Critical State of Business Part 3: Finding solutions and common ground

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I’m a local business owner. My shop is not as ‘labor intensive’ as my neighbors who employ many more than my small eleven person staff. I’m proud of my employer record. Zero labor board claims in 14 years. Zero unemployment claims in 14 years. Zero lawsuits. Almost zero people who quit their jobs and I cannot recall any person who was fired. Great employers had no say at the table in the development of the ordinance that affects all workers. Even great employers who are generous and paid their staff well are now challenged with a one size fits all cost that is a job reducer as mandated.

I’ve never had so many applications for jobs from people who used to work in the area. This worker ordinance is not helping workers. A worker who had 5 shifts and now has 4 cannot pay their rent. One of my part time staff got laid off from their $19.08 per hour at a local restaurant and then got a job in Beverly Hills. He now leaves the city to go to work. The exact opposite of what the council intended.

Some people give birth to children and others, dreamers and entrepreneurs give birth to businesses. Being a parent of a business is not always easy. It takes a Queen Bee to create a hive, but the policies are killing the Queens.

Some of you may laugh at the Supreme Court decision that found corporations to be ‘living entities’, but they are. Do you know a corporation outlives the life of its owner?

I’m not here to argue with the city council, or many of you as to the cause and effects of the highest minimum wage and benefit package in the nation. The results are around us and you heard the death cries from.. chopstop, starbucks, la boheme, critical state. The rules applied to our small 1.9 square mile city are a giant tax on the residents who are paying increased prices or traveling out of the city for their needs.

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Three weeks ago I got a call. “Hello, I’m Anna and my real estate agent told me to call you. We are looking to open our office on Sunset Blvd but then I heard something about this minimum wage ordinance. Can you give me some background?”

I replied, yes, the wage is now $19.08 per hour, I suggest you look on the city website for all the provisions of the ordinance. It includes up to 80 hours vacation time per employee and 96 hours of sick time, plus it will go up every year.

Anna said, my receptionist makes $16 per hour. That’s $500 per month extra just for the receptionist. Thank you, I’m going to look for another location.

Again, I’m not here to argue about yesterday. But we can discuss today and tomorrow. We can have the highest in the nation minimum wage but we must address the other issues that are hardships to businesses.

Can we agree on some basic principles.

Our politicians are supposed to represent the best interests of West Hollywood residents and its businesses. Our politicians are elected to represent West Hollywood residents and businesses. Not their donors.

It is a factual statement that $19.08 minimum wage rate is the highest in the entire nation. The minimum wage in New York City is $15 per hour, with phased increases to $17 per hour through 2026. The minimum wage in San Francisco is $18.07 per hour. The minimum wage in unincorporated parts of Los Angeles County is $16.78. The minimum wage in the State of California is $15.50 per hour.

It’s really important to note that an employer pays taxes on that wage. 6.2% matching federal tax on $20 per hour is an additional $1.24 per hour to the employer cost. 6% unemployment insurance another $1.20 per hour. There’s a long list. The cost is closer to $25 per hour to the employer before adding workman’s compensation and other insurance add based on payroll.

There are 4 components to the worker ordinance. We need to stop calling it the minimum wage because that is only part of it. It is the worker ordinance.

a) West Hollywood business owners universally accept $19.08 as the minimum wage. This wage is not to be changed or argued, it’s not going away. The few businesses, about a dozen have applied for and received a waiver from the wage. The provisions of the wages are not open for waivers.
The discussion on the worker ordinance does not include lowering the highest in nation minimum wage of $19.08 per hour. Politicians can claim victory. Business owners are digesting this increase.

b) The one component that creates the hurdle for business owners is the PTO. The paid time off has no conditions. In the rest of the world you get a week paid after a year of work. Paid time off or sick pay for hourly workers is not “a thing” in the rest state or country. This link says it all. In West Hollywood we have employees asking to use vacation or sick days after a month of working. Employers are chasing accruals and replacement staff and are burdened with paperwork and work force limitations.

