Minimum wage debate heats up in Los Angeles

minimum wage raiseWhat if three different studies on the effects of a minimum wage increase in Los Angeles each came up with a different conclusion — who do you trust? That was a question asked at the Town Hall Los Angeles debate Thursday between Gary Toebben, President and CEO of the Los Angeles Chamber of Commerce and Rusty Hicks, head of the Los Angeles County Federation of Labor, AFL-CIO.

Toebben said trust your experiences — when wages go up speedily, businesses, especially small businesses, have to cut somewhere. If minimum wage is increased there would be fewer jobs (just as the Beacon Economics study sponsored by the Chamber stated, up to 140,000 fewer jobs over five years).

Hicks said it is common sense — if workers have more money they will spend the new money, which will increase the economy and create jobs (46,000 new jobs according to the Economic Roundtable who did its study for the Labor Federation).

The third study by UC Berkeley, done at the behest of the LA City Council, decided the lives of low-wage earners would improve which would overshadow job losses.

Since the dueling studies didn’t offer clarity to observers considering the question of raising the minimum wage, perhaps the debaters could break the gridlock. Reflecting the studies they sponsored, the debaters rolled out familiar arguments to buttress their positions.

Hicks argued that increasing the minimum wage for those barely getting by would decrease government subsidies in such things as child care and food stamps, saving the taxpayer dollars. Toebben said implementing a minimum wage increase of 50 percent in three years and 75 percent over 5 years, as proposed, would slow job growth in half and reduce revenue for city services for low-income families.

Hicks argued that business has claimed job loss as a result of minimum wage increase since the minimum wage came into being in the 1930s, and that has not happened. Toebben countered that business will have to compensate for the increased wages in some way. If not layoffs, then reductions in charitable contributions or advertising, for example, would come into play.

Toebben insisted that he was defending small business, which would be most affected by the increase. “This is all about Main Street, not about Wall Street,” he said.

Hicks conceded that exemptions might be made for some organizations like non-profits, some small businesses or young workers to ease the conversion to a higher minimum wage. The Chamber president said if no accommodation is made Los Angeles will have a reputation of a place not to start a business.

Common ground? Perhaps a small patch of turf, but not much more. Figuring out the exemptions and who gets what could be a regulatory nightmare, not to mention a field day for lobbyists.

The minimum wage increase proposals in Los Angeles include Mayor Eric Garcetti’s plan for an increase from $9.00 an hour to $13.25 by 2017. A city council proposal calls for an increase to $15.25 by 2019.

Other major West Coast cities — Seattle, San Francisco, Oakland — have already lifted their minimum wages recently. Could Los Angeles learn from those experiences?

Rusty Hicks said it was too early to measure the true impact, but he said there are now more restaurants in San Francisco since the minimum wage law was changed. To which Gary Toebben replied restaurants have closed in Oakland because of the minimum wage increase.

The studies didn’t give any clarity to those considering the minimum wage deliberations. The Town Hall debate probably didn’t change too many minds, either.

3 comments

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  1. Ronald Stein
    Ronald Stein 3 May, 2015, 16:24

    There was a time when the minimum wage was an incentive to get an education to get into job that would pay a wage to support a family. Now, the crusade toward huge increases in the minimum wage to the point that everyone will be getting similar compensation as those on Social Security. The crusade toward entitlement lives on while the incentive to get educated loses.

    Numbers don’t lie but liars can figure. Yes, our employment numbers have improved, but those reporting those great numbers don’t bother highlighting that most are in the food service and hospitality sectors. The public focus is diverted to those not making enough on minimum wages, i.e., those in the food service and hospitality sectors, and the crusade is to RAISE the minimum wage! Rather than heal the wounds resulting from constant attacks on businesses that are driving out many high wage positions and driving up the costs for those that remain in California, the easy way out is to apply a “band aid” on the wound rather than heal the wound.

    But wait, the unintended consequence associated with the upcoming minimum wage increases will be a great way to incentivize kids to drop out of school. Imagine the carrot of a huge minimum wage of a $25 to 30,000 a year minimum wage as a reward for no higher education. These kids will also be netting more than those on fixed income Social Security. It may be better to stop beating up on businesses with over regulations, over taxation, and uncontrollable “fees” that are slight inconveniences to those making the big bucks, but the California financially challenged will continue to disproportionally pick up the costs “camouflaged” at businesses.

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  2. Queeg
    Queeg 4 May, 2015, 21:54

    Employment hell to be unleashed. Employers will demand productivity or you are gone!

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  3. Brandon
    Brandon 5 May, 2015, 12:57

    You will rarely ever hear politicians say ” Let’s lower income taxes” and so WE THE PEOPLE will have more of OUR money in OUR pockets. They scream raise the minimum wage so all the foolish people that jump on that economy destroying band wagon will “earn” more so the government can tax them on their higher incomes or just raise income taxes. Businesses will fire or layoff people to meet payroll or just move to a state that is business friendly.

    Lower or eliminate income taxes is the real solution!

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