[row][double_paragraph][accordion][acc title=”L.A. Wage Increase (on July 1 of each year)”]2016: $10.50 per hour
2017: $12.00 per hour
2018: $13.25 per hour
2019: $14.25 per hour
2020: $15.00 per hour[/acc][/accordion][/double_paragraph][double_paragraph][accordion][acc title=”Small Businesses Increase (on July 1 of each year)”]2017: $10.50 per hour
2018: $12.00 per hour
2019: $13.25 per hour
2020: $14.25 per hour
2021: $15.00 per hour[/acc][/accordion][/double_paragraph][/row]

L.A. Mayor Eric Garcetti praised the actions of the City Council and said in a press release:

“Today, help is on the way for the 1 million Angelenos who live in poverty. I started this campaign to raise the minimum wage to create broader economic prosperity in our city and because the minimum wage should not be a poverty wage in Los Angeles.”

The approval of the wage raise is a success for people like Albina Ardon, a McDonald’s employee from Los Angeles and an active member of the Fight for $15 LA. She wrote in a press release:

“By voting to raise the minimum wage to $15 an hour, the Los Angeles City Council has just shown what workers are capable of when we stick together. People used to think we had no chance, but we are steadily winning the fight by demanding $15 an hour to lift our families out of poverty.

 

“People like me, who work hard for multibillion-dollar corporations like McDonald’s, should not have to rely on food stamps to survive. My life would be completely different if I were paid $15 an hour. I could afford groceries without needing food stamps, my family could stop sharing our apartment with renters for extra money, and I’d be able to provide my daughters with some security.”

Anna Chu, vice president of policy and research at the Center for American Progress Action Fund, said raising the minimum wage “is one of the most direct actions that policymakers can take to raise wages for low-income workers.”

“While the sample size is still relatively small, cities that raise their minimum wages have seen drops in unemployment more often than not, belying the doomsday claims of those who oppose such increases. Cities have led on the issue of raising the minimum wage, and they are seeing the benefits of workers having more money in their pockets and more economic security.”

But not everyone views the increase as a positive change. The California Restaurant Association said in a press release yesterday that they were “disappointed the Los Angeles City Council voted in favor of an extreme approach to a minimum wage increase.”

“The California Restaurant Association has advocated for a comprehensive minimum wage increase that ensures the higher wage is targeted to those that need it most.

 

“Unfortunately, the City Council voted in favor of a policy that:

• Excludes total compensation, which would provide owners the ability to create wage equality between tipped and non-tipped workers.
• Limits a teen wage to ages of 14-17, for only 160 hours, thereby restricting access to entry-level jobs that teach youth the skills they need to succeed.
• Attaches further wage increases to the Consumer Price Index, which is the equivalent of putting the minimum wage on auto-pilot and ignoring any economic impacts or other factors.”

Economic Professor David Neumark of UC Irvine wrote in an L.A. Times article on Sunday that “[s]imply requiring employers to pay $15” per hour would not solve the market forces at hand that cause low wages and a lower standard of living:

“In fact, data indicate that minimum wages are ineffective at delivering benefits to poor or low-income families, and that many of the benefits flow to higher-income families. That’s because minimum wages target low wages rather than low family incomes. And many minimum-wage workers are not poor or even in low-income families; nearly a quarter are teenagers who will eventually find better-paid jobs. …

 

“Yet another reason to be wary of raising the minimum wage is that modest job loss overall may mask much steeper job loss among the least skilled. Economists use the phrase “labor-labor substitution” to describe employers responding to a higher minimum wage by replacing their lowest-skilled workers with higher-skilled workers, whom they are more willing to hire at the higher minimum.”

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.

But two years later, however, Schwarzenegger — in full legacy-hunt mode — didn’t say squat when the California Air Resources Board released a “scoping” plan of the economic impact of AB 32 that was full of happy talk that depicted the law as akin to a job-creation program.

Professional economists pushed back. The “peer review” of the findings was harsh. The panel included Harvard’s Robert Stavins — perhaps the world’s leading environmental economist. Stavins backed AB 32 but considered its happy talk ridiculous. “I have come to the inescapable conclusion that the economic analysis is terribly deficient in critical ways and should not be used by the state government or the public for the purpose of assessing the likely costs of CARB’s plan,” he wrote.

Stavins later told The Wall Street Journal that if shifting to cleaner-but-costlier energy were good for businesses, they would have already done it.

That’s such a crisp, simple Occam’s Razor way to frame this issue.

Unfortunately, in the California of 2014, when it comes to economics, we’re in a post-common sense era.

‘Skimp’ on wages? You’ll make less money!

This is playing out in San Diego, where the City Council’s liberal supermajority wants to make a big splash before November elections in which they are likely to lose their power to impose legislation over a veto by Republican Mayor Kevin Faulconer.

The main way they want to make this splash is by sharply increasing the minimum wage in the city. The initial proposal was to make it $13.09 cents an hour by July 2017. That would be nearly one-third higher than the $10 that will be the minimum state rate effective 2016.

Business interests point out that this will hurt San Diego on competitiveness grounds. Advocates initially responded by saying job losses from a minimum wage hike would be minimal. But somewhere along the way, the spirit of the loony air board infected their thinking, and now San Diegans are being told that a minimum-wage hike is, yes, a rising tide that will lift all boats.

Consider this nugget from this op-ed defending the City Council’s plan. The gist is that business operators who try to keep costs down are idiots who don’t know what they’re doing:

“Employers who skimp on wages and benefits don’t make more money, they make less. They have greater turnover, resulting in more training, and they engender less loyalty and more cheating.”

Oh, give me a break.

CA activists lecture business on how to make money

According to this one-size-fits-all theory, Wal-Mart and carwashes and taco stands and all the non-union companies in the world that try to keep wages down are simply buffoons who are lucky to still be in business.

The arrogance of this is stunning.

The truth, of course, is that — as the world’s leading environmental economist told The Wall Street Journal — businesses won’t reject strategies that make them money. They will embrace such strategies.

But as I said, we’re in a post-common sense era in which activists and liberal pundits who have never made a payroll or run a business look at successful businesses and say something akin to the following:

Hey, you idiots, you don’t know what you’re doing.

Surreal. And so California-ish.