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Hollywood Braces for Impact of Higher Minimum Wage

The recent vote by the Los Angeles City Council to boost the city’s minimum wage to $15 per hour by 2020 may not seem like it would have much of an impact the entertainment industry, with its reliance on handsomely paid creative professionals and union presence.

But caterers, prop houses, nurseries and numerous other businesses that support Hollywood productions pay many of their workers minimum wage or close to it, and an increase in their costs for workers would likely get passed along. While wages in Los Angeles would end up higher than in other major production centers like New Orleans, Atlanta and New York, it’s too soon to tell just how hard the proposed hike could hit local production.

More than a few local business leaders, though, let their views be known.

“Costs are going to go up,” says Stuart Waldman, president of the San Fernando Valley-based Valley Industry & Commerce Assn. “It just makes L.A. a little less film friendly, a little more difficult. If someone can get catering for cheaper in Louisiana, do they make that decision to shoot there? ” Julie Jackson of Jackson Shrub Supply, which has provided greenery to the industry for almost 80 years, echoed those sentiments. “We just started getting production to come back to California, and now could face them leaving us yet again, and perhaps permanently this time,” she wrote in an email.

Christopher Thornberg, founding partner of Beacon Economics, which did a study of the minimum wage increase commissioned by the L.A. Area Chamber of Commerce, says merchant flight is a likely concern for the city. A prop house, for instance, could move to a neighboring municipality, like Burbank or Culver City, which has not yet set higher minimum wages. “You end up hurting city competitiveness and city tax revenues,” he says.

Los Angeles City Councilman Paul Krekorian, who voted for the wage hike, and heads an ad hoc committee on movie and TV production jobs, said the increase addresses a level of income inequality that has become “poisonous.” Ever escalating housing costs have put superlatives on L.A.’s standard of living. A UCLA study last year deemed the city the nation’s most unaffordable rental market.

Yet the corrective could be a catch-22: Low-wage workers can’t afford the city’s sky-high rents, but businesses such as theme parks and studio lots could end up possibly trimming support staffs to avoid rising costs. While Krekorian, too, has concerns over the impact of the wage hike, he noted that gains by low-paid workers would filter throughout the city. “That is money that will be spent in the local economy,” said Krekorian, whose district covers parts of the San Fernando Valley. A UC Berkeley study concluded that the cost of the wage increase would be absorbed by most businesses, with consumers perhaps seeing a “small one-time increase in restaurant prices.”

Councilman Mitch O’Farrell, who represents Hollywood, noted that the increase is phased in over a period of five years, a move he championed. Businesses, he said, “will have time to anticipate an increase in costs.” A number of public hearings were held on the minimum wage increase, with comments shared in large part by restaurant owners and employees, he said. Few if any entertainment companies gave their input at the forums, he said.

Ray Bidenost, principal at Chef Robert Motion Picture & Television Catering, which has six dishwashers on the payroll — starting at $10 per hour and going up to $15.50 — says his company will be directly affected by the new law, but believes a wage hike to $15 should have kicked in sooner. “We are going to(feel an) impact, and we are willing to absorb that,” he said, adding simply, “It’s the right thing to do.”

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