ANALYSIS: As Washington City Eyes $15 Wage, a Test Case Unfolds to the South

LONG BEACH, Calif. (The Seattle Times/MCT) - A year ago, Jorge Sanchez was struggling to support his family on $9.75 an hour after a decade as a dishwasher at the Hilton hotel.

So Sanchez, 56, threw his support behind raising the minimum wage to $13 an hour for hotel workers in this port city just south of Los Angeles. A campaign flier featuring Sanchez in his white work uniform urged Latino voters to go to the polls last Nov. 6 and check “Yes” on Measure N.

But the Colombia native soon experienced what he believes was an unintended consequence: The same month he got a $3.25-an-hour bump in pay, Sanchez’s employer cut his workweek from 40 to 30 hours.

“Measure N was good because it raised our wages. But in reality, what the hotel did was cut our hours, so it hasn’t made a change,” he said.

Unlike Sanchez, Hilton bellman Donald Blackwood still works a 40-hour week, and pulls in an extra $800 a month thanks to the city’s “living wage” law.

“Now, I have enough money saved up to buy a car,” he said. “I’m not going to say it’s a lot of money. But you could live on that.”

Next month, people in SeaTac, Wash., will vote on a similar yet broader ballot initiative:

Proposition 1 would lift the minimum wage to $15 an hour for workers at the airport and its nearby hotels, parking lots and car-rental agencies. That’s a 63 percent increase over Washington’s current minimum wage of $9.19 an hour, the highest of any state.

Both the SeaTac and Long Beach measures are part of a stepped-up effort by labor and community activists nationwide to end what they call poverty-wage jobs.

Workers at fast-food chains conducted walkouts and strikes last summer, hoping to boost their hourly pay to $15. California lawmakers agreed last month to raise the state’s minimum wage from $8 to $10 an hour by 2016. And in Seattle, both mayoral candidates are plugging an hourly minimum standard of $15 or more.

Proposition 1 proponents say it would lift low-wage workers out of poverty and give them more money to spend at local businesses, pumping an additional $54 million into the economy. Opponents say it would drive up labor costs and force employers to lay off workers, reducing jobs by 5 percent.

But if Long Beach is any indication, the short-term effects of a living-wage ordinance in SeaTac would be neither as good as supporters hope, nor as bad as critics warn.

Measure N won the backing of 64 percent of Long Beach voters last November, affecting about 2,000 workers at 16 large, nonunionized hotels. Its requirements apply to hotels with 100 or more rooms and can be waived in union contracts.

The Hyatt chain recently began contract negotiations with Unite Here Local 11, making its two Long Beach hotels eligible for exemption. That means there now are four large, unionized hotels in Long Beach.

Two other hotels had a different response: They mothballed rooms to bring them just below Measure N’s 100-room threshold.

At Hotel Current, a 143-room independent property off Pacific Coast Highway, 44 rooms sit empty amid tentative plans to convert them to a fitness center. The 173-room Best Western Golden Sails closed even more rooms.

Hotel Current’s downsizing was in the works before Measure N, but the “anti-business regulations” accelerated its decision, management said in a statement, adding that the ordinance “financially cripples the hotel’s operations.”

Management at nearly all of the other affected hotels, including the Hilton, did not respond to requests for comment.

“They don’t want to say they’re having to lay off people, that sort of thing,” said Randy Gordon, president and CEO of the Long Beach Area Chamber of Commerce.

Gordon, a vocal critic of Measure N, said hotels probably are using cost cuts and price increases to maintain profits. He said he worries that Long Beach no longer will be seen as an affordable business-travel destination.

“How many conventions do we lose because of higher room rates?” he said. “We compete with Anaheim, San Diego and Sacramento. They don’t have a living-wage ordinance like we do.”

But recent data suggest Long Beach hotels are doing about as well as their Los Angeles County rivals, with strong demand and only modest price increases.

Long Beach’s hotel-occupancy rate from January through July was 76.1 percent, up 3.4 percent from the same period in 2012, according to PKF Consulting. Countywide, occupancy ticked up 2.3 percent, to 80.5 percent.

The average daily room rate in Long Beach rose 2.9 percent to $137.01 for the first seven months of 2013, while countywide it increased 4.2 percent to $172.33.

The minimum-wage increase also does not appear to have hurt jobs in Long Beach. The city’s unemployment rate was 11.2 percent in August, down from 12.4 percent a year ago – in line with a countywide drop to 10.2 percent from 11.3 percent. (Sector-specific jobs data for Long Beach is not available, according to the California Employment Development Department.)

Comparing ‘Living Wage’ Proposals:

Long Beach’s Measure N:

  • Description: Created a $13-an-hour minimum wage at nonunionized hotels with 100 or more rooms
  • Who’s affected: About 2,000 workers at 16 large hotels
  • Bottom line: Represented a 63 percent pay raise over California’s minimum wage of $8 an hour

SeaTac’s Proposition 1:

  • Description: Would create a $15-an-hour minimum wage at Seattle-Tacoma International Airport and its nearby hotels, car-rental agencies and parking lots
  • Who’s affected: About 6,300 workers at 72 airport-related businesses, or a quarter of the jobs in SeaTac
  • Bottom line: Represents a 63 percent increase over Washington state’s current minimum wage of $9.19 an hour

 

SOURCE: Seattle Times research