Minimum Wages Are Being Set, City by City
By LOUIS UCHITELLE
LOS ANGELES -- What bothers Henry A. Berber most about the new "living wage" ordinance in Los Angeles is the picketing at his restaurant, La Luz del Dia, during a busy lunch hour. "The way they are dressed," he said, "they give the impression they are my regular customers, very dissatisfied. It hurts me personally."
The pickets are in fact community advocates who pushed for passage of the local law, which increases minimum wages at companies doing business with the city. Because Berber leases his site in a subsidized tourist zone, the ordinance requires him to pay $8.76 an hour, not the $5.75 that is standard pay for kitchen help here. The reasoning is that all his workers should benefit from the public largess that makes the quaint Olvera Street where his Mexican restaurant is situated so profitable. Berber has raised his bottom wage, but only to $6.75 an hour, without health insurance -- and the pickets are trying to get him to go the extra distance.
"I am moving in the direction of conforming," he said, leaning for emphasis across a huge, cluttered desk that almost filled his small, low-ceilinged office. But to pay the full wage now, he said, would put his restaurant in the red.
Here and elsewhere, a small but increasing number of employers who do business with government are suddenly finding themselves required by local ordinances to grant big raises and benefits to their low-wage workers. Forty cities and counties in 17 states, particularly those with large constituencies of low-wage workers, have enacted such wage laws since the movement began five years ago.
As one follows another, lately at the rate of a new ordinance a month, the movement has begun to broaden from a simple emphasis on higher wages into a wide range of requirements involving health insurance, vacations, sick pay, job security and incentives to unionize.
"You have to look at the living wage movement in the context of the utter failure of federal labor law, now so stacked against workers," said Madeline Janis-Aparicio, director of the Los Angeles Living Wage Coalition. She cited what she said was Washington's failure to raise the national minimum wage to keep pace with the needs of the working poor or to strengthen labor's bargaining power. The coalition, an amalgam of community groups, churches and unions that organized the picketing at Berber's restaurant, is out to redress the balance.
As the ordinances spread, business opposition and complaints about higher costs and patchwork regulation are on the rise.
But the vast majority of affected companies, though often ducking full compliance, have generally lived with the law rather than give up profitable contracts, subsidies and leases on choice city-owned properties like Olvera Street, three studies have found. The early evidence suggests that relatively little of the extra cost has been passed on to the cities or to consumers. Companies are absorbing the higher wages or finding ways to offset them.
"The cost increases for companies in Los Angeles were only 1 to 1.5 percent of their total expenses," said Robert Pollin, an economist at the University of Massachusetts at Amherst who led one of the studies.
This wage movement is an increasingly popular tool for improving the lot of janitors, cleaning people, restaurant and health care workers, security guards, school bus drivers, parking attendants and others who earn less than $8 an hour. That group represents 25.7 percent of the work force, or 28.5 million people.
Yet only a fraction of these workers -- no more than 44,000, according to an analysis by Pollin, Mark Brenner and Stephanie Luce -- are covered so far by wage ordinances, the largest group being the 9,000 or so in Los Angeles. But more than 50 other cities and counties are considering such bills. One alone, in San Francisco, would nearly double the number of workers covered nationwide if the proposal now before the Board of Supervisors passes.
The ordinances cover the companies that tap the public till through a tax abatement, for example, or a service contract to clean schools or through leases at a city airport; the companies can be cut off if they fail to raise wages. Here in Los Angeles, United Airlines and Delta Air Lines have accepted the ordinance as lessees at the international airport, imposing the new wage -- $8.76 without health insurance, or $7.51 in pay and $1.25 for health insurance -- on the contractors and subcontractors who supply baggage handlers, security screeners, wheelchair attendants and the like. The airlines' own employees generally earn more in wages and benefits than the law requires.
"United resisted the ordinance for a while and could have tied us up in court for a long time," said Isaac Nuru, lead organizer at the airport for the Living Wage Coalition. "But it did the moral thing; it did not want a bad press."
The ordinances have their limits. They are hard to enforce even when city officials audit corporate payrolls, as they do in Los Angeles and one or two other cities. Further, though companies like United and Delta comply with the ordinance at the city-owned airport here, workers employed by contractors at the airlines' other sites in the city are not covered. And companies do not have to comply with the ordinances in most cities until existing contracts and leases are renewed or revised, though some companies do so anyway.
Host Marriott Services did. It runs bars and restaurants at the airport here and has applied for a revision of its lease to expand. Even before submitting the application, the company increased the pay of 700 airport workers to the levels specified in the ordinance, which took effect last January at the airport. And in a bit of horse trading, Ms. Janis-Aparicio's coalition has endorsed Host Marriott's request.
"You monitor every lease that comes up for renewal or revision," she said, "and you go to the company and say, 'We want to work with you.' "
Still, much of American business, once indifferent to a movement that seemed to apply to so few workers, is now fighting the effort more vigorously -- denouncing the laws as an excessive cost for business and a distortion of wages, which should be set in the marketplace, not by government.
