REINING IN CITY : COUNCIL'S OK OF LIVING WAGE DESPITE PREDICTED ADVERSE ECONOMIC EFFECTS SHOWS NECESSITY FOR PASSAGE OF CHARTER REFORM.

Byline: Robert Krol and Shirley Svorny

IF you were thinking the City Council could be trusted with charter reform, and planning to vote against the citizens' charter reform commission (Proposition 8), think again.

Just recently, the Los Angeles City Council voted (12-0) to require firms that receive city contracts or city funds to pay a living wage ($7.25 an hour plus benefits, $8.50 an hour without) to their workers.

Either the council has been ``captured'' by labor interests, is naive about the ability of a minimum wage to ameliorate poverty or has no clue about the impact of public policy on economic activity.

In any case, it is not a good sign for a group that, without the passage of Proposition 8, will be left with veto power over charter reform.

With applause from all sides, 12 council members voted for legislation that is mostly show. The 10-year phase-in assures that, by the time wages rise, inflation will have eroded some of the supposed benefits.

But more important, it is a poorly targeted anti-poverty policy. Many families whose incomes fall below the poverty line have no one working anyway. Those who do will see much of the increase in their earnings wiped out by simultaneous reductions in means-tested public benefits, such as the earned-income tax credit.

If the City Council really cared about the poor, it would take steps to promote job creation in Los Angeles.

Los Angeles remains an outlier in adopting business-friendly policies necessary for economic growth. The living-wage ordinance is just one more nail in the coffin.

Instead of moving toward a more efficient provision of public services, this legislation constrains our service providers to pay a wage that is significantly above that offered in the private sector.

The City Council has chosen to ignore the advice of economists, who have tediously explained the negative consequences in terms of job access and job creation for the least skilled.

By making these jobs more attractive, it makes it harder for the least skilled to compete. Without access to these entry-level jobs, inexperienced workers cannot acquire the skills necessary to move up the employment ladder to better jobs and better wages.

In passing this legislation, the council has revealed that it cannot be trusted with the responsibility for charter reform. It is not surprising that city workers want higher wages, nor that the City Council wants to maintain the financial support it gets from labor.

It is time for Los Angeles to make some hard choices, to move forward, to reduce its tax and regulatory burden and, at the same time, to be sure its streets are clean and its citizens safe.

The City Council has to be able to look at the big picture. It can't be beholden to a narrow group for its agenda.

What will council members do when confronted with a sound proposal for charter reform that suggests that we adopt competitive bidding for public services?

Just when we are trying to think about ways to improve the efficiency of service provision through charter reform, the council takes two steps backward. Local governments around the world are adopting policies to reduce the size and cost of government.

In the interest of promoting economic growth and job creation through lower taxes, they are thinking about which services need to be provided by government and which services can be left to the private sector. Using competitive bidding, breaking the connection between the purchase and provision of services, and putting in place incentive contracts that reward efficient service providers, innovative public officials are creating an environment that promotes responsive, cost-effective government.

In contrast, the Los Angeles City Council has been totally remiss in pursuing these reforms.

If we weren't sure before, it is now obvious that the majority of City Council members are unwilling to accept economic reality, attracted more by show than substance.

There are many reforms that would benefit the city, but the council chose to grandstand with a feel-good, do-nothing ordinance.

Charter reform is a debate about the size and scope of government and how it should be structured to provide services in a responsive and efficient manner. We have a chance, through charter reform, to make substantive changes that will improve the quality of our lives.

It is clear, from its vote on the living wage, that this should not be left to the City Council. Proposition 8, by creating an independent charter reform commission, gives us another option, and we should not let it slip by.

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DRAWING: no caption (people at city hall)