With three different studies serving as the centerpiece of discussion, the Los Angeles City Council Economic Development Committee on Tuesday kicked off a series of public hearings regarding a proposal to raise the minimum wage in Los Angeles.
In the council chambers which was, at times, filled to capacity, supporters and opponents of the measure pushed their view points with facts and figures. The next public hearing on the proposal is set for 6 p.m. tonight at the Watts Labor Community Action Committee, 10950 S. Central Ave.
What may have been considered surprising about the inaugural hearing was that the opposition, traditionally mounted by a united front of business organizations, was largely absent. In fact, Adam Lane, a spokesman for the L.A. Business Council. (LABC), which is considered one of the most effective and influential advocacy and educational organizations in California, said his group supports raising the minimum wage to $13.25 per hour rather than $15.25.
And like many of the other industry groups and business owners who spoke in favor of the increase, the LABC advocated for a slower implementation of the increase and a full consideration of the total compensation that minimum wage workers earn as well as a review of wages earned by tipped workers versus non-tipped employees.
Among the other concerns broached at the hearing were the issue of wage theft, where workers are not paid the full wage they’re entitled to or are asked to work off the clock, and enforcement of the laws that are supposed to protect against this; as well as the exemption of certain classifications of businesses (nonprofits and micro firms) or jobs (teen and transitional) from the increase.
There were also calls for the council to take into consideration a regional approach to increasing the minimum wage.
The studies regarding increasing the minimum wage came as a result of legislation proposed last fall by Councilman Curren Price (9th District) along with colleagues Nury Martinez, Mike Bonin and Gil Cedillo all of whom have called for raising the minimum wage to $13.25 by 2017, and to $15.25 over the next four years. Mayor Eric Garcetti last fall also laid out his proposal to raise wages to $13.25 by 2017. Both proposals would attach future increases to the Consumer Price Index.
“The Proposed Minimum Wage Law for Los Angeles: Economic Impacts and Policy Options,” released by U.C. Berkeley indicates that increasing the local minimum wage to $15.25 would “improve the lives” of more than 600,000 Angelenos and create a “positive economic impact” for the city.
The study, commissioned by the city of L.A., indicated that the benefits of the proposed hike in take-home pay would largely outweigh the costs to the city, and when the county is considered as a whole, the “… net impact of the law will be positive.” The 600,000 residents who would see the immediate benefits of the wage increase would likely be comprised of more than 80 percent people of color from traditionally underserved communities such as South and East Los Angeles.
“As a policy maker, representing one of the poorest regions in the city, I know the real-life impact that stagnant wages have had on our underserved communities,” Price said. “This study helps us better understand the magnitude of income inequality in Los Angeles while also providing us with reassuring data that shows that a minimum wage increase—done thoughtfully—will have benefits for the local economy and businesses.”
However, economists hired by business and labor groups paint a far different picture about what would happen if the city boosted pay for hundreds of thousands of workers. The Los Angeles Chamber of Commerce has warned that raising the base wage to $13.25 citywide would drastically reduce and may even eliminate job growth as businesses may opt to relocate out of Los Angeles or decide to hire fewer people. The chamber’s report was prepared by Beacon Economics and stated that a base wage of $13.25 would result in 73,000 to 140,000 fewer new jobs over the next five years.
The report also concluded that the bulk of the increased wages would, in fact, not help the city’s poorest workers because many of these persons reportedly live outside the city or in households with a total income of more than $55,000 per year. As well, some industries could face significant increases in labor costs—as high as 14 percent of revenues for restaurants and bars. Economic blows like this, the report found, would only undermine programs for residents in need. “Raising the minimum wage to $13.25 would have significant negative effects on the city with, at best, modest benefits for low-income residents,” the report stated.
The business-backed report recommended a smaller, slower wage increase and urged proponents to find a “legal way” of eliminating or reducing the boost for workers who receive tips and to explore other ways to soften any detrimental effects.
Another report, this one underwritten by the Los Angeles County Federation of Labor, tends to refute the chamber study. Raising the minimum wage to $15.25, the labor group found, would in effect create an additional 46,400 new jobs across the region by 2019, including nearly 25,000 in Los Angeles. The boost would produce a reported $5.9 billion in added wages by 2019, including almost $3.2 billion for workers residing in Los Angeles.
“It would be a stimulus effect for the region; raising pay would also pump up tax revenue and reduce the need for spending on public assistance across the region,” the labor report found.
Business leaders counter this report with findings from the chamber of commerce survey that indicate that employer costs could rise ultimately by 0.9 percent by 2019, and price increases would result in a roughly $1.1-billion cumulative drop in consumer demand. Employment would be lower by 0.2 percent and some 3,500 jobs would reportedly vanish.
OW Staff Writer Merdies Hayes also contributed to this story.
