September 2 2014
Patrice J. Lee
What better a way to celebrate Labor Day than with a job-killing business-harming policy of raising minimum wages?
The mayor of Los Angeles proposed that the city gradually increase its minimum wage to $13.25 by 2017 in what he calls an effort to enable workers to live above the poverty level.
Los Angeles currently has a minimum wage of $9. Under Mayor Eric Garcetti’s proposal, that would rise to $10.25 next year, $11.75 in 2016, and $13.25 by 2017.
Los Angeles is not the only city that is raising its minimum wage rate, but if this proposal passes, it will set a new high across the nation. As we’ve reported Seattle is considering one and a $15 minimum wage is on the ballot this November in San Francisco.
While the news is cheered by some, others either don’t think it goes far enough or think the effects will be more harmful than helpful.
Local affiliate KPCC reports:
Following in the footsteps of cities like Seattle and San Francisco, Mayor Eric Garcetti made a Labor Day pitch for an increase, over the next three years, in the Los Angeles minimum wage to more than $13 per hour.
Garcetti said the new wage would "restore dignity for all Angelenos," according to NBC4.
California's minimum wage is currently $9 per hour and will increase to $10 on Jan. 1, 2016.
"From the president to local leaders in other cities, we've seen Republicans and Democrats alike say our minimum wage simply is too low, that people cannot support themselves…
The minimum wage proposal is supported by the L.A. County Federation of Labor, though organizers in the labor community have long said they want to see hourly wages set at $15.
Members of the business community are already speaking out about the proposal.
"We're concerned that a 50 percent increase will force a lot of businesses to either raise prices, which hurts everybody, or to cut jobs, which hurts those people who lose their jobs," said Stuart Waldman, president of the Valley Industry and Commerce Association.
The president and CEO of the LA Area Chamber of Commerce said he's particularly concerned about the impact to small businesses and nonprofits.
We’ve examined the impact of raising the minimum wage previously and hold that this is a bad move for L.A. and the larger California economy as small businesses will struggle under the weight of higher labor costs. They will see their margins cut and for some retail and restaurants operating under already thin profit margins, this will undercut their business. Those who were the intended beneficiaries become the victims; employers forgo hiring or cut the hours of workers.
If you want to see what happens when cities raise the minimum wage ask Seattle residents who are dealing with new fees that businesses tack on to deal with higher labor costs –a direct unintended consequence of a higher minimum wage.
The LA Chamber of Commerce president also refers to a sector of employers that especially cannot afford wage hikes: the nonprofit sector. Many nonprofit organizations are hardly meeting their expenses, but they are the frontline providers of necessities like food, shelter, and employment services to help the poor. Why cut their ability to help Americans who have hit hard times?
The moral of the story is that while the goal of raising the minimum wage may be well-intentioned, it is akin to using a blunt tool for a problem that needs an entirely different approach.