"When you raise the wage so much, a lot of the people you are trying to help will lose their jobs," said Thomas R. Larmore, a lawyer in Santa Monica. He heads a Chamber of Commerce committee formed recently to prevent passage of a wage proposal in Santa Monica that would be the first in the country to go beyond companies that benefit directly from city business. The ordinance would apply to an entire commercial district, a two-mile stretch of Pacific coast developed with public funds as a tourist mecca.
Within this zone, which extends three blocks inland from a promenade overlooking the ocean, no company with more than 50 employees would be allowed to pay its workers less than $10.69 an hour. Other provisions, borrowed from the Los Angeles ordinance, include paid vacations, a health insurance requirement and a provision to protect workers against retaliation.
The zone flourishes, the argument goes, because the city spent hundreds of millions of dollars to develop it as a tourist and entertainment center, and limited the number of hotel rooms, to help keep room rates high, often above $300 a night. Low-wage employees, advocates say, should share more of this public bounty, or at least earn a high enough wage to live in Santa Monica. Most commute from poor Los Angeles neighborhoods.
Larmore says such reasoning is spurious. "It is totally backward to say that business is subsidized by the city," he said. "It is business that is lifting the city," he added, by providing a huge flow of tax revenue that allows the city to provide many services.
A majority on Santa Monica's seven-member City Council, which recently approved a ban on automated teller fees for nonbank customers that has been temporarily set aside by a local court, favors the ordinance. But rather than act now, the council is likely to wait while the wage issue is fought out in next year's election campaign.
The Chamber of Commerce is raising money to support candidates who will oppose it.
Wage ordinances have become a goal of such national groups as the Independent Areas Foundation and the Association of Community Organizations for Reform Now that seek to bring community groups together in social action campaigns. And with increasing frequency, the ordinances are becoming big issues in local politics.
In San Francisco's Dec. 13 runoff election for mayor, the issue divides Willie Brown, the incumbent, who has been lukewarm about a wage law, and his challenger, Tom Ammiano, president of the Board of Supervisors and chief sponsor of the proposal. It specifies a wage of $11 an hour, surpassing the current national leader, San Jose, where an ordinance requires $9.50 with health insurance and $10.75 without. By comparison, the national minimum wage is $5.15 an hour; adjusted for inflation, that is nearly $3 less than it was in 1968.
"If the bill is watered down too much, say to $9 an hour," Ammiano said, "and nonprofit organizations are exempted and there is not enough funding for enforcement, then I would advocate taking the proposal to a referendum."
The first such ordinance was enacted in Baltimore, in December 1994, largely through the efforts of a community organization called Build. Last November, Build got thousands of residents in poor neighborhoods to the polls. Most voted for the re-election of Gov. Parris N. Glendening of Maryland, who is increasingly using the city's ordinance as a model for contracts that the state makes with private companies.
Here in Los Angeles, Mayor Richard J. Riordan tried to block the measure, but his veto was overridden by the City Council. "I believe employers should be aware that employees who earn under $10 an hour cannot lead an independent life," he said. "But I do not believe that government should dictate wages. We have seen this fail in Socialist and Communist countries. It will do irreparable harm."
Mayor Riordan said, however, that he agreed with supporters of the wage ordinance that income inequality had increased in part because of the decline in union bargaining power.
Several ordinances try to reverse that trend through an "opt out" loophole that lets companies partly off the hook if they agree to let their workers organize.
Half of Berber's 28 employees, for example, have signed a petition seeking union recognition. If he granted recognition voluntarily, the opt out clause would allow him to negotiate a labor agreement that permits pay and benefit levels below the city's mandated wage, at least temporarily. But he would be locked into a union -- a central goal of Ms. Janis-Aparicio's coalition.
"Whenever you rely on legislation solely, the gains can be lost," she said, noting that the Los Angeles City Council's current pro-labor bent could disappear in a future election. "So we need to build union agreements that have community support and will last."
While running a refugee center here, Ms. Janis-Aparicio, 39, was recruited into her present line of work in 1993 by Miguel Contreras, now the powerful executive secretary-treasurer of the Los Angeles County Federation of Labor.
Contreras, who had worked with Cesar Chavez's United Farm Workers, was mindful of the public support -- the consumer grape boycott -- that had brought such success to the farm workers. So he asked Ms. Janis-Aparicio to set up a nonprofit organization that could foster similar community support for labor. She founded the Los Angeles Alliance for a New Economy, which operates with a $1 million annual budget and 18 salaried staff members. The wage issue soon became the central cause.
"This question of job inequities in the public sector, if we address it as a union, people say we are self-serving," Contreras said. "But if it has the cloak of religious leaders and community activists, then it becomes a community issue." ----------- charts
Hourly wage Nationwide, all workers ages 18-64 Less than $8 28.5 million people $8 to $9.99 15.7 $10 to $14.99 29.2 $15 and over 37.6
Minimum City Enacted An Hour Baltimore Dec. '94 $7.70 Milwaukee Nov. '95 6.56 Tucson May '96 9.00 Jersey City June '96 7.50 Los Angeles March '97 8.76 New Haven May '97 8.03 Boston Mid-'97 8.23 Duluth, Minn. July '97 7.25 Durham, N.C. Jan. '98 7.55 Chicago July '98 7.60
Each jurisdiction applies the law to different workers. Sources: Economic Policy Institute!; The Employment Policies Institute