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CC - ACTION ITEM: (1) Report on and Discussion of Potential Development of a Culver City Minimum Wage Ordinance (MWO) that is Similar to the City of Los Angeles’ Minimum Wage Ordinance (MWO); (2) Approval of a Professional Service Agreement with Berkeley Economic Advising and Research (BEAR) in an Amount Not-to-Exceed $145,000 for conducting an Economic Impact Study of a Potential Minimum Wage Ordinance and Project Management; (3) If Desired: Approval of a Professional Service Agreement with Berkeley Economic Advising and Research (BEAR) in an Additional Amount Not-to-Exceed $37,000 to Study the Economic Impact of Implementing a Potential Minimum Wage Ordinance (MWO) Similar to the City of Los Angeles’ Minimum Wage Ordinance (MWO); (4) FOUR-FIFTHS VOTE REQUIREMENT: Approval of a Budget Amendment Appropriating an Additional Amount of $37,000 from General Fund Unassigned Fund Balance; and (5) Direction to the City Manager as Deemed Appropriate.
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Meeting Date: October 9, 2023
Contact Person/Dept: Onyx Jones/City Manager’s Office
Phone Number: (310) 253-6023
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Attachments: Yes [X] No []
Commission Action Required: Yes [] No [X]
Public Notification: (E-Mail) Meetings and Agendas - City Council (10/09/2023)
Department Approval: John M. Nachbar, City Manager (10/09/2023)
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RECOMMENDATION
Staff recommends the City Council (1) receive a report on and discuss the potential development of Culver City Minimum Wage Ordinance (MWO) that is similar to the City of Los Angeles’ Minimum Wage Ordinance; (2) approve a professional service agreement with Berkeley Economic Advising and Research (BEAR) in an amount not-to-exceed $145,000 for conducting an economic impact study of a potential minimum wage ordinance and project management; (3) if desired, approve of a professional service agreement with Berkeley Economic Advising and Research (BEAR) in an additional amount not-to-exceed $37,000 to study the economic impact of implementing a potential minimum wage ordinance similar the City of Los Angeles’ minimum wage ordinance; (4) approval of a budget amendment appropriating an additional amount of $37,000 from General Fund unassigned fund balance (requires a four-fifths vote); and (5) provide direction to the City Manager as deemed appropriate.
BACKGROUND
During the City Council meeting on July 10, 2023, Council authorized staff to prepare and issue a request for proposals to conduct an economic impact study of a potential MWO. The report generated from the economic impact study will outline the local effects of increasing the minimum wage in Culver City, including its impacts on the residents, workers, and local businesses. The study will also provide analysis/information that will facilitate discussions at community stakeholder meetings. During the July 10th Council Meeting, there was also a consensus among City Council members to bring back an agenda item to have a discussion to potentially tie a Culver City’s MWO to the City of Los Angeles’ MWO.
DISCUSSION
Review of the City Of Los Angeles’ MWO
The Los Angeles City Council first approved a phased minimum wage increase on June 1, 2016. The minimum wage was targeted to reach $15hr by 2020. As of July 1, 2023, the minimum wage for the City of Los Angeles has increased to $16.78 for all employees covered by the MWO.
In 2015, prior to implementing their MWO, the City of Los Angeles, conducted three economic impact studies to review the financial/economic impacts of the proposed MWO. The studies were designed to research how the financial impacts of providing income gains to lower income workers would affect price increases, impacts on employment, and/or the overall economic growth of the area. They received economic impacts studies from The Institute for Research on Labor and Employment at UC Berkley, UCLA Economic Roundtable, and Beacon Economics. To synthesize the differing recommendations and projections in all three reports, the LA County Board of Supervisors commissioned a peer review analysis of the studies, which was authored by Drs. Tills von Wachter and Jeffrey Wenger.
In preparation of the discussion to develop a Culver City MWO that is tied to the City of Los Angeles’ MWO, staff has prepared a matrix of the various provisions of the City of Los Angeles’ MWO (See Attachment 1 for details).
Below is a summary of the City of Los Angeles’ MWO:
• The City of Los Angeles’ minimum wage rate is increased annually based on the consumer price index for Urban Wage Earners and Clerical Workers (CPI-W) for the Los Angeles Metropolitan area, published by the Bureau of Statistics.
• For the first five years of the MWO small businesses (25 or fewer employees) were able to pay a deferral rate, that was one year behind the minimum wage rate issued for businesses with 26 or more employees.
• Non-profits with 26 or more employees were also allowed to apply for the deferral rate under certain circumstances.
• Limited exemptions are offered for non-profit corporations which have been certified by the city as a transitional employer.
• Employees 14-17 years of age could be paid 85% of the minimum wage during the first 160 hours of employment.
• The City of Los Angeles has a separate MWO for Hotel Workers and Healthcare Workers.
