West Hollywood will have the nation's highest minimum wage. Business owners are not happy

West Hollywood, CA - June 29: Lucian Tudor, CEO of Global Dining, Inc of CA., is photographed in the main dining room of La Boheme, in West Hollywood, CA, Thursday, June 29, 2023. Tudor has spoken out about the financial stress West Hollywood's increase to the minimum wage, on July 1 to $19.09 has caused his restaurant on Santa Monica Blvd. (Jay L. Clendenin / Los Angeles Times)
Lucian Tudor, in the main dining room of La Boheme in West Hollywood, has spoken out about the stress on his business created by the city's increase of the minimum wage. (Jay L. Clendenin / Los Angeles Times)

Thanks to a bump in his pay last summer, Norberto Ruiz was able to afford a $150 air conditioner to keep his family's two-bedroom home in North Hollywood from feeling like a furnace when temperatures soared.

The Honduran immigrant, who works at a liquor store in West Hollywood, saw his hourly pay jump by $1 to $16. For the first time, the 53-year-old, his wife, two daughters and in-laws could enjoy the simple pleasure of a slightly chilled living room, due chiefly to a small pay raise.

“I don’t think people understand how much an extra dollar or two can change people’s lives,” Ruiz said. “We’ll never be a rich family, but at least we can be happy.”

Ruiz and many low-wage workers will see another increase Saturday, when West Hollywood will officially have the highest minimum wage in the nation: $19.08 an hour. That puts the city of 35,000 people ahead of Seattle, San Francisco and Denver.

The increase comes at a time of rising rent, gas prices and inflation.

Employers facing financial hardships can apply for a one-year delay via a waiver with the city. Still, many small-business owners in West Hollywood are speaking out against the higher wage, saying they are reaching a breaking point and need relief to avoid closing.

"These pay increases are about superficiality and about opportunistic politicians who are just trying to make a name for themselves," said West Hollywood restaurateur Lucian Tudor, a Romanian immigrant. "They don't make any sense for small businesses who were never consulted. If we go out of business, that means workers will lose their jobs too."

Tudor is the chief executive of La Boheme, a French and Japanese upscale restaurant on Santa Monica Boulevard that relied on an expanded outdoor seating area to survive the COVID-19 lockdowns, when many other businesses were forced to close.

But the challenge brought by the pandemic, he said, doesn't compare to his current financial headaches. Tudor said his business lost $100,000 in the first fiscal quarter this year, after the city in January implemented a $1 minimum wage increase for medium to large businesses, bringing it to $17.50 an hour.

He has cut his staff from 120 to 80 over the last 12 months and slashed 1,000 working hours in an attempt to trim expenditures.

Tudor, 36, said his business is "not a failure." La Boheme averages sales of $600,000 a month, according to Tudor, and hosts 400 people for brunch and 400 for dinner on Saturdays, the busiest day.

Instead of an across-the-board raise in minimum wages, he would favor New York City's wage policy. There, food service workers must make $15 an hour, but up to $5 can be made from tips, meaning owners can pay as little as $10 an hour.

Tudor said members of his staff easily clear $400 in tips a night and don't need the same pay increase as hotel workers and others in the city.

Brett Latteri, 44, owner of the Den on Sunset, agrees with Tudor. Latteri said the staff at the bar and restaurant is down to 22 from 30, and the latest increase isn't "just a few thousand dollars."

"You can be laying out hundreds of thousands of dollars a year in extra payroll," Latteri said. "It's not just strictly wages."

The City Council's wage increase in 2021 included a stipulation that restaurants provide a minimum of 12 days of paid personal leave time and 10 additional days of unpaid time, he said.

"Many employees are seasonal workers in this industry and now, whenever they quit, let's say in six months, we're going to have to pay for vacation every year," Latteri said.

Part-time employees are provided leave on a pro-rata basis, according to Laura Biery, economic development director for West Hollywood.

Genevieve Morrill, chief executive of the West Hollywood Chamber of Commerce, said businesses are too easily seen as villains.

"We believe in a living wage for all employees," she said, "but we also need to correct the false narrative of how successful small businesses are doing."

Councilmember John Heilman said the council is not likely to reconsider the wage increase soon but is willing to help small businesses in other ways, such as beefing up security. The city voted in May to fund four new sheriff's positions after cutting funding a year earlier.

Lucian Tudor
Tudor has cut his staff from 120 to 80 over the last 12 months and slashed 1,000 working hours in an attempt to trim expenditures. (Jay L. Clendenin / Los Angeles Times)

Some West Hollywood residents applaud the City Council's action as progressive.

Resident Jorge Zeparak, 52, works at the Beverly Hills Hotel as a daytime room service server. He and thousands of Southern California hotel workers are planning to strike Saturday as their contracts expire.

He said many of his friends who work at hotels in West Hollywood have seen their livelihoods improve over the last few years due to salary increases.

"The minimum wage has been life-changing for workers in our city," texted Zeparak, a native of Peru. "The reality is that hotel companies are making record profits while workers are barely getting by."

Experts differ on what constitutes a living wage. The Economic Policy Institute estimates that an individual needs to make $49,000 a year to live in metropolitan Los Angeles. MIT's living wage calculator lists an average for one childless adult at $21.53 an hour. A recent federal report said workers "earning the federal or prevailing state or local minimum wage" cannot afford a modest two-bedroom rental home at fair market rent anywhere in the United States.

Ellen Scott, a professor of sociology at the University of Oregon, said paying a living wage isn't just an altruistic pursuit. She argued that the vast majority of increased wages are redistributed to the local economy.

"Utilities and rent are being paid in a more timely manner, and clothing that workers couldn't afford for their kids is being purchased," Scott said. "That's also groceries now being purchased, and potentially the occasional luxury of going out with one's family."

L.A. County Supervisor Lindsey Horvath, who served as a West Hollywood councilmember in 2021, said she was delighted by both the wage increase and the paid time off.

"I'm very proud that we are looking for ways to ensure that people's mental and physical well-being is protected in their jobs," she said. "That we are not saying that people have to choose between being able to afford rent and taking time off to care for themselves or a loved one."

Horvath, whose district includes much of the Westside and San Fernando Valley, said she understands that some small businesses are struggling. But she views the policies in West Hollywood as aspirational for other cities.

"That's why you see communities like West Hollywood stepping up and saying, 'We have to do better,'" she said, "not just in our talk, but in the actions and in the laws that we pass, and that was what was intended with this policy."

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This story originally appeared in Los Angeles Times.