Citing stagnant wages for a shrinking middle class, and a low-income population that is working full-time for near poverty-level income, Los Angeles Mayor Eric Garcetti on Monday announced plans to increase the city’s minimum wage to $13.25 by 2017.
Garcetti made the announcement with a group of business leaders and members of the clergy at Martin Luther King Jr. Park in South Los Angeles. If approved by the city council, the plan would go into effect next year, raising the minimum wage from the current $9 per hour to $10.25, and again to $11.75 by 2016. Approval would also make it the largest anti-poverty program in Los Angeles history; seven council members are reportedly on board with the plan.
“This is good for the city, good for the economy,” Garcetti said. “I am proposing to responsibly and gradually raise the minimum wage in Los Angeles to $13.25 because it’s deplorable and bad for our economy to have more than one-half million Angelenos stuck in poverty, even when working full time. Right now, we have sort of a ‘barbell’ economy in which there are two opposite extremes: Those at the top have done very well as we rebound from the recession. But another group of workers are being left further and further behind because they can’t purchase goods and take care of their families. You shouldn’t have to debate whether to buy groceries or to purchase school supplies for your children. We have a bigger percentage of people each day in Los Angeles living off the minimum wage.”
Garcetti had been meeting for the past month with business and community leaders as well as members of the clergy “to discuss ways to help Los Angeles families and our economy thrive,” he said in a statement released before Monday’s press conference. The move follows the lead of San Diego ($9.75 by Jan. 1 2015 and $11.50 by 2017) and Seattle, Wash. which have raised their minimum wages. An alternate plan at city hall—backed by Councilman Curren Price—would raise the minimum wage for workers at large hotels to $15. San Francisco has a minimum wage of $10.74; Chicago may raise its minimum wage to $13 per hour in the next few years, according to a plan suggested by Mayor Rahm Emanuel.
Garcetti said there are 567,000 Los Angeles residents working for minimum wage, the same pay scale issued by the state which plans on an increase to $10 per hour by 2016. “The erosion of wages for middle and low-income families threatens [L.A.’s] economic recovery,” Garcetti said on the KTLA Morning News on Tuesday.
Garcetti’s idea is not going over well with the Los Angeles Chamber of Commerce. “Businesses are already hinting that if the plan is approved, they’ll have to raise prices, cut staff and not hire,” said Gary Toebben, chamber president. He said his group is skeptical of the plan, but representatives are weighing the idea. “The initial reaction wasn’t very supportive, but a position has not been taken,” Toebben told the Daily News.
Supporters say an increased minimum wage is overdue. “If Los Angeles is to maintain our standing as a world-class city, we need to increase the minimum wage,” said philanthropist Eli Broad in a statement released before the Labor Day announcement. “Raising the minimum wage would help lift people out of poverty and stimulate our local economy.”
Price, whose ninth district includes some of the nation’s most impoverished residents, said the idea to increase the minimum wage represents sound economic policy.
“We will never be a thriving city if we continue to leave so many behind,” Price said in a statement released on Tuesday. “When we raise our city’s minimum wage we’ll give our local economy a financial booster shot, finally giving hundreds of thousands of residents the buying power they need to spend in their local stores and restaurants helping to grow our local economy.”
A 2012 report issued by the Economic and Policy Analysis Group entitled “Industry and Labor Market Intelligence for the City of Los Angeles” revealed that almost 19 percent of households in the city of Los Angeles have lived under the poverty level since 2011—much higher than the national average of 14.6 percent of households living in poverty. That year, almost 144,300 people—just over 18 percent of all families—saw their incomes fall below the poverty level after the beginning of the Great Recession.
Seattle has the nation’s highest minimum wage—$15 per hour—while Washington’s hourly minimum wage is $9.32 an hour, the highest among all states. The federal minimum wage remains at $7.25 an hour. So far this year, 13 states and the District of Columbia have acted to increase their minimum wage.
President Obama on Monday told a Milwaukee, Wis. crowd of about 6,000 union supporters that he wants to make sure all Americans can meet simple goals, like being able to pay their bills and send their children to school.
“There’s no denying the truth: America needs a raise,” he said. “But until we’ve got a Congress that cares about raising working folks’ wages, it’s up to the rest of us to make it happen.” In February the Obama Administration issued an executive order requiring that federal contractors in 2015 increase their hourly minimum wage to $10.10 from $7.25.
