LOS ANGELES — Economists sparred over the effects of a proposal to raise the minimum wage to as high as $15.25 per hour in Los Angeles during a city council committee hearing attended by hundreds of business people and activists.
The city council is considering 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.
The economists giving presentations to the Economic Development Committee on Tuesday, March 24, authored competing reports on the effects of the proposed wage hike, including a city-commissioned study that concludes the benefits of the wage increase would outweigh its drawbacks, and two reports funded by labor and business groups that reflect opposite viewpoints.
The economists quibbled over whether the proposed wage increase would result in Los Angeles businesses moving to cities where the minimum wage is lower, possible exemptions for small businesses or nonprofit organizations, whether businesses could withstand the increased costs and whether the workers would see their standard of living go up or instead, end up seeing their jobs disappear.
Many of the economists acknowledged that the wage increase would put some stress on certain industries, such as the apparel and restaurant industries, but they differed on whether businesses in those industries would be able to bounce back.
Michael Reich, an economics professor who conducted the city-funded UC Berkeley study, called the minimum wage plan “a very bold proposal … one of the boldest yet, and of course it requires a lot of careful study to see what its effect will actually be.”
Los Angeles’ wage hike plan is among a “new wave of minimum wage policies put in place in states and quite a few cities at levels we have not seen before,” Reich said.
Reich’s study concluded the wage hike would have more benefits than negative impacts. He dismissed the view that the wage increase would likely drive businesses to neighboring cities and said there are limited real estate vacancies in neighboring cities, and contended that Los Angeles’ wage increase could actually prompt businesses in other cities to raise their wages in order to compete for qualified workers.
Christopher Thornberg of Beacon Economics, which conducted a study for the Los Angeles Area Chamber of Commerce, said while there is a general consensus that “L.A. has a big working poor problem,: the minimum wage plan “is going to have a very bad return for this city.”
Councilman Curren Price, the committee’s chair, said toward the close of the hearing that “we always knew these reports would tell us the good, the bad and the ugly about the proposed minimum wage hike and I think that’s what we heard today.”
While the debate has been set up as a battle between labor groups and businesses, the business owners who spoke at the hearing had a variety of views on the proposal.
Restaurant owner George Abou-Daoud, who submitted a petition that he said was signed by more than 150 other restaurants, said the wage increase would be “catastrophic” to their businesses.
However, Kevin Litwin, owner of parking lot company Joe’s Auto Park, said the number of Angelenos living in poverty is “eye-opening” and said “it’s time for Los Angeles to set the example” by “saying ‘no more’ to unfair wages.”
More members of the public will have the opportunity to join the debate over the proposal at three hearings 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.