommend your services to others in the future.

Steve Zlick
Steve Zlick
1 month ago

$16/hr base pay and 96 hours of paid sick/vaca time is bare minimum civilized compensation for places as expensive to live in like L.A. and WeHo. Raise your prices. If you can’t make a working business model without exploiting your workers, you shouldn’t be operating a business in the 21st century.

Gimmeabreak
Gimmeabreak
1 month ago
Reply to  Steve Zlick

If he raises his prices he will have fewer paying customers.

Sheesh!!! I don’t know why it is so hard to understand basic economics!

Most people who work low-wage jobs are in transition to higher skills which will mean higher wages. There is a point that a business can’t pay any more and has to either cut back or close down. Where, then, do those employees go?

Davedi
Davedi
1 month ago
Reply to  Steve Zlick

Even though Larry laid it out for you in detail it looks like you might need a remedial class in economics.

Joshua88
Joshua88
1 month ago

Full time employees for all businesses are to be provided at least 96 compensated hours and 80 uncompensated hours per year for sick leave, vacation, or personal necessity. Part-time employees are to be provided compensated and uncompensated hours in increments proportional to that accrued by someone who works 40 hours in a week.

Geoffrey Buck
Geoffrey Buck
1 month ago

Thank you Larry. We need someone like you to run for city council. Someone who understands the how to run a business and how to make West Hollywood Great Again. The city is most definitely on the wrong track.

Davedi
Davedi
1 month ago
Reply to  Geoffrey Buck

Maybe even make up some red hats. 😉

Bravo!
Bravo!
1 month ago

One voice that speaks for so many. Thank you Larry.

Voter
Voter
1 month ago

We can use a small business owner who on the city council. I hope you decide to give it a shot.

Joshua88
Joshua88
1 month ago

How about – for a little balance – interviewing some of the recipients of the minimum wage increase?

Let’s see if their lives are better or if life is a little bit easier.

Joshua88
Joshua88
1 month ago
Reply to  Larry Block

I am not a minimum wage employee, let alone contingent on somebody else’s kindness/generosity, but you own this *blog*, which I call our local newspaper.

Hoping for a report, as this is not written as an opinion piece.

Thank you for the suggestion though.

JF1
JF1
1 month ago
Reply to  Joshua88

They might like it..who wouldn’t. But if your store owner can’t keep up and has to shut its doors like three businesses have in the last week, they can like it all the way to the unemployment line. These shops run on very tight margins. The jobs in these shops are not careers. The system can only be pushed so far before it is not profitable for a business owner to assume all the risk and keep their doors open. Ask the three others that closed in the last week. I’m sure the employees that worked in those jobs would… Read more »

Joshua88
Joshua88
1 month ago
Reply to  JF1

Who closed and why did they close?
Is this information that you cite public and available?

I presume you speak for all workers and know what their capabilities, education, aspirations, and situations outside of work are.

Now that I know, I am extremely sympathetic to all business owners everywhere, even the multi-million-dollar clothing stores, jewelers, hotels/restaurants/private clubs.

Last edited 1 month ago by Joshua88
JF1
JF1
1 month ago
Reply to  Joshua88

I don’t speak for all employees, that’s ridiculous. But I do know that these low skill jobs are not meant to be careers and should not be paid as such. And I also know that these businesses run on very tight margins. And when I say low skilled jobs I’m not talking about the employees education level I’m talking about the skill that’s needed to do the job. Making a sandwich requires very little skill. Regardless of the employees education level. And as far as the three businesses that closed in the last week or so you can find that… Read more »

Michael on Havenhurst Drive
Michael on Havenhurst Drive
1 month ago
Reply to  Joshua88

Life would be so much better if we never see Sepi Shine, John Erickson or Lindsey Horvath’s face again.

JF1
JF1
1 month ago

Truth. 30 years of hard work to turn the city into a lovely place to live and only a couple years to systematically pull it apart.

WehoQueen
WehoQueen
1 month ago
Reply to  Joshua88

As a business owner, I have no interest what employees do with their salary. They weren’t forced to accept the job. If they made bad life choices and have to take orders from someone else, that is their concern. There are cheaper further out places to live and work than west hollywood. If people want to live and work in the most desirable area, think about some sacrifices. Supply and demand should set the price/salary.

Joshua88
Joshua88
1 month ago
Reply to  WehoQueen

Well, of course you don’t.
You appear to be classist and have no idea who people other than you are.

I take it that you can afford to pay the lowlife people who take orders from you and are not moving out of WeHo, but instead defending your ilk.

WehoQueen
WehoQueen
1 month ago
Reply to  Joshua88

I shouldn’t just appear to be classiest, I am classiest. We live in a capitalist society that rewards smart people, or even just lucky people like with trust funds. If I had a trust fund, do you feel some entitlement that I share it with you? You and your ilk are the problem. We saw that communism didn’t work out too well, although I like limited socialism We have (police, public roads, public schools and hospitals). If you’re unsuccessful in life, maybe reflect on your bad life choices. Don’t come to me to bail you out.

