Category Archives: City of Los Angeles

Business, City of Los Angeles, Employment, Hollywood, Hollywood Chamber

Potential Loss of Jobs Is NOT a Myth!

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At a debate held last week by the candidates for L.A. County Supervisor, it was reported in the L.A. Times that they both agreed that it is a “myth” that a minimum wage hike would lead to job losses. Well … I think it is time to dispel that “myth”.

The Mayor’s proposal would raise the minimum wage in 2015 from the recent State-imposed rate of $9 to $10.25. In 2016, it would be raised to $11.75 and in 2017 it would go to $13.25. Thereafter it would be tied to cost of living and be adjusted annually.

The proposed hike when fully implemented amounts to a 65 percent increase in the minimum wage. However, when you add in payroll tax increases, workers comp increases and unemployment tax increases, one business told me that they had computed that the effective increase is 88 percent. On top of that, it puts wage pressure on all of the other positions at a business, who will be dissatisfied that their salaries are not also being raised.

The one thing that so many public officials do not seem to realize is that a business must operate at a profit. Many businesses are just barely making it. With tight operating margins, they are fearful of what hikes in the minimum wage will do to their bottom line.

George Abou-Daoud, one of our most energetic entrepreneurs who owns several restaurants in the Hollywood area, told us that when the minimum wage increased from $8 to $9 on July 1st, he had no choice but to close two of his Hollywood restaurants – Mercantile and Township. These restaurants were operating on a tight margin and the hike pushed them over the precipice. Now, 40 former employees are out of a job.

George tells me that he is willing to meet with any politician and show them his books on these closed restaurants so that they can get a better understanding of what it takes to operate a business. He encourages our public officials to speak with businesses like his to get the facts rather than the economists at Berkeley. He supports measures for wage increases, but only if other taxes and fees that would rise are fixed.

The Hollywood Chamber understands the reasoning behind the Mayor’s proposal. We agree that no one working full time should be living in poverty. However, any increase in the minimum wage must be tailored to minimize the impacts on small businesses. Here are the points that our board of directors approved last week as mandatory to earn the Chamber’s support of a hike in the minimum wage:

First, it is essential that the minimum wage increase be phased in over a longer period of time at smaller increments. Perhaps there could be two schedules – one for businesses with more than 500 employees and another for those with less than that.

Second, the business community wants to see immediate and comprehensive reform of the L.A. Business Tax. The City of L.A. currently has the highest business tax in the County – a whopping 9.5-times the average for the other 87 cities. We are never going to be able to address the job growth issue in this City until the Council addresses this onerous tax.

Third, the City needs to abandon its efforts to impose a minimum wage of $15.37 on hotels. It makes no sense to single out an industry like this. There is NO reasonable justification for doing this to our hotels. It places an unreasonable burden on existing hotels and will prove to be very damaging to the effort to attract new hotels to this City.

Fourth, the City needs to actively work (and not just give lip service) to get the State to change its requirement that tipped wage earners also receive the same minimum wage as other employees. California is only one of seven states that have this ridiculous condition. In addition, current State law requires that employers pay taxes on all the tips their employees receive, although it is not income to the establishment. Tipped wage earners already earn significantly more than the minimum wage. By removing this requirement, it makes it easier for businesses to help those truly in need.

Fifth, there needs to be a carve-out for non-profit organizations, who will not be able to perform their work in the community if the minimum wage hike goes into effect.

These steps will not completely offset the pain to businesses from the proposed hikes, but they will certainly help.

As discussions go forward on the proposals, we hope to address what is the real myth being circulated – that you can take $1.8-billion out of the pockets of small businesses and have no adverse impact on jobs!

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 22 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

Business, California, City of Los Angeles, Employment, Hollywood, Hollywood Chamber

Labor Day Should be About Creating Jobs

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In my view, when we celebrate Labor Day it should be about creating jobs to provide opportunity for our citizens. When an economy is strong and when there are jobs, then there is plenty of room for upward mobility.

This past Labor Day, Mayor Eric Garcetti unveiled a proposal to hike the minimum wage in three increments to $13.25 an hour by 2017 and to index it to inflation thereafter. That would be a $10.25 minimum wage in 2015, $11.75 in 2016 and $13.25 in 2017. As this proposal moves forward, it may provide an opportunity to have a healthy discussion not only about the minimum wage but jobs as well.

I think most people would agree that there is a need to adjust the minimum wage. However, the State of California just raised the minimum from $8 to $9 an hour on July 1st. So the question we need to discuss is how much of an additional increase is warranted? When you add the City’s proposed increases to the State’s, it adds up to a whopping 66 percent increase in only three years. That is a substantial amount for many small businesses to absorb.

The City commissioned a study of the proposed hike from the Institute for Research on Labor and Employment at UC Berkeley. They estimate that in the first full year of implementation, workers will earn an additional $1.8-billion. What they fail to say is that this $1.8-billion is coming from the pockets of small businesses.

