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# Local restaurant feels the squeeze from living wage law
- URL: https://www.smdp.com/local-restaurant-feels-the-squeeze-from-living-wage-law/
- Published: 2002-11-02T16:00:00.000Z
- Updated: 2026-10-23T00:50:30.000Z
- Author: Carolyn Sackariason
- Tags: Business, Santa Monica, #archive-import

*Living wage has business owners worried about future*

In the effort for many low-income workers to realize the American dream, those same dreams pursued by dozens of Santa Monica business owners will be squashed by the city’s proposed living wage, they fear.

“It goes against everything this country is about,” said Giacomo “Jack” De Nicola, the general manager at The Lobster restaurant. “It is going to cost me three quarters of a million dollars a year, which is going to make one restaurant virtually unprofitable.”

The Lobster is one of hundreds of businesses that would be affected by Measure JJ, if approved by voters on Nov. 5\. The law would require businesses in the coastal zone that make more than $5 million in annual revenue to pay their workers $10.50 with health benefits or $12.25 without.

The ordinance, which predominately targets businesses that benefit from the tourism industry, was passed by the city council in July of 2001 as a way to lift low-wage workers out of poverty. Many entry-level workers at luxury hotels along the beach are paid $8 an hour with no health benefits. At the unionized hotels, of which there are two in Santa Monica, the workers are paid more. Proponents of the measure argue those businesses have more than enough money to pay their employees — many of whom live in poverty conditions — a decent wage.

The Lobster, which is located on Ocean Avenue and Colorado Boulevard overlooking the Santa Monica Pier, makes more than $5 million a year. About 10 percent of De Nicola’s staff aren’t paid what the proposed wage would require. None of them make less than $7.50\. Those employees are either prep cooks or dishwashers.

Despite hardsip exemptions for which businesses can both apply for and help write, De Nicola believes he will be required to pay all of his 100 employees at least $12.25 an hour, whether they are tipped or not. Waiters currently make about $20 an hour, while bus boys get about $15 an hour.

372,“What is a hardship exemption? What does that mean?” he said. “The exemption is a completely nebulous thing.”

According to the language of the ordinance, employers who immediately would be exempt from the law either have young, first-time seasonal workers, or are able to prove the business would be non-viable if it had to pay its workers more. An exemption also could be granted if the business could prove that if it did raise wages it would actually counter what the law is intended to do. That means if a business had to downsize its workforce to remain economically viable, it could be exempt because people would lose their jobs.

Under those rules, The Lobster would be exempt. Or would it?

“I would have to economize as much as I can which means people will lose hours,” De Nicola said. “It will eat away at our profit margin but is that enough to be exempt? I don’t know.”

De Nicola said the law is unclear on that point. An exemption is not automatic, and it’s uncertain how the proposed city administrative body reviewing exemption applications would make that determination. Hardship could be based on profit margins or on whether the business can stay afloat, he said.

The criteria for review hasn’t been determined, however a panel of business owners, community members and city officials will be created to set those parameters after the law is passed, proponents of the measure say.

“We will not go out of business but it will take a large investment and turn it into nothing,” he said. “I don’t think anyone will get an exemption because if one does, why wouldn’t the other?”

De Nicola and many other business owners who are fighting a fierce battle to shoot down the ordinance are worried about a government entity or unknown person examining a private business’ balance sheet and making a decision on undetermined criteria.

Payroll at the Lobster, which opened in 1999 and is owned by 10 investors, will go up 20 percent if the living wage is passed and an exemption isn’t granted, De Nicola said. Typically, restaurants have a 7 percent profit margin.

De Nicola said he would support a living wage that gradually increases over time and is applied city-wide. But businesses shouldn’t be singled out or bear the brunt in a futile attempt to solve a much larger social problem, he said.

The jobs that are targeted in the living wage are entry level and are not designed to be careers, De Nicola said. He expects people to educate and train themselves to be skilled workers so they can become self-sufficient like his immigrant Italian grandfather did when he came to America.

“No one is saying that it’s not harder now... the gap between the rich and poor is worse than it has been for decades but there still is opportunity,” De Nicola said. “I believe people need to take responsibility for themselves and their actions.”

*Originally published in the Santa Monica Daily Press print edition on November 2, 2002.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/110202.pdf?ref=smdp.com)