The paid time off as mandated calls for 80 hours per year for full time employees and up to 96 hours sick time. This cost is about $4,000 per head for the minimum wage worker and goes up exponentially. An employee making $75,000 will cost the employer $10,000. An employee making the an income of $130,000 would cost that employer almost $20,000 per head. There are no rules. They put a union proposal on the free market employers. OWN Network left the city, Paramount decided against moving into the Lot, and the law as written is not equitable to the employer. Saban Free Clinic opted to forego free money grants rather than be tied to this item.

Solution 1: However paid time off is adopted it should be earned after the first year of employment. A person who works 6 weeks should not be receiving accrued vacation time. Many employees are transient too, gig workers, and one employee dancing around can cause more than one employer time and cost to follow.

Solution 2: Keep West Hollywood competitive with our neighbors and follow the state rules.

In addition, not all workers are union workers who get the schedules handed to them. Many small businesses and many of our local business allow employees to select their own shifts online. In these cases an employee can just select a bunch of shifts and then cancel to collect sick days. Technology that works for the employees to give them flexibility are hampered by mandatory paid sick days for hourly workers.

c) Hospitality tip credit – the ordinance does not allow the employer to count tips as wages, yet the employer has to pay the credit card fees and the taxes on those tips. West Hollywood carved out a ‘living wage ordinance’ for city contractors, and then a ‘hotel worker ordinance’ for hotel workers, but it refuses to discuss a ‘hospitality wage ordinance’ for our city’s largest industry. A restaurant in West Hollywood is forced to absorb $5 or more per hour for their servers than Beverly Hills. That’s why you’re seeing surcharges on tabs at West Hollywood restaurants that do not appear in Beverly Hills, or Los Angeles.

Solution: Let’s compromise, carve out a tip credit for hospitality workers and do not allow surcharges on restaurant receipts. Everybody wins. Employees will get all their tips and not have to explain surcharges. Residents who dine locally, and tourists who come from all over will not have to see these surcharges on the receipts. We can reduce local inflation. There is a cost to our reputation that is intangible, we must address this.

d) CPI increase – the ordinance does something that has never been mandated by any municipality anywhere. The ordinance forces annual increases to the minimum wage. This is not ‘a thing’ anywhere in the world. It is a thing for for federal employees, and union workers who are not individually rewarded. The problems we have will get worse if they continue to push the minimum wage higher every single year. Businesses need stability. The community needs a break to digest the increases already implemented as well as other economic realities. It’s real important that we can agree to postpone increases to the minimum wage until 2025 so that businesses get a chance to digest and absorb the new market conditions.

These are the pillars of discussion we need to address and find common ground. If we do not address these issues you will see more anger and frustration from business owners faced with the decision to close or renew their leases.

Any single council member can place an item on the agenda. Sepi ran on a platform to help small business. Chelsea speaks of her family as ‘small business owners’ Keeping West Hollywood competitive keeps our businesses healthy. We can’t afford more vacant storefronts. Our city is at stake. Let’s fine tune the ordinance and keep the highest minimum wage in the nation and address the other components that need to be fine tuned. We can do this. Let’s do it together.

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[…] my urges to paint a picture outweigh the message. And I failed in “Critical State of Business Part 3,” link, to put the solutions over the […]

Joan Henehan
Joan Henehan
9 months ago

It is evident that businesses in West Hollywood will be forced by economic reality to take their business locations elsewhere in order to survive. The list of casualties here is only a beginning.

Joshua88
Joshua88
9 months ago

“You are posting comments too quickly. Please slow down.”

This is now preventing me from editing my work.

Joshua88
Joshua88
9 months ago

Today, inflation has robbed the benefits of even $15/hr.
If the minimum wage did rise in step with productivity growth since 1968 it would be almost $21.50 an hour. This is from $7.50.
Federal minimum wages haven’t increased since 2009.

There’s a plethora of data out there.
Workers UNITE!!!!!

Joan Henehan
Joan Henehan
9 months ago
Reply to  Joshua88

Blood from a stone? Small business operates under an entirely different set of economic realities from multinational corporations.

Joshua88
Joshua88
8 months ago
Reply to  Joan Henehan

Seems only restaurants are predominantly complaining, but every week new businesses (including restaurants) are opening, have opened, or will open.

Please explain.

Joshua88
Joshua88
8 months ago
Reply to  Larry Block

Judging everybody else?

