“I believe in a ‘living’ wage,” businessman and philanthropist Rick Caruso told The Tidings in a one-on-one interview recently. “Some have attached a number to it of $13 an hour. I’m uncomfortable with that figure. I think the minimum wage should be higher. You know, you’re still sort of tapping around the poverty level even when you’re at $13 an hour. But it’s a help.
“I think companies can afford it,” he said. “I think companies should get involved and debate it and craft it. I’m very sensitive to job creation. I don’t think it’s going to affect job creation. But I think we’ve got an obligation to pay people a wage that they can actually live on and provide for. We do it in my company and we do it voluntarily. And I’m very proud of that.”
The 55-year-old real estate developer of The Grove in the Fairfax District of Los Angeles and The Americana at Brand in Glendale, among a host of other projects, was delving into one of the hottest button issues in the City of Angels right now.
This past Labor Day, at Martin Luther King, Jr. Park in South Los Angeles, Mayor Eric Garcetti unveiled his plan to raise the city’s minimum wage in steps, from the current $9 per hour to $13.25 by 2017. In years after that, to make sure wages wouldn’t fall prey to inflation, increases would be linked to the Consumer Price Index for Urban Wage Earners Workers (CPI-W).
“I’m proposing to responsibly and gradually raise the minimum wage in L.A. to $13.25 because it’s deplorable and bad for our economy to have one million Angelenos stuck in poverty, even when working full-time,” declared the mayor to a coalition of business, labor, community and faith leaders.
In a kind of sidebar action, the Los Angeles City Council on Oct. 1 approved an ordinance raising the minimum wage for thousands of hotel workers to $15.37, with caveats. The hotels had to be big — at least 150 rooms — and they didn’t have to comply until July 1, 2016.
With pay jumps as high as 71 percent for some employees anticipated, more than a few businessmen and their associations were livid. When dire warnings of Southland job losses were totally ignored, the director of the Center for the Study of Los Angeles at Loyola Marymount University, Fernando Guerra, told the Los Angeles Times many were “alienated to a degree that I’ve never seen before.”
Then on Oct. 7, six council members unveiled a minimum wage plan that trumped Mayor Garcetti’s. By 2019, the local lawmakers proposed raising the minimum wage to the hike favored by labor leaders — $15.25.
‘A good start’
Caruso, a major benefactor of the Caruso Catholic Center and Our Savior Parish Church on the campus of USC, his alma mater, said he doesn’t go for the City Council’s plan “at all.”
“I don’t agree with it because I don’t think you pick out a sector and you say, ‘People who work in a big hotel are worth more money than people who work in a retail store,’” he explained. “That doesn’t make any sense. How do you change the value of people depending on the job that they have?”
“I think Mayor Garcetti’s plan is a good start,” he added, however. “I think it needs a bit of tweaking, which I’ve talked to the mayor about, which he agrees with. But it’s a good start, and I think the City Council should adopt it. I think they should debate it and adopt it.”
The billionaire businessman didn’t buy the old saw argument that raising the minimum wage would necessarily drive companies to other cities and states. And he had a ready reply. First and foremost, it should be set by the federal government or, at least, California lawmakers.
“I don’t think this issue is the one that’s going to drive people out of California,” he said. “I think there’s other reasons that will drive people out of California, but I don’t think it’s going to be this issue. And I think there is a fairness test that needs to be applied, and this passes the fairness test.”
What about the other major concern — raising worker’s pay will only increase prices or cut employees?
“Well, I think in some cases that may be true,” he conceded. “My argument to that is, ‘Why don’t we deal with over-regulation that’s driving a lot more costs than minimum wage?’ The amount of regulation in California is excessive. The amount of regulation in the City of Los Angeles is excessive. Getting rid of the regulation that requires some of the most ridiculous things in the world, would reduce overhead and cost and be business friendly. That’s the way I look at it.”
After a moment, the former president of the Los Angeles Police Commission, who came close to running to become L.A’s mayor twice, got more specific.
“I think it’s lazy to make an argument that because you’re going to raise the minimum wage you’re going to lose jobs,” he said. “Why don’t we eliminate the Gross Receipts’ Tax in Los Angeles that is much more of a job killer, absolutely? In the 88 cities in the County of Los Angeles, Los Angeles has the highest taxes. So, of course, somebody’s going to go to Glendale. There’s no Gross Receipts Tax in Glendale.
“And I’ve told this to Mayor Garcetti,” he noted. “‘Why don’t we couple a wage increase with a reduction of the Gross Receipts Tax?’ Then you’re sending a message: ‘We care about the workers, and we also care about creating jobs, and we care about businesses being in Los Angeles.’”
When asked what the mayor’s response was, a small smile creased his face: “You’ll have to ask him.”
Positive response
The mega-developer, who has a reputation for hands-on supervision, surprisingly reported he didn’t get a lot of flak from fellow business moguls for his seemingly iconoclastic views on raising the minimum wage.
“Actually, I’ve had a number of CEOs of Fortune 500 companies call me and thank me for my leadership,” he pointed out. “Honestly. In one day when that article came out in the Wall Street Journal about how I felt, I had three CEOs of national companies call me.
“Cause I think a lot of people believe it, but they’re scared to say it,” he mused. “And you’re particularly scared to say it when you’re a public company and you’re worried about the shareholders getting upset at you.”
Caruso said he believes the pendulum has finally swung in favor of working stiffs getting a real living wage. “I think it’s going to happen; it’s just a question of what’s the amount going to be,” he noted. “I know when the vice president was here recently, people were talking about an even higher minimum wage. So I think it’s headed in the right direction.
“It’s a fairness issue, a justice issue,” he stressed. “I think it’s the right thing to do.”