• The City of Los Angeles MWO requires employers to offer employees 48 hours of paid sick leave if employees work 30 days or more within a year.
• The City of Los Angeles' Office of Wage Standards of the Bureau of Contract Administration in the Public Works Division bears the administrative responsibilities of the MWO.
• MWO fines range from $500 - $1,000 and late payment penalties are 10% of the administrative fine.
• The MWO requires that every three years staff commission a study to review the state of the City’s economy and the minimum wage impacts to select industries listed in the ordinance.
• The MWO also requires that economic data, including jobs, earnings and sales tax is collected on an annual basis
Request for Proposal (RFP) Process
The Request for Proposal (RFP) process for selecting a vendor to conduct an economic impact study for a potential Culver City minimum wage ordinance has been completed. The City received one responsive proposal from Berkeley Economic Advising and Research (BEAR). Staff reviewed the proposal and interviewed the vendor.
• 75% of BEAR’s consulting practice consists of public sector analysis and advisory work.
• Since its founding 20 years ago, BEAR has advised 10 California state agencies, as well as county and city governments. Bear has also done work in other states, for the United States Federal government, twelve foreign governments, and a variety of international agencies.
• BEAR uses proprietary, advanced, and innovative tools to produce high-quality data to support evidence-based analysis of agencies’ policies and/or programs.
• Their leading specialty is Standardized Regulatory Impact Assessments (SRIA). The SRIA process involves a comprehensive impact assessment of how the proposed regulatory changes would create new costs and benefits for California residents, businesses, and public institutions. They provide end-to-end client support for the complex SRIA process and have a perfect record of Department of Finance SRIA approvals.
• BEAR has conducted dozens of macroeconomic assessments for local, state, national, cities, and multinational institutions, providing detailed evaluations of a wide range of policies toward environment, industry, fiscal, and trade in over 15 states, federal agencies, and more than 20 countries.
• Recent projects BEAR has completed include:
o Development of County Job Quality Index Framework for Southern California Association of Governments (SCAG)
o Economic Assessment of Diablo Canyon Nuclear Power Plant Closure for California Public Utilities Commission (CPUC)
o Long Term Economic Assessment of the California Consumer Protection Act (CCPA) for California Department of Justice (DOJ)
o Clean Transportation: An Economic Assessment of More Inclusive Vehicle Electrification in California for Next 10 Foundation
o Economic Assessment for California’s Senate Bill 350 for California Independent System Operator (CAISO)
Potential Next Steps
After discussion of the City of Los Angeles’ MWO and review of the qualifications for BEAR, Council could take the following next steps:
1. Give staff direction to bring back a MWO for the City of Culver City similar to the provisions of the City of Los Angeles’ MWO.
2. Give staff direction to bring back a MWO for the City of Culver City that outlines different provisions than the City of Los Angeles’ MWO.
3. Give staff approval to enter into a professional service agreement with Berkeley Economic Advising and Research (BEAR) in an amount not-to-exceed $145,000 for conducting an economic impact study for a potential MWO.
4. Give staff approval to enter into a professional service agreement with Berkeley Economic Advising and Research (BEAR) in an additional amount not-to-exceed $37,000 to study the economic impact of implementing a potential MWO similar to the City of Los Angeles’ MWO.
5. Give staff different direction as deemed appropriate.
FISCAL ANALYSIS
The Adopted Budget for Fiscal Year 2023/2024 includes sufficient funds to cover the economic impact study report and the project management services, with a not-to-exceed amount of $145,000 in Account No. 10114100.619800 (Finance Administration - Other Contractual Services). If Council desires to expand the scope of services to include studying the economic impact of implementing a potential Culver City MWO that is similar to the City of Los Angeles’ MWO, a budget amendment of $37,000 from General Fund unassigned fund balance is required (requires a four-fifths vote).
ATTACHMENTS
1. City of Los Angeles MWO Matrix.
2. Los Angeles Minimum Wage Ordinance, Article 7
3. City of Los Angeles Ordinance 184319
4. City of Los Angeles Inter-Departmental Correspondence, “Policy Elements for a Citywide Minimum Wage”
MOTION
That the City Council:
1. Receive a report and discuss the potential development of a Culver City MWO that is similar to the City of Los Angeles’ MWO;
2. Approve to enter into a professional service agreement with Berkeley Economic Advising and Research (BEAR) in an amount not-to-exceed $145,000 for conducting an economic impact study for a potential MWO and project management;
3. If desired, approve of a professional service agreement with Berkeley Economic Advising and Research (BEAR) in an additional amount not-to-exceed $37,000 to study the economic impact of implementing a potential MWO similar to the City of Los Angeles’ MWO;
4. Approval of a budget amendment appropriating an additional amount of $37,000 from General Fund Unassigned Fund Balance (four-fifths vote requirement); and
5. Provide direction to the City Manager as deemed appropriate.