Battle over living wage skirted

Even as the City Council unanimously rescinded a law Wednesday extending the so-called living wage ordinance to workers at Los Angeles International Airport-area hotels, council members ordered new legislation that would leave the door open to further expansions of the ordinance.

Both actions were part of a loosely worded two-page agreement negotiated late Tuesday with the mayor, council, labor leaders and two top officials of the Los Angeles Area Chamber of Commerce.

The deal -- by preventing a business-led referendum on the living wage ordinance from going to the ballot -- was hailed at a morning news conference as a grand compromise that would spare the city a costly and divisive election battle.

But the exact details of the new legislation have yet to be drafted, much less negotiated. “This is a work in progress,” said David Fleming, chairman of the Los Angeles Area Chamber of Commerce.

An examination of the eight-point agreement, as well as interviews with a dozen participants in the negotiations, suggests that Los Angeles’ powerful labor movement has positioned itself to gain significantly when the new legislation is negotiated.

In the near term, labor gives up little. The new legislation, like the repealed law, would extend the living wage to all workers in the same dozen hotels near LAX. The increase would be phased in -- first a boost to $9.50 an hour on passage of the legislation, then a bump to $10.64 an hour July 1. Even if the original law had survived the referendum attempt, workers would not have received a raise until May at the earliest.

Councilman Greig Smith, a critic of the living wage extension, chided his colleagues for “the bait and switch of the decade” in rescinding one law while replacing it with something he saw as similar. “It gives us the same thing that you gave us with the first ordinance,” he complained.

The new legislation would create an “airport hospitality enhancement zone” that would make the hotels eligible for a variety of public incentives for infrastructure, marketing and neighborhood beautification. By tying the living wage to a zone whose businesses receive public benefits, the city could put the provision on a firmer legal footing.

But it is the fine print of the agreement that could have its greatest effect on the economy of the city. In essence, the legislation would establish a new system for considering expansion of the living wage, with the council having to study the economic effect under an elaborate process that would involve at least two economists, one selected by the chamber of commerce and one by the Los Angeles County Federation of Labor.

Such a study might represent a considerable obstacle to expanding the living wage, but that would seem to fall short of what business demanded: a “quarantine” of the pay requirement to the airport hotels.

“This is a big victory for the labor movement and its allies,” said Peter Dreier, an Occidental College professor who is close to many of Los Angeles’ union leaders. “Rather than shut the door on expanding living wage laws, it opens the door further.”

Despite all the pieces of the deal, the direct, immediate effect on workers’ wages may be less dramatic than hotels fear and living wage supporters promise. Many of the approximately 3,500 people who work at the airport-area hotels already take home a living wage: about half, according to the labor movement, and closer to 90%, according to the hotels.

There is such uncertainty about the practical meaning of the living wage that the deal mandates an extensive city study of its effect on workers, hotels and customers after one year.

For the hotels, the deal appeared to offer a victory at the same time it deepened their isolation from the city government. Harvey Englander, the lobbyist who speaks for the hotels, said the proposed referendum had accomplished its goal: “We are extremely pleased and proud that the ordinance was rescinded by the City Council.”

But he also said many provisions of the deal were unsatisfactory. Hotel representatives, after spending three weeks in talks with the city, were not part of the final negotiations.

After five hours of meetings that involved hotel representatives on Sunday in the mayor’s office, the hotels appeared to have agreed to drop their central demand: the exemption of workers who rely primarily on tips for their income from the living wage requirement. Labor and city officials said such a “two-tiered” pay structure might be illegal. But on Monday, after learning that Unite Here had negotiated union contracts that accounted for differences with “tipped” employees, the hotels renewed their demand.

A conference call was slated for 7:45 a.m. Tuesday to try to reconcile the differences. “I come in and yowl a bit at everybody and put on a little pressure,” Villaraigosa said in describing his method. But when he saw a participant list for the call that included hotel managers instead of hotel owners and chief executives, he refused to get on the call, saying there weren’t enough “decision makers.”

Instead, his counsel, Thomas Saenz, participated in the call and told the hotel officials that there would be no exemption for tipped employees. “The city’s elected leadership,” he said, would not accept a two-tiered structure. That call marked the end of the hotels’ direct involvement in the negotiations.

And even as they celebrated the rescinding of the original law, hotel officials talked privately about blowing the deal up. A lawsuit is possible, several sources said.

Hotels could argue that the council, by repealing one law and replacing it with similar legislation, was not changing its mind but instead was merely trying to avoid the referendum on the original law. Election lawyers say citizens who signed the referendum petition might have grounds to sue.

On Wednesday, hotel workers filled the mayor’s office and loudly applauded during the news conference, though they understood the uncertainty.

Jose Lozano, a 62-year-old banquet server at the LAX Hilton, makes minimum wage plus about $6 to $8 an hour from service charges, not enough to buy a house and send for his wife, who lives in Peru. While calling the new legislation “fantastic,” he said he doubted that even an increase to the living wage would be enough to bring them back together.

joe.mathews@latimes.com

duke.helfand@latimes.com

Times staff writer Steve Hymon contributed to this report.

*

(BEGIN TEXT OF INFOBOX)

Elements of planned law

Under an agreement announced Wednesday, the Los Angeles City Council rescinded an extension of the city’s so-called living wage law that would have covered workers at a dozen airport-area hotels. The action came on the day the council had to decide whether to rescind the ordinance or place on the May ballot a referendum sponsored by the city’s business community aimed at repealing the law. The council then agreed to draft a new ordinance that would phase in a living wage for the hotel workers while also including provisions to aid the hotels and ease business leaders’ concerns. Here are key points of the planned ordinance:

* It would create an “airport hospitality enhancement zone” near LAX that would make the hotels eligible for a variety of public incentives, including infrastructure improvements, marketing subsidies, workforce education and training programs.

* It would require hotels in that zone to pay a living wage to workers.

* It would require a phase-in of the living wage, with employees bumped up to $9.50 an hour on passage of the new legislation and up to $10.64 an hour on July 1.

* It would create “new procedural and substantive requirements” for future living wage laws.

* After one year, it would require the city to study and evaluate the effect of the living wage in the airport zone, including its effect on the hotel industry, customers and workers, particularly workers who rely on tips for much of their income.

* After six months, it would require a study of how the living wage affected the availability of health insurance for workers.

* It would provide an exemption from the living wage to employers who allow unionization and sign collective bargaining agreements with their workers.

Source: Los Angeles City Council