Joshua88
Joshua88
1 month ago
Reply to  WehoQueen

Dude, classiest and classist are not the same words.

Communism is bandied about with little understanding of what it is, let alone using it properly to try to demean people who think differently from you.

Bad choices are not always responsible for a person’s position, so try to muster up a little tolerance for people less fortunate (but likely happier and wiser) than you.

Gimmeabreak
Gimmeabreak
1 month ago
Reply to  Joshua88

Please tell us what we need to know about communism. Where has it ever worked? Where has it not resulted in mass death at the hands of those in charge?

Joshua88
Joshua88
1 month ago
Reply to  Gimmeabreak

WeHo Queen seemed to accuse /equate my
statements/thoughts/ideas as communist.

I highly disagree that I am advocating communism.
Have no idea what your beef is.

Gimmeabreak
Gimmeabreak
1 month ago
Reply to  Joshua88

My bad!

(Do people still say that?)

WehoQueen
WehoQueen
1 month ago
Reply to  Joshua88

I used Communism, not Socialism, cause Communists control everyone salary, and what they can charge. Sorry you weren’t smart enough to figure that out. I suspect you made lots of bad life choices, and you’re bitter and angry at people who made better life choices, who don’t have to worry about going to bread lines, cause members of the Weho city council, (who are likely millionaires), are forcing businesses to pay the losers of society more money. Got it, genius? Glad you have insight into my happiness and wisdom. Your comments make you seem utterly foolish.

Leslie Hope
Leslie Hope
1 month ago
Reply to  WehoQueen

millionaires living in rent controlled apartments??? WEHO council members do take care of themselves!

jjabely
jjabely
1 month ago
Reply to  WehoQueen

“We live in a capitalist society that rewards smart people…”

You are correct. If a business owner is not smart enough to figure out how to operate properly, no matter their local city ordinances, then they should close and operate elsewhere. If unsuccessful, the business owner should reflect on their bad life choices.

Last edited 1 month ago by jjabely
Gimmeabreak
Gimmeabreak
1 month ago
Reply to  jjabely

If only you knew how many people are rolling their eyes at your comment!

Gimmeabreak
Gimmeabreak
1 month ago
Reply to  jjabely

Businesses succeed or fail based on the principle of competition. They have to pay their employees a competitive wage or they won’t have anyone to work for them. Their prices to the public also have to be competitive or no one will shop at their business and will go elsewhere. When government, by regulations, takes away the business owner’s ability to make decisions of his own about how he will run his business the principle of competition has little influence over the battle to keep pace with the government.

THAT, my dear jjabely, is socialism!

C.R.
C.R.
1 month ago
Reply to  WehoQueen

This isn’t just about living in West Hollywood, that’s a big part of the problem, so it’s not just that simple as you seem to think. Every city in Los Angeles County is becoming unaffordable to rent an apartment in, so where do you expect these low paid workers to be realistically commuting from?

JF1
JF1
1 month ago
Reply to  WehoQueen

Yes you should be living where you can afford to live and if you can’t afford to live where you want…that’s life. I’d like to live on the beach but can’t afford it. I don’t see Malibu making an effort to make my dream come true.

jjabely
jjabely
1 month ago
Reply to  WehoQueen

Supply and demand also applies to businesses, doesn’t it? I f you can’t afford to operate a business in West Hollywood, there are plenty of other places to do so.

Gimmeabreak
Gimmeabreak
1 month ago
Reply to  jjabely

You’re showing your ignorance with every comment!

So you are suggesting that WeHo residents have fewer choices when businesses leave the area. This discussion is about government intruding on businesses only in WeHo making it far more difficult for them to provide us residents with goods and services. It has nothing to do with business owners making bad decisions.

Gimmeabreak
Gimmeabreak
1 month ago
Reply to  Joshua88

You might find one who is not self-pitying and knows he is lucky to have the chance to learn skills and prove he is reliable, honest and hard working so he can then move up to where he is worth higher wages. He might see the plight of his employer who could go out of business because of government intervention leaving this worker with no job or opportunity at all, and does not feel entitled to get more than his value to his boss, to whom he is so grateful. We all want our lives to be better and a… Read more »

Joshua88
Joshua88
1 month ago
Reply to  Gimmeabreak

Well said and little closed-minded.
Why both sides of the story aren’t germane is beyond me.

Raising the min wage is – primarily – a poverty reducer – and our country can use a tremendous amount of that.

Thank you for engaging.
Too few do.

Gimmeabreak
Gimmeabreak
1 month ago
Reply to  Joshua88

I disagree that raising the minimum wage is a poverty reducer because it very often results in fewer jobs because of the strain it puts on employers who can’t afford the increase. They have to hire fewer people or even go out of business altogether. In capitalism the market disciplines itself. If a business owner isn’t paying enough because good workers can find jobs elsewhere he will have to pay higher wages. But if he is paying too much he will have to cut back on what he offers the consumer, or he will raise his prices which the consumer… Read more »

Joshua88
Joshua88
1 month ago
Reply to  Gimmeabreak

I do not have to tell you how free you are to disagree.

