A Los Angeles city panel will consider a trio of economic studies into the effects of a proposal to raise the minimum wage in Los Angeles to as high as $15.25 per hour by 2019.
The city-commissioned report by UC Berkeley concludes that the benefits of the wage increase would outweigh its drawbacks, while two other reports reflect opposite viewpoints.
A report funded by business groups contends the wage hike would kill an anticipated 73,000 to 140,000 new jobs, while a labor-funded report argues that it would result in $5.9 billion in added income for about 700,000 workers in Los Angeles and create more than 46,000 additional jobs.
The studies look at the economic effects of raising the minimum wage from $9 an hour to $13.25 an hour by 2017, to $15.25 an hour by 2019, and higher in subsequent years based on the Consumer Price Index.
According to UC Berkeley’s mostly positive findings, the wage hike would prompt businesses to pass costs onto customers, driving down consumer demand, but this would be offset by $2.381 billion added to workers wages by 2019, which is expected to have a multiplier effects on spending.
UC Berkeley researchers say 80 percent the workers affected would be people of color, and the wage increase would affect more than half of Latino workers in the city. The 600,000 workers who would see their wages go up by 2019 make up about 40 percent of the Los Angeles workforce, they said.
A separate study released by the Los Angeles Area Chamber of Commerce and done by Beacon Economics found the wage hike proposal would be more harmful than helpful to the city’s economy, preventing an anticipated 73,000 to 140,000 new jobs.
The Beacon Economics researchers argue the wage increase could drive businesses to neighboring cities where the minimum wage rates are lower.
They called the intent of the wage hike proposal “commendable,” but recommended ways to make it less drastic. They urged the city to consider increasing the minimum wage to a lower amount; slowing down the rate of the increase; making exceptions for certain workers such as those who might officially earn the minimum wage but actually make more because they work off tips; and excluding certain types of employers such as nonprofits, small businesses and those that tend to hire younger workers.
The Los Angeles County Federation of Labor’s Raise the Wage campaign is pushing for the wage to go to $15.25 per hour, further than Garcetti’s original $13.25 plan.
The federation released a report by the Economic Roundtable, which found that raising the wage to $15.25 per hour by 2019 would result in an additional $5.9 billion in earnings for more than 700,000 workers. The hike would also create 46,400 more jobs, more than half of them within the city, that study says.
The wage increase would also lower spending on public assistance by about $300 million a year, according to the report. State and local governments would also get $414 million more in revenue, and the federal government would get $546 million.
The Economic Roundtable report also argues that industries in Los Angeles are “predominantly resilient,” with researchers saying that four out of five low-paying jobs are physically performed within the city.
UC Berkeley prepared the study for Seattle’s minimum wage hike plan and worked on a economic study that Los Angeles Mayor Eric Garcetti released last September as he announced his proposal for raising the wage to $13.25 per hour.
Some business leaders opposing the wage hike plan have criticized the choice of UC Berkeley to do the study.
The three studies’ findings will be discussed today and at three other public hearings on the issue hosted over the next month by the City Council’s Economic Development Committee.
The other hearings will be held on:
— March 26 at 6 p.m. at the Watts Labor Community Action Committee headquarters, 10950 S. Central Ave.;
— March 31 at 6 p.m. Van Nuys City Hall, 6262 Van Nuys Blvd.; and
— April 2 at 6 p.m. at the Museum of Tolerance, 9786 W. Pico Blvd.
—City News Service