Just another
Just another
9 months ago

Thank you for working toward the betterment of capital’s profit.
The Soviet Republic of West Hollywood has always spent too much attention on people. Like disabled folks. Or women. And Russians. Or old people. And gays (lord they do go on about the gays).
Your paper is the one standing up for the white business establishment when the council is helpinng the blacks and the transgenders, neither of which help make money.
Money, profit, not people.
You have it right.

Joshua88
Joshua88
9 months ago
Reply to  Just another

Ha-ha or boo?

voter
voter
9 months ago

We need to cut taxes and lower the minimum wage.

Michael Cautillo
9 months ago

This is the number one issue decimating our City and the West Hollywood economy. The Council needs to reverse itself immediately for the benefit of our residents and all our businesses. This is insanity.

JF1
JF1
9 months ago

Economy & Public Safety.

Steve Davis
Steve Davis
9 months ago

How can our City Council reverse course and save face? They will never admit their mistake, but is there a way out of this mess?

WehoQueen
WehoQueen
9 months ago
Reply to  Steve Davis

The way out of the mess is people have to decide overpaid uneducated bed-makers, who live outside of Weho, shouldn’t control our elections. People have to recognize Rent Control (the only thing that matters to the hardcore voters) will still be here, even if we pay our bed-makers the State minimum wage (which I personally think is also already too high). So people have to understand it’s not necessary to vote for the wackos, and they can still get their Rent Control paradise. And maybe more businesses can stay open. There’s your solution, but the damage has been done, and… Read more »

greeneyedguy
greeneyedguy
9 months ago
Reply to  WehoQueen

Why don’t you go on the record and say all of this at a city council meeting? Put a face out there so we can see who is spewing this disgusting rhetoric.

comment
comment
9 months ago
Reply to  greeneyedguy

wehoqueen is a mean troll

oneyedguy
oneyedguy
9 months ago
Reply to  comment

but often correct

voter
voter
9 months ago
Reply to  oneyedguy

I agree. WehoQueen is often correct. A heroic voice for our community.

greeneyedguy
greeneyedguy
9 months ago
Reply to  voter

You’ve got jokes. No one takes WehoQueen seriously lol

Kevin
Kevin
9 months ago

Larry, I don’t think you are naive enough to think politicians in weho or anywhere are not beholden to the special interest groups, financial supporters and organizations that get them elected. That being said, you and other business owners in weho need to step up and proactively find, endorse and financially support candidates who support your and other business owners agenda, many of which are valid. Set up a PAC. The current city council was NOT appointed, but elected by receiving more votes than other candidates.

WehoQueen
WehoQueen
9 months ago
Reply to  Larry Block

And it’s sad that I doubt any of the bed-makers in that Union actually live in Weho. And they are helping put our hotels out of business. So when you vote for the 3 Marxists, you are voting to help workers who live elsewhere, which destroys our City and economy at the same time. But it fits the narrative of the class struggle Sepi, Chelsea, Erickson want of the evil employers and the poor little uneducated bed-makers earning just $19.08 per hour. Do not act surprised when those three are reelected, as the voters of Weho vote for who is… Read more »

Just another
Just another
9 months ago
Reply to  WehoQueen

You doubt that Eastside WeHoans can read?
That sure says a bundle about you and your ability to think.

Just another
Just another
9 months ago
Reply to  Larry Block

Those darned unions. We should abolish them. Use indentures for employees. Keep the laborers in shacks without running water in camps.
West Hollywood was, once upon a time, a capitalists’ wonderland. As center of the Pacific Balloon Route, it held massive capitaal interests in the town of Sherman where the white managers and small business owners held ALL the housing.
The Mexican laborers slept out in the car yard under the trains.
We should return West Hollywood to its roots of about 100 years ago.
White capital rules!

Joshua88
Joshua88
9 months ago
Reply to  Just another

Yah! Cute responses!

Joshua88
Joshua88
8 months ago
Reply to  Larry Block

After reading this rag almost daily, “shattered” seems to be an exaggeration.

JF1
JF1
9 months ago

👏👏👏👍👍👍 Larry, run for office! We need competent people on the council!

voter
voter
9 months ago

Block 2024 , we need some of this on the dais.

Downhill spiral
Downhill spiral
9 months ago

It’s clear that This council is bad for businesses and good for maids, well not sure they are laid off too

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