It’s been the year of the worker, but West Hollywood employers are over it
Across the country, many American workers have enjoyed pay hikes unlike anything seen in decades. And for many American businesses, this also has been a good year for profits, with some corporations notching record or near-record gains.
But don’t try to sing that song of good times in West Hollywood: Business owners there say that paying workers more is killing them, and that goes for some of the low-wage workers that many liberal policymakers worry about.
In an area known for its nightlife, hip restaurants, trendy shops and boutique hotels, workers at or near the minimum pay abound. And, thanks in part to the political muscle of L.A.’s hotel union and the COVID-era shakeup that gave workers greater leverage, city leaders there have approved the highest minimum wage and some of the most generous paid time off to be found anywhere in the country.
The West Hollywood rules, approved two years ago, stand in contrast to the situation in much of the country, where business leaders have successfully opposed substantial increases in minimum wages. The federal wage floor has been stuck at $7.25 an hour since 2009, and two dozen states currently are at less than $10 an hour or have no minimum wage at all.
In California as a whole, the minimum wage stands at $15.50 an hour, behind only Washington state at $15.74 and the nation’s capital at $16.50.
Many cities have their own minimum rate, and none higher than West Hollywood, where it’s now $19.08 an hour, with paid leave even for part-time staff.
Economists have long argued over what effect minimum wage rules have on jobs. Conservatives have generally maintained that requiring higher minimum pay leads employers to reduce hiring. Liberal economists have denied such a link in all but theory and some rare exceptions.
For restaurateur Craig Susser and other employers like him, that theoretical point of no return has been reached in West Hollywood. Susser, the owner of Craig’s and Craig’s Vegan, said he has reduced the number of servers from 12 to nine, sometimes eight. Other employers have cut worker hours. Many have jacked up their prices.
And by the city’s count, a sizable 177 businesses have closed since 2021, although exit interviews suggest a multitude of reasons, including labor costs, but also inflation more broadly and challenges posed by leases, entertainment industry strikes and changes in consumer behavior post-COVID crisis, according to Laura Biery, West Hollywood’s economic development director.
Things have gotten so desperate, some employers say, that in a year when picketing workers have become commonplace and autoworkers, screenwriters and health workers have struck for significant gains, in West Hollywood, it’s bosses who’ve been holding up signs and marching in protest.
“For God’s sake, give us a break,” said Genevieve Morrill, president of the West Hollywood Chamber of Commerce.
Until relatively recently West Hollywood had followed the state’s minimum wage, which has been rising every year since 2017, mostly by a dollar at a time, to its $15.50 level today.
But that all changed at the start of 2022. Since then West Hollywood’s wage hikes have been extraordinary — more than $6 an hour for small businesses and $5 for larger ones in a span of just 2½ years.
Even some liberal economists are cringing a bit. “That’s such a substantial increase,” said Harry Holzer, a Georgetown public policy professor and the Labor Department’s chief economist in the Clinton administration. He added that bigger increases matter more in the long haul.
West Hollywood businesses are having an even harder time swallowing the city’s paid time off rule that was part of the minimum wage ordinance. That requires employers to provide 12 days of compensated leave per year for full-time employees, at least half in vacation or personal time off and the rest in sick leave.
Part-timers also qualify on a prorated basis. And upon separation, all employees must be paid for unused vacation or personal leave, something neither the state nor any other city is thought to mandate.
Labor proponents have argued that even $19 an hour isn’t enough to live in expensive L.A. and that the rapid jump in West Hollywood’s minimum wage came after years in which its pay rate trailed that of Los Angeles and neighboring cities.
Now, “it’s on the cutting edge of this important debate” over living wages, said Danielle Wilson, political coordinator of Unite Here Local 11. The union has been striking hotels across Southern California since summer and had an influential role in pushing through the West Hollywood pay increases.