Update: Council Overrides Riordan Veto

The Los Angeles City Council on April 1 voted 11-1 to override Mayor Richard Riordan's veto of a so-called "living wage" law for employees of city contractors. The mayor, in a guest commentary in the February issue of Cal-Tax Digest, warned that the proposal would hurt small business, noting that Congress and California voters had already increased the minimum wage.

Councilwoman Jackie Goldberg said the ordinance, reduced in scope after a UCLA study, "is not where we want to be, but it is certainly not where we were."

The vetoed ordinance had been amended so that it will apply to about 5,000 workers, less than 0.5 percent of the work force. They will receive at least $7.25 an hour with benefits, or $8.50 an hour without benefits, such as health insurance. New York and Baltimore are among other cities that have enacted minimum wage and benefit requirements.

The ordinance requires employers with city contracts of more than $25,000 to pay workers a "livable" wage. Expected to take effect this month, it also applies to companies receiving city financial aid amounting to at least $100,000 a year, or $1 million or more in one-time tax assistance from the city.

The plan was scaled back after a UCLA study said both sides had overstated their cases. It was estimated by city officials that $21.6 million in annual costs when the ordinance is fully implemented would be paid by contractors and consumers.

Mr. Riordan, a venture capitalist Republican, was re-elected to a second term in a landslide victory over Democrat state Senator Tom Hayden on April 8. Mr. Riordan urged Los Angelenos to take advantage of the federal earned income tax credit to increase take-home earnings.

When he vetoed the measure, which had passed 12-0, the mayor said, "I disagree with it, and I believe it will hurt those it intends to help." He said it undermines the goal of supporters because it would damage the city's business climate. Instead, he cited a UCLA study that found the total value of unused earned income credits in Los Angeles is $100 million a year.