The study says that about half of all affected workers will be in four industries: restaurants (17.4%), retail trade (13.9%), health services (11.7%), and administrative and waste management services (9.5%). Restaurants, the most-impacted industry, are expected to see total payroll costs rise by 14 percent, but when you add in all operating costs, the study claims it is “only” a 4.7-percent increase in operating costs. They expect restaurants will raise their prices by only about 4.1-percent to recover the additional cost. They note that they “cannot rule out the possibility that the restaurant industry might experience small reductions in growth.”

It seems to me that these consultants are spinning this as a “no pain” wage hike that is going to add money to the pockets of those most in need, and have virtually no impact on businesses. In fact, they say businesses are going to benefit because they are going to see “improved worker performance and reduced turnover.”

If only things were so simple. What the researchers fail to consider is the narrow profit margin within which many businesses operate.

The Daily News ran an editorial yesterday calling for a “full, public debate” not just about the proposed minimum wage, but also “a wide-ranging discussion of what the city can do to lift both workers and employers.” Certainly, if the City took action to do away with the Gross Receipts Tax, then the business community would be more open to the idea of a hike in the minimum wage. Also, the separate proposal to raise the hotel minimum wage to $15.37 should be dropped, with the hotels treated the same as other businesses.

The Chamber’s Legislative Action Committee is scheduled to be briefed by the Mayor’s Office on Thursday, September 11, at 4:30 p.m. at the Chamber. We invite any members with interest to attend. We expect the committee to make a recommendation to the Chamber board for a position.

In the end, it should be all about creating jobs to help those on the lowest rungs to advance. Simply taking $1.8-billion from the pockets of small businesses does not help them to create more jobs! Let’s work together to not only improve workers’ lives but also to improve the business climate.

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 22 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

Business, City of Los Angeles, Community, Economic Development, Employment, Hollywood, Hollywood Chamber

The Bullseye Is On Target

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Over the past year, I have heard from numerous Hollywood residents and business owners who are excited about the new Hollywood Target, under construction at the intersection of Sunset and Western. I did not hear them complaining about the height of the project. They were looking forward to being able to shop close to home.

Now, thanks to the efforts of a handful of naysayers, construction may stop on this important community center, that was scheduled for opening March 2015. If the opponents get their way, 75 construction workers will be laid off and another 200 permanent jobs will be on hold.

And what is their objection? – Target’s 74-ft. height. Never mind that the Walgreen’s center on the opposite corner is almost as high. The opponents were able to prevail with a judge because of an antiquated zoning code known as the Station Neighborhood Area Plan (SNAP) that was adopted in 2001. This ill-conceived specific plan, which was adopted with very little community input, was supposed to improve the neighborhood adjacent to the new subway stations. Its objective was to stimulate development, but in actuality has prevented almost anything from happening. That is why, across the street from the Hollywood & Western subway station, a single-story retail center is being built rather than a more intensive use – because the developer did not wish to deal with SNAP. I have heard the same story over and over again from numerous property owners.

Because SNAP only allows the extra height for mixed-use projects (residential and retail), the Walgreen’s center was allowed. However, because it was strictly a retail center, Target’s height is limited to 35 ft. Now that people can actually see how the Target impacts the skyline, I think most people’s reaction is going to be “what is the big deal?” It fits fine at that intersection, and is a significant improvement from the run-down retail center that previously occupied the site. It is surrounded by commercial buildings. None of the neighboring businesses objected to the height.

Perhaps the best we can hope to salvage from this sad situation is if it provides the impetus for the City Council to finally amend SNAP to remove the provisions that have harmed that neighborhood. I say: Let’s get on with it, so that construction can be completed on the Target!

If you agree, please send our Hollywood-area council representatives an email at: [email protected]; [email protected]; [email protected]. In this situation, it is all about jobs, and shopping opportunities, and an improved quality of life for Hollywood.

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 22 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

Business, City of Los Angeles, Community, Economic Development, Employment, Hollywood, Hollywood Chamber

Assessing the Fault

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Over the past year, there has been a great deal of debate about the Hollywood fault.  A lot of heated rhetoric came from opponents to the Millennium Hollywood project, who seized on the fault issue to try and stop the development.  Now, finally, we are beginning to see a little clarity on this issue.  We may not know exactly where the fault is, but we do know where it isn’t.

In a press release issued last week, Millennium Partners and Argent Ventures announced the results of the “most extensive urban fault investigation ever undertaken in California” that “conclusively found no evidence of an earthquake fault on their property.”

The study was conducted by Group Delta, a geological and geotechnical engineering consulting firm that they and three other property owners hired.  The firm found no active fault traces on any of the four properties.

Then, on Thursday, at a public hearing held in Sacramento by the State Mining and Geology Board (SMGB), the executive officer of the board, Steve Testa, reviewed the data, said that he had made direct geologic observations of the fault trench walls and had studied the preliminary data that had been generated.  He concluded with this statement:  “Should the conclusions set forth prove definitive, such results would be cause for modification of the earthquake fault zone map within the subject area.”

The SMGB board voted to adopt his recommendations and forwarded those, along with 200 pages of testimony to State Geologist John Parrish, who has the final say on how the Hollywood Fault Zone map will be drawn.  He has 90 days to make his decision – until November 14th.

