What to Pay?

JEFFREY KAYE:

With its white sandy beaches, luxury hotels and upscale boutiques, Santa Monica is the ultimate fun-in-the-sun southern California resort. But behind the picture postcard scenes are thousands of low-wage service workers who clean and cook and serve the food and make the beds. Most earn minimum wage, which in California is $6.25 an hour– a dollar more than the federal minimum wage.

But in Santa Monica, as in cities throughout the country, there's been vigorous debate over raising pay from a minimum to a so-called living wage, an income designed to keep full- time workers above the federal poverty level. At her pay of $8.95 an hour, it would take Maria Garcia two and a half days to earn what it costs to stay overnight at the Holiday Inn in Santa Monica, where she works as a maid and housekeeping inspector.

MARCIA GARCIA:

I think little money we make in this hotel, but life is very expensive, but what can we do?

JEFFREY KAYE:

Maria Garcia has worked at the Holiday Inn for 15 years. A native of El Salvador, she says she likes the work and the benefits she receives, such as paid vacation and sick leave, but she has difficulty keeping up with the rising cost of living. She says she can't afford to live in Santa Monica. So Garcia, a single mother, commutes two hours each day from her one-bedroom apartment in Los Angeles. She shares a bed with her mother and seven-year-old daughter. Her 17-year-old son usually sleeps on the living room couch. Maria Garcia is one of America's 30 million working poor, the one quarter of the workforce with such low incomes that they live in poverty, as the federal government defines it. They sometimes can't afford basic necessities, such as housing and food.

SPOKESMAN:

The Department of Labor established, for the first time in history, a decent minimum wage…

JEFFREY KAYE:

It is a problem that new deal legislation of President Franklin Roosevelt was supposed to have prevented. The "Fair Labor Standards Act" of 1938 promised a decent quality of life for workers. The law created a federal minimum wage, which was intended to keep working Americans off the bread lines. But 60 years later, needy families are still receiving free food from charities, such as the St. Joseph Center Pantry, just outside Santa Monica, which regularly serves hundreds of people. Rhonda Meister, the center's executive director, says most of the food recipients work full- time, minimum wage jobs.

RHONDA MEISTER:

They tend to be housekeepers, child and elder care workers, gardeners. The families that we're working with here, they are industrious, entrepreneurial, hardworking people, and food is their number one concern.

JEFFREY KAYE:

Zena Garcia relies on her bag of groceries from the center to help feed her family of four. She works part-time chopping vegetables in a school cafeteria. Her husband works two jobs, earning $8 an hour, without benefits. Despite food stamps, subsidized housing and welfare assistance, the Garcias struggle to make ends meet by juggling household expenses.

ZENA GARCIA:

Last month, I took part of the rent money and paid my light bill, so I had to make up the difference this month, which pretty much put a damper on the situation.

JEFFREY KAYE:

Which meant you couldn't pay something else?

ZENA GARCIA:

Couldn't pay the full bill of my light bill this month. I only paid partial.

JEFFREY KAYE:

So every month you get behind on one thing or another?

ZENA GARCIA:

Um-hmm.

JEFFREY KAYE:

To help people like Zena Garcia, advocates for the working poor have campaigned for living wage laws that peg incomes to the local cost of living. More than 50 local governments across the country, from Baltimore to San Francisco, have passed such laws. In Santa Monica last summer, as the Democratic Party Convention got underway in nearby Los Angeles, protesters demonstrated in support of union contracts for hotel workers and for a local living wage law. A year later, labor groups and their supporters have reason to celebrate. Santa Monica's liberal city council recently passed the most far-reaching living wage ordinance in the country. It will take effect next year.

MADELINE JANIS-APARICIO:

This is a huge victory not just for Santa Monica, but it's also a victory for the living wage movement overall throughout Los Angeles, throughout the country.

JEFFREY KAYE:

While other living wage laws affect only companies with local government contracts, the Santa Monica ordinance will apply more generally to private businesses. Retailers, hotels and restaurants grossing more than $5 million a year will have to pay their employees at least $10.50 an hour, more if the workers don't get health insurance. The law could affect as many as 4,000 workers in the main business district and along the coast. Companies that claim the law will impose a serious financial hardship can request an exemption. Because of the law, some of the staff at the Santa Monica Holiday Inn may be laid off in order to save money, according to hotel general manager Bob Buescher. He campaigned against the living wage law, and says its advocates are intruding on the rights of businesses.

BOB BUESCHER:

What they want, plain and simple, as they told me, is a redistribution of income. That is the social motivating force at work here. And they want government intervention to make sure that happens. I don't think anybody in the hotel business or retail business is philosophically opposed to living wages or raising the standards of those that are less fortunate in our society. But when you narrowly define and target these businesses, that's where I have a problem and I take issue with this.

JEFFREY KAYE:

Buescher says the ordinance will likely cost his hotel $400,000 a year, which is about 20 percent of the profit. Raising rates, he says, isn't an option. Jeff King owns two restaurants in the area covered by the law.

JEFF KING:

Nice, what is it?

JEFFREY KAYE:

He says raising entry-level wages will force up pay throughout an industry that already operates on razor-thin margins.

JEFF KING:

What happens to the hostess that's been making $10 to $11 an hour? You're going to have to raise her. And what happens to the cook that's making $18 to $19 an hour? If you have to give a dishwasher $13 an hour, you're going to have to raise him. It's a suicide pill. You might as well commit hara-kiri.

JEFFREY KAYE:

Even Santa Monica merchants not required to pay higher wages because they're outside the zone are concerned that they, too, will be affected.

SPOKESMAN:

The next and last item is the living wage ordinance. Tom Larmore…

JEFFREY KAYE:

Attorney Tom Larmore with the local chamber of commerce, is leading a campaign to overturn the living wage ordinance at the ballot.

TOM LARMORE:

So it will have a direct impact on many, many businesses. It will have an indirect impact for reasons we talked about before on a lot of the businesses who try to compete in the same labor market for the employees.

WOMAN:

How can this be? This is not constitutional. You can't tell a private business what to pay somebody.

JEFFREY KAYE:

Larmore says the ordinance will hurt Santa Monica businesses in competition with firms in nearby cities that don't have such broad living wage laws.

TOM LARMORE:

The problem is that to try to come into a small town like this and apply it to businesses in this small town, which is surrounded by the City of Los Angeles on three sides, and where the businesses compete with others, puts those businesses at a great disadvantage, discourages people from coming here.

JEFFREY KAYE:

Living wage advocate Madeline Janis-Aparicio disagrees.

MADELINE JANIS-APARICIO:

When we were doing this in Los Angeles, Mayor Riordan and businesses in Los Angeles said the same thing. They came out and they said, "oh, the sky is falling and all the businesses are going to go to Glendale, and you know, no one's going to be able to buy a hamburger at the airport." And you know what, that didn't happen.

JEFFREY KAYE:

Housekeeping inspector Maria Garcia is not sure about the new law. Although she has some concern that her employer might try to save money by cutting her hours, she also welcomes a $3-an-hour raise, which might let her save money to send her children to college.

JEFFREY KAYE:

Do you save any money right now?

MARCIA GARCIA:

No. No. No, I can't.

JEFFREY KAYE:

You can't.

MARCIA GARCIA:

No.

JEFFREY KAYE:

The debate over the working poor is intensifying. 75 communities across the country are now considering living wage ordinances.