Wages Raise Concern of Business

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Wages Raise Concern of Business
Wage Reservations: Robert Brandt

While moves to raise the minimum wage have been front and center in several Los Angeles County cities – including its two biggest – there are still large swaths where wage-hike talk has not penetrated. And wary businesses and business groups in those dozens of cities are hoping it stays that way.

In largely commercial communities such as Commerce, the City of Industry, Vernon and Torrance, business owners and executives have either moved to preempt the encroachment of a wage increase or have chosen to stand pat, feeling insulated because of the few minimum – wage jobs in their cities.

“It really hasn’t been an issue in our city,” said Jon Reno, senior vice president with Heger Industrial, a real estate brokerage in Commerce and board president of Commerce Industrial Council, the local chamber. “Indeed, this really hasn’t come up too much even in our neighboring cities, such as Montebello and Pico Rivera. Businesses are now finally functioning on all cylinders and there doesn’t seem to be much appetite among our local political leaders to upset that.”

But in other cities, the threat is more palpable – not from minimum-wage hikes in their own cities, but from the spillover effect of increases in neighboring communities.

The threat comes as support for minimum-wage increases has gained traction, with Los Angeles city and county passing increases and Long Beach, Santa Monica, Beverly Hills, West Hollywood and Pasadena considering hikes.

Indeed, in Torrance, the concern is so great that it motivated the chamber there and several business owners to travel twice to the County Hall of Administration this summer to testify against the county’s proposal to raise the minimum wage in unincorporated areas to $15 an hour by 2020, a move that won final approval last week. A strip of unincorporated county land lies just east of the city, as does the Harbor Gateway community of Los Angeles.

“I’m very concerned about where this is heading,” said Robert Brandt, co-owner of Torrance’s Red Car Brewery and Restaurant and one of the business owners who testified against the county wage increase. “I have guys that have been with me for 16 years; I hope they will be loyal and not go just down the street for (more) money in Los Angeles city or Los Angeles County. As it is, I’ll probably have to raise my wages just to keep pace.”

Torrance Chamber of Commerce Chief Executive Donna Duperron said the chamber decided to try to head off the wave of minimum-wage increases, both within Torrance and neighboring communities.

“I think that eventually there will be pressure for lawmakers, even in Torrance, to raise the wage. So we’re trying to get out in front of the issue now, to let them know that if they raise the wage, there will be consequences,” she said.

In addition to testifying to county supervisors, Duperron took to the press, writing an op-ed that ran in a local paper and having local business leaders bring their concerns about wage hikes up in their regular meetings with Torrance city officials.

This approach appears to have paid some dividends at City Hall. Torrance Mayor Patrick Furey told the Business Journal last week that he and his council colleagues have gotten the message.

“We’re standing with our chamber and the small-business community,” he said. “I and the council are adamantly committed to maintaining the wage at the statewide level.” The state minimum wage – now $9 an hour – will go up to $10 an hour in January.

Wait and see

But the Torrance chamber’s get-out-in-front tactic has so far been rare among business groups in cities where no minimum-wage hike is on the table. Most other business groups are taking a wait-and-see approach.

“We’ve not heard of much mobilization among local business groups on the minimum-wage issue out here in the San Gabriel Valley,” said Cynthia Kurtz, chief executive of the San Gabriel Valley Economic Partnership, a public-private group that promotes business investment in the region.

Partly, she said, that’s because there just isn’t much activity on the issue in city halls. Of all the San Gabriel Valley cities, only Pasadena is considering a minimum-wage increase; the rest have sidestepped the issue – for now.

One business source in the area said a council member in one city or another will occasionally bring up the idea of raising the minimum wage, but it generally doesn’t get much traction.

That has been the case in City of Industry, according to Donald Sachs, executive director of the Industry Manufacturers Council.

“Most of our major companies are paying substantially above the minimum wage already,” Sachs said. “That may be the reason why there’s no group or organization in the city taking a stand on the minimum wage.”

Sachs said that while there are an estimated 150 restaurants in the city, with no imminent wage hike on the table, they have remained largely silent on the issue.

Kurtz said cities in the region are watching how the wage hikes in Los Angeles city and county play out, and they have an eye on what’s happening in Pasadena. She said if the wage hikes are perceived as successful, other cities in the San Gabriel Valley could take action.

Little poaching

Outside of one well-documented instance, there’s been little interest among cities that aren’t looking to raise their minimum wages in trying to grab businesses from cities where wage hikes are in force or likely.

The Los Angeles Times reported earlier this year that Glendale sent gift baskets to several businesses in Los Angeles, referencing the fact that while Los Angeles was on the verge of raising the wage, Glendale wasn’t.

Few other cities have followed suit. Some of this could be due to cities’ desire not to portray themselves as low-wage havens. But also, with the economy doing much better now, many cities do not have the physical room to accommodate more businesses, especially industrial companies.

Reno of the Commerce Industrial Council said he has heard of two or three manufacturing companies headquartered in the city of Los Angeles looking for space in his city and in neighboring communities, specifically citing their concerns about minimum-wage increases. But he said neither Commerce nor its immediate neighbors were actively recruiting businesses.

“With our industrial vacancy rate at under 2 percent, we’re pretty full up now, especially on the industrial side. So if businesses come calling, we don’t really have anywhere to put them,” he said.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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