Doing business in the place with America’s highest minimum wage

WEST HOLLYWOOD, Calif. — Josiah Citrin, the owner and chef of a Santa Monica restaurant with two Michelin stars, opened a new steakhouse a few months ago off the Sunset Strip. He is already concerned about whether the restaurant can survive.

The reason, Mr. Citrin said, is singular: a West Hollywood city mandate that workers be paid at least $19.08 an hour, the highest minimum wage in the country.

“It’s very challenging,” Mr. Citrin, 55, said of the new minimum wage, which took effect about two weeks before he opened his doors in July. “Really, it’s almost impossible to operate.”

His sentiment is widely shared among business owners in West Hollywood, a city of 35,000 known for restaurants, boutiques and progressive politics. In recent weeks, many owners have written to lawmakers, pleading for a moratorium on further increases to the minimum wage; another is scheduled for July, based on inflation. And last month, several marched to a local government building carrying signs that read, “My WeHo” and “R.I.P. Restaurants in West Hollywood.”

Their sense of duress arises partly from geography. The jaggedly shaped city is bordered by Beverly Hills to the west and Los Angeles to the north, south and east. Some streets begin in Los Angeles, slice through West Hollywood and end in Beverly Hills. You can be in three cities — barring, of course, traffic — in a matter of minutes.

And that means West Hollywood’s small businesses have competitors down the street with lower costs.

Beyond raising the minimum wage, the West Hollywood ordinance, which the City Council approved in 2021, requires that all fulltime employees receive at least 96 hours a year of paid time off for sick leave, vacation or other personal necessities, as well as 80 hours that they can take off without pay.

The state of California’s hourly minimum wage is $15.50, the third highest in the nation, trailing only the District of Columbia at $17 and Washington state at $15.74. But just as each state’s minimum wage can supersede the federal minimum of $7.25 an hour, more than two dozen cities across California, including West Hollywood and several in the Bay Area, have higher minimum wages than the state, according to the Economic Policy Institute, a nonpartisan think tank.

In San Francisco, it’s $18.07; in Los Angeles, $16.78.

Chris Tilly, a professor at UCLA who studies labor markets and public policies that shape the workplace, said research had shown that gradual and moderate increases to the minimum wage had no significant impact on employment levels.

“The claim that minimum wage increases are job-killers is overblown,” Mr. Tilly said. But “there are possible downsides,” he added. “One is that economic theory tells us an overly large increase in the minimum is bound to deter businesses from hiring.”

Over the past year, workers in several California industries have seen significant pay raises due, in many instances, to wins by organized labor. Healthcare workers at Kaiser Permanente facilities secured a contract that includes a $25-an-hour minimum wage in the state. Fast food workers across the state will soon make a minimum wage of $20 per hour, and hotel workers have received significant pay bumps across Southern California.

Until recently, West Hollywood followed the state’s minimum wage increases, which have risen every year since 2017, often by a dollar at a time. But that changed with the new ordinance, which included a series of increases.

Genevieve Morrill, president of the West Hollywood Chamber of Commerce, said that while her group wanted workers to earn a living wage in an increasingly expensive part of the country, she felt that the ordinance had done more to hurt workers, who have lost hours or, in some cases, their jobs after places have shuttered.

Around the time the recent wage bump took effect, Ms. Morrill helped more than 50 local businesses, including Mr. Citrin’s restaurant, write a letter to the City Council outlining their concerns. They called for a moratorium on further minimum wage increases through 2025 or until the rate aligns with the Los Angeles rate. They also asked that the city roll back the mandated paid time-off policy.

Mayor Sepi Shyne, who was sworn in this year, said businesses had long been a part of the fabric of the community.

“Our businesses are also the backbone of support for workers: Lifting workers with fair pay is part of securing economic justice and a brighter future for everyone,” said Ms. Shyne, who supports the minimum wage ordinance but said she was seriously listening to resistance from the business community.

Last month, the City Council, of which Ms. Shyne is a member, approved about $2.8 million in waivers, credits and marketing dollars to help the business community. The City Council, she said, has also directed staff members to get feedback from workers about the effect of paid time off.

A major supporter of the ordinance was UNITE HERE Local 11, which represents 30,000 workers at hotels and restaurants across Southern California.

Kurt Petersen, co-president of the local, said West Hollywood was setting a standard that should be replicated across California and the country. “It has raised living standards and given workers the security of paid time off,” he said. —