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Hotel Group's Study Says Living Wage Would Hurt

September 08, 2000

SANTA MONICA — A business-sponsored study released Thursday suggests that Santa Monica's so-called living wage proposal would drive property values down, force hundreds of layoffs and drive away new business.

At a meeting Thursday morning, UCLA law professor Richard H. Sander detailed the findings of a five-month study that a group of hotels paid him and three other professors $55,000 to conduct.

The report suggests that a minimum wage under consideration for businesses in Santa Monica's tourist-heavy coastal area would force layoffs of about 1,000 workers and the closure of one large department store and several restaurants.

If businesses are forced to pay higher wages, profits will drop, businesses will leave Santa Monica and "land values will fall dramatically," Sander said.

Instead of a minimum wage, the study recommended that the city match federal subsidies, known as earned income tax credits, for about 7,000 low-wage workers in Santa Monica.

The city commissioned a similar study, released last week, by University of Massachusetts economics professor Robert Pollin. Those findings suggest that area businesses could afford to pay a higher wage to workers who live at or below the poverty line.

The City Council late last year voted to study the wage proposal suggested by a group of union organizers, clergy and residents known as Santa Monicans Allied for a Responsible Tourism. The proposal calls for an increase to $10.69 an hour of the minimum wage paid to most workers in the tourist-heavy areas along the coast. The state minimum wage is $5.75 an hour.

In response, hotels championed a successful campaign to place Proposition KK on the November ballot. If passed, the measure will prohibit the city from enacting such a law and require an increase in wages for some city-contracted workers.

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