City, Business Leaders Offer Sharply Differing Views About Pasadena’s Economic Health

Local small business owners are taking issue with Interim City Manager Steve Mermell’s analysis of the local economy, saying that predictions Pasadena’s outlook remains rosy are misguided.

Mermell remarked that “Pasadena’s local economy continues to perform well” in his introduction to the city’s proposed 2017 budget document his office submitted to the Pasadena City Council on Monday night.

The outlook, Mermell said, remains “vibrant,” given the “continued success of local employers.”

But the Pasadena Chamber of Commerce’s President and CEO Paul Little, who represents of hundreds of local business managers and owners, says his members on the “front lines” don’t agree.

“Pasadena Chamber members, especially small business members, are not so optimistic. They are seeing sales trends that are staying flat or even shrinking. City mandates on everything from minimum wage, banning polystyrene packaging along with anticipated increases in costs of utilities and tax rates are putting more pressure on their bottom line,” Little said in an email.

Mermell had pointed to the low unemployment rate in Pasadena as a bright spot.

“The local unemployment rate stood at 4.9% through March, better than Los Angeles County as a whole which was at 5.5%,” Mermell said in the budget introduction.

Little countered that local businesses are now predicting higher unemployment and higher consumer prices as Pasadena’s small businesses “adjust to their new financial realities.”

The increase in prices, Little noted, “will, in turn, slow or stall sales growth.”

Both Mermell and Little do agree that local big businesses in complex industries remain healthy and growing.

“Pasadena’s economic base includes many successful business particularly in the fields of  finance, healthcare, and technology,” Mermell had written. “East West Bank, Kaiser Permanente, Open X, Alibaba, Bluebean, and iRobot, to mention but a few,  have all experienced positive growth and added jobs in Pasadena.”

Little concurs, pointing to the “robust tech and strong financial sectors of late.”

City sales tax revenues paint a picture of steady but modest private sector revenue growth last year.

Pasadena’s citywide total sales tax revenues — a key indicator of local economic health — collected in the quarter ending September 20, 2015, increased 2.2% over the same quarter the year before. (Sales tax revenue information is not currently available for 2016).

That local sales revenue increase of 2 to 3% is no match for the increased burdens of the new higher minimum wage and additional costs mandated by government, such as the new “styrofoam” restrictions, some Pasadena business owners say.

“Your employee hours are anywhere from a third up to almost 50% of your expenses, which is huge,” said Christina L. Suter, owner of Ground Level Consulting, a management consultant firm based in Pasadena. “And then to have that with one third or a quarter of your expenses to be pushed up to a higher level, potentially up to 50% of what they were before, it really directly affects the capacity to pay your help.”

Bobby Ghofranian, owner of Avanti Italian Bistro & Bar, agreed higher costs are affecting how he views Pasadena’s economic health.

“We’ll have to cut some hours, maybe let people go earlier when they’re not needed,” he said of the new minimum wage ordinance’s impact.

Rather than laying off or terminating current employees, Ghofarian said he is assigning his workers fewer hours.

Ghofranian also said he has already increased food prices at his restaurants.

“I tried to delay that as long as I could,” he said.