In Santa Monica, business owners say wage hike would add to hardships

As Santa Monica considers following L.A.'s example and raising its minimum wage to $15 an hour over the next five years, it's hearing from business owners, some of whom said it's already too hard to run a company there.

"My biggest worry is that the city of Santa Monica will go out of its way to one-up Los Angeles because it's viewed as a progressive and liberal city," said Hunter Hall, the Director of Operations for CBB Restaurant Group, which owns Finn McCool's and Lula Cocina on Main Street. "It's no secret to the business community within Santa Monica that simple things like getting permits is a herculean task."

Hall said a restaurant he hoped to open on Lincoln Boulevard last December was still under construction because of permitting delays.  He said the minimum wage hike would certainly cost his restaurants more but the issues attached to it like paid sick leave would further complicate operating in Santa Monica.  

"I really want all of our employees to make a good living," Hall said. "I'm simply advocating the government provide an environment where I can do that on my own terms rather than mandating it." 

He was one of about 30 business owners who attended a town hall meeting Wednesday put on by the city at the Santa Monica public library. (They'll hold another meeting for businesses next week.)

"Even without a proposed law, Santa Monica's low-wage employers will start to pay higher wages to keep their best workers from switching to jobs in L.A.," Michael Reich, director of UC-Berkeley's Institute of Labor and Employment, told the crowd. 

Reich was hired by L.A.'s City Council to study the issue in advance of the city's own wage hike and anticipated mostly positive effects. He fielded questions about the economic implications of both raising the wage and leaving it the same.

Santa Monica City staff took notes and will report report back to the city council before any vote takes place.

The Santa Monica business owners present worried a rising minimum wage would add to the city's already tough business climate.

Jerry Rosenstein, president of Pioneer Magnetics, explained that including benefits, many of his lower-wage workers already earn $16 per hour.  

His company manufactures power supply components and once employed more than 600 people in Santa Monica.  To stay competitive, he said he had to slash his workforce to about 125 employees locally and 300 in off-shore facilities in Mexico and China.  

Factoring in business costs and overhead in Santa Monica, Rosenstein estimated he's currently spending $45 per hour per employee.  In Mexico, the rate is $6-12 per hour, he said — and in China, it's $5.  

The biggest reason: rent. He pays roughly $400 per square foot, compared to potentially $150 in nearby communities, he said - though he did acknowledge it's easier to attract talent to Santa Monica. 

"As the minimum wage goes up — which we support — it's going to force us to consider whether or not we want to stay in Santa Monica," Rosenstein said.