The detailed documentation for the conclusions drawn by Group Delta will be completed and submitted by the end of August to Mr. Parrish.  We trust he will wait for that data and study it, as recommended by the SMGB, before issuing his final map.

If the data holds up, as the SMGB executive officer believes it will, then these four properties should be removed from the map, so that they can move forward with their development plans, which will create hundreds of needed jobs here in Hollywood.

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 22 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

Business, California, City of Los Angeles, Community, Economic Development, Employment, Hollywood

NeueHouse Brings Jobs to Hollywood

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It was very good news for Hollywood on a number of fronts when we heard a week ago that Kilroy Realty had signed NeueHouse to a 93,000-sq.ft., 15-year lease at Columbia Square, now under construction.

It was a demonstration that there is indeed strong interest in the Hollywood office market. This bears out the faith that Kilroy Realty, Hudson Pacific, and J.H. Snyder have shown by making significant investments in Hollywood’s office sector. There hasn’t been a speculative office building erected in Hollywood in 30 years, so with more than 700,000-sq.ft. of spec space under construction, these firms are helping to shape the future of Hollywood.

NeueHouse is a New York operator of avant garde communal office space. They intend to take the incubator-office concept a step further by designing an environment where strangers can work independently or come together serendipitously. They will cater to people in the creative arts such as film, design, publishing, the performing arts and technology. They arrive on the heels of WeWork, another communal office space provider, which successfully launched in Hollywood a couple of years ago. Although WeWork has a slightly different niche than NeueHouse, it has demonstrated the potential that Hollywood has to serve this young, creative market.

I am sure that one of the things that NeueHouse found attractive was the thousands of young Millennials who have moved to Hollywood in the last 10 years. Over the past decade, 2,800 housing units have been built in central Hollywood. With another 1,600 under construction today, we are adding a solid base of young, educated and talented residents who will help to fill the new office buildings in Hollywood. Unlike previous generations, a significant portion of Millennials do not wish to commute from the suburbs and would rather locate in a central, high energy urban environment. Hollywood fits the bill. John Kilroy, Jr., the chairman of the board of Kilroy Realty, told us at our recent annual Economic Development Summit that 77-percent of Millennials plan to live in urban centers, which is why his firm has invested in Hollywood.

This synergy between a talented pool of young workers and quality office space built specifically to meet the needs of the Millennial generation should work well for Hollywood’s future.

NeueHouse is the first of many new firms that we anticipate will set up shop in Hollywood. We look forward to welcoming them to Hollywood, because, when it comes to building a strong community, it is all about jobs.

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 22 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

Business, City of Los Angeles, Community, Economic Development, Employment, Hollywood, Hollywood Chamber

It Is All About Jobs

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Welcome to my new blog about jobs in Los Angeles. One of the major missions of the Hollywood Chamber of Commerce is to create a strong economy – and for years we have trekked to Sacramento, testified at hundreds of City Hall hearings, worked to attract and retain companies in Hollywood, and organized events to promote this community. If you boiled it all down to one word – it is “jobs” that we are seeking.

I came to the Hollywood Chamber in 1992, shortly after the civil unrest that shocked our region. One of the first events I attended here was the reopening of Hollywood’s Sears Store on Santa Monica Blvd., that had been severely damaged during the rioting. It is interesting to note that Sears had reached out and hired gang members to help make repairs. After I was introduced at the celebration, several of them came up to me with an appeal, which I recall very clearly. They said, “Mr. Chamber of Commerce President, all we want are jobs.”

When you think of it, there is nothing that could help more to resolve civil problems than providing people with a livelihood, where they can hold their heads high, earn a living, and feel that they are making a contribution.

And so it was alarming earlier this year to learn that the City of Los Angeles has one of the worst records in job creation in the nation. Since 1990, Los Angeles has lost 3.1 percent of its employment base. That is worse than Cleveland (-0.2%) and Detroit (-2.8%). It is hard to believe that we have fewer jobs in this city today than we had 25 years ago, but that is exactly the case. By comparison, job growth over the same period exceeded 50 percent in Phoenix, Orlando, Las Vegas, San Antonio, Houston and Dallas.

Now it should be noted that these figures are for the City of Los Angeles. Job growth is occurring in Southern California – just not in our City. You would think that this report, which was issued by the UCLA Anderson School of Management, would have jolted the City into action. But that has not been the case.

It seems that we are hit weekly with decisions that are made at the local or state levels that impact the creation or retention of jobs. I will offer you my assessment on whether these decisions will help us on the job front or if they will lead to a loss of jobs. When our public officials make good decisions, I will certainly recognize and commend them. Likewise, I will point out how potential decisions may have consequences on the jobs front and why our representatives should consider that possibility when they vote.

I also welcome your feedback, suggestions and input about how potential decisions might impact your ability to do business, because when it comes to creating a strong economy in Los Angeles, it is all about jobs!

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 22 years.  His tenure since 1992 continues to oversee the great comeback of Hollywood. Gubler is also the face of the Chamber at the famous Hollywood Walk of Fame ceremonies, promoting both the Chamber and Hollywood to the world.