From this website alone, I can say, unequivocally, that WeHo is liberal in matters of sex/sexuality, but in other matters it appears quite conservative.

Gimmeabreak
Gimmeabreak
1 month ago
Reply to  Joshua88

I’m curious, then, to know what the voting pattern is in WeHo; Democrat vs. Republican. I’m guessing it is overwhelmingly liberal Democrat on issues and candidates.

I would think business owners in WeHo might now be rethinking their party affiliation away from the donkey party because of their growing intrusion in businesses.

Last edited 1 month ago by Gimmeabreak
Joshua88
Joshua88
28 days ago
Reply to  Gimmeabreak

We know what the voting is like in WeHo.
Business owners tend to lean towards the corporate party.

Gimmeabreak
Gimmeabreak
28 days ago
Reply to  Joshua88

At one time all businesses tended to be anti-government intrusion until the government began rewarding big businesses (crony capitalism) at the expense of small businesses.

Joshua88
Joshua88
27 days ago
Reply to  Gimmeabreak

Case in point was COVID-19 government largesse. $2T.
Everybody that could, did, except the public screamed in some cases. With PE, I am sure very few people knew.
Too Big to Fail, COVID-19 Edition: How Private Equity Is Winning the Coronavirus Crisis | Vanity Fair

Crazy Joe
Crazy Joe
1 month ago

I am suprised you survived this long!

JF1
JF1
1 month ago

Now with the raise in the minimum wage, we should not be tipping servers 15-20% or more. (especially since most restaurants are adding on a “kitchen gratuity of up to 3.5%). That would mean a tip of up to 23.5% in addition to almost $20 an hour for serving tables.

greeneyedguy
greeneyedguy
1 month ago
Reply to  JF1

16 is almost 20?

especially since most restaurants are adding on a “kitchen gratuity of up to 3.5%”

MOST restaurants are not doing this actually. And you almost always have the option of asking them to remove this charge.

JF1
JF1
1 month ago
Reply to  greeneyedguy

Actually most are. And yes a lot of restaurants say you can ask to have it removed from the bill but that makes the customer the bad guy. And they only tell you that you can have it removed from the bill IF you catch the charge on your bill and you ask about it. Most times than not this is not even displayed on the menu or any other place they just simply add the charge to the bill which is also wrong. The whole reason we had tipping was because the servers got paid much lower than minimum… Read more »

Last edited 1 month ago by JF1
State of Chaos
State of Chaos
1 month ago

The tectonic plates beneath West Hollywood are shifting. This city which had a bright, peaceful future demonstrating inclusiveness has been hijacked by a barely recognizable group of permanently aggrieved individuals who will likely never experience oeace and satisfaction in their lives. They appear to feed in disruption, contrariness, belligerence and hate tools of their presumed power. Candidates for City Council need to do more than talk about their hopes, dreams and promises and show the public in multiple ways how to heal this breach. The community could use people not transitioning from their PR positions at non-profits, displaced attorneys from… Read more »

Important Facts
Important Facts
1 month ago

Dear Wehoville, So everyone is clear could you please provide a bulletin point time line, orininsl sponsor(s) of ordinance, link to original ordinance, final form of ordinance and council votes? That would be immediately helpful.

It was devastating reading your rendition of events and technicalities. Somehow this does not seem right and possibly illegal given further scrutiny..

pprspry
1 month ago

WEHOVILLE TO WEHOANS: De-Fund the Poor!

It’s not fleecing businesses to require that they pay people a living wage.

Gimmeabreak
Gimmeabreak
1 month ago
Reply to  pprspry

Every time I hear this “living wage” crap I want to go postal! A job shouldn’t pay more than it’s worth to the employer. Is the employer supposed to ask in a job interview what their monthly expenses are? Low-skilled jobs should be low wage because those jobs are intended to be transitional jobs, usually held by a young student who still lives with family or roommates, or someone who intends to progress onto something more as they gain experience and develop skills. These are not jobs that are intended to support someone living on their own, and certainly not… Read more »

JF1
JF1
1 month ago
Reply to  Gimmeabreak

Exactly. They are trying to turn these low skill jobs into careers that pay as much. Our inexperienced council thinks that because you have a business, you must have deep pockets. The margins are too tight to make it worth wild for a business owner to assume all the risk and responsibility if the profit margins are not there. This pushes for more automation or closing up shop here. It’s that simple. Three businesses have closed in the last few weeks. More to come.

Disincentives
Disincentives
1 month ago
Reply to  Gimmeabreak

The same dilemma occurs with some aspects of affordable housing designed as utopia for those lacking incentive to better their station in life.

JF1
JF1
1 month ago
Reply to  Disincentives

Education has always been the key. Study hard and stay in school. Have the drive and ambition for a better life. Work hard. Stay out of trouble. The possibilities are endless. We’ve seen that. Oprah Winfrey who was about as poor as could possibly be and had a hard life as a child grew to be one of the richest and most successful people in the world.

Gimmeabreak
Gimmeabreak
1 month ago
Reply to  pprspry

Please define what you mean by living wage. Be specific.

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