Proponents behind a ballot initiative aimed at eliminating the city’s $800 million-plus business tax began actions Tuesday to rescind the proposal after Los Angeles elected officials negotiated a deal between business and labor to phase-in wage increases for certain hotel and airport workers.
The move came after months of behind-the-scenes discussions, according to Mayor Karen Bass, who said she was called on by both sides to close the deal.
“This agreement ensures workers are paid fairly and that businesses that create jobs can continue serving L.A. and hiring Angelenos,” Bass said in a statement prior to a City Council’s vote on the issue. “I want to thank SEIU 721, SEIU USWW and Unite Here Local 11, and the Central City Association. And I want to commend the Council President (Marqueece Harris-Dawson) for his leadership, and Council members (Tim) McOsker, (Katy) Yaroslavsky, and (Hugo) Soto-Martinez for their commitment to these negotiations.”
In a 11-4 vote, the Los Angeles City Council approved amendments to effectuate the proposed changes in the “Olympic Wage” increases for airport and hospitality workers. The draft ordinance is expected to come back to council members for a second and final vote next Tuesday.
“I think we walked away from negotiating tables, like many negotiating tables, where no one was happy about the outcomes, but everybody came away better than we started,” Harris-Dawson said.
Bass and other city officials previously warned that eliminating the business tax would devastate the city financially.
Top city officials were already discussing emergency plans to lay off thousands of workers and reduce services and programs if the proposed ballot initiative was approved by voters in November.
In exchange for having proponents back away from their ballot initiative, the city made changes to the Olympic Wage Ordinance, which was approved last year. The ordinance increased the minimum wage for certain hotel and airport workers, starting at $22.50 per hour with the goal of reaching $30 per hour by the 2028 Olympic Games.
It also enshrined other worker protections and boosted health-related credits for workers.
The amended ordinance is expected to alter the schedule for when future raises take effect, with workers expected to earn $25 per hour starting on July 1, 2027, then by $27.50 per hour by July 1, 2028, $29 per hour by July 1, 2029, and $30 an hour by July 1, 2030.
The city council’s progressive bloc — Eunisses Hernandez, Hugo Soto-Martinez, Nithya Raman and Ysabel Jurado — voted against altering the ordinance.
“To be in this place, it is sad. It is enraging,” Soto-Martinez said, referring to the vote to phase-in wage increases after workers conducted rallies, hunger strikes and other actions to secure the raises. The councilman led the effort to approve the “Olympic Wage Ordinance.”
Members of Unite Here Local 11, who advocated for the wage increase, criticized the council and business leaders for taking away their enhanced wages after fighting so hard to secure them.
Several union members called the decision a “betrayal,” as workers had planned out how they would use their higher wages to improve their lives.
A group of about 40 Unite Here Local 11 members were escorted out of the Council Chamber after disrupting the meeting.
City Councilwoman Imelda Padilla addressed the crowd in Spanish. She criticized the labor union for “creating” the issue in the first place.
“The business community has us by the neck,” Padilla said.
She said if members of the labor union would have allowed council members to ask questions and negotiate better, they could have avoided the entire situation.
Meanwhile, Central City Association President Nella McOsker, daughter of Councilman McOsker, insisted the success and vitality of business owners and workers are linked. She said it is possible to ensure the expansion of wages and benefits while realizing the economic realities of hotels being empty and closing.
“It is reasonable to ask us to partner together, and to be on the other side of the table and negotiate, but it is not okay to do so without that process,” McOsker said.
In response to the city approving the Olympic Wage Ordinance last year, a coalition of businesses called The LA Alliance for Tourism, Jobs and Progress collected and then submitted more than 73,000 signatures for their ballot initiative in February, seeking to eliminate the city’s business tax.
In late March, the Los Angeles County Registrar-Recorder/County Clerk announced that the measure had qualified for the ballot.
The coalition includes all three major Los Angeles business groups — the Central City Association, LA Chamber of Commerce and the Valley Industry Commerce Association — along with other organizations and individuals representing trade associations, small businesses and others.
The effort was also backed by United Airlines and the American Hotel and Lodging Association.
Critics of the Olympic Wage Ordinance argued it would force businesses to eliminate jobs, reduce hours and increase prices to cover the new wages. They also claimed it would further impact tourism as costs would dissuade travelers from shopping or traveling.
“This proposal is a common sense solution. No one is saying repeal the wage, just asking it to be spread out a little longer to help businesses be able to brace for that impact,” Stuart Waldman, president of the Valley Industry and Commercial Association, previously said.