Report: LA Minimum Wage Increase Would Be ‘Economic Stimulus’

Use quotes to search for exact phrases. Use AND/OR/NOT between keywords or phrases for more precise search results.

News Economic Justice

Report: LA Minimum Wage Increase Would Be ‘Economic Stimulus’

Nina Liss-Schultz

The Los Angeles City Council is considering a proposal to raise the sprawling city’s minimum wage to $15.25 an hour, joining a handful of cities across the country taking steps to ensure the financial stability of some of their lowest-income residents.

The Los Angeles City Council is considering a proposal to raise the sprawling city’s minimum wage to $15.25 an hour, joining a handful of cities across the country taking steps to ensure the financial stability of some of their lowest-income residents.

The marked wage boost wouldn’t just benefit LA’s low-income communities, but prove to be a boon for the city’s entire economy, serving as a wide-ranging stimulus, according to one study.

The push for an increased minimum wage in the city isn’t exactly new; the Los Angeles County Federation of Labor last January bought a series of billboards reading “Los Angeles: City Limited, Poverty Wage Pop. 810,864,” in conjunction with a report that found that the average pay for the city’s full-time, low-wage workers is $9.55 an hour, or about $19,000 a year.

Mayor Eric Garcetti last year announced a proposal to raise the city’s minimum wage to $13.25 in 2017, a figure that he called a “measured approach” that would “get the job done.” The proposal would boost the minimum wage in 2017, and then tie future increase to inflation.

Sex. Abortion. Parenthood. Power.

The latest news, delivered straight to your inbox.

SUBSCRIBE

Vice President Joe Biden met with Garcetti in October to drum up support for the increase, saying that “no one in America should be working 40 hours a week and living below the poverty level—no one.”

That same day, six council members announced a more ambitious plan to raise the minimum wage to $15.25 an hour by 2019, with increases based on inflation after that.

The council debated in March the findings of three analyses of the city’s proposal, which offer divergent conclusions on the economic effects of a wage increase.

One study, by the Economic Roundtable, found that an increased wage would be exceedingly positive for the city.

“We found that a phased-in increase to $15.25 by 2019 will put $5.9 billion more into the pockets of 723,000 working people, which will generate $6.4 billion in increased sales,” wrote Yvonne Yen Liu, one of the group’s researchers.

“That means that every dollar increase in the minimum wage generates $1.12 in economic stimulus,” Yen Liu wrote. “Businesses will hire more in response to the greater demand, creating 46,400 new jobs.”

A second study, commissioned by the city and completed by University of California, Berkeley Researchers, had  slightly more tepid conclusions, finding that although a minimum wage increase would slow job growth, the benefits on the economy would outweigh any costs.

And a third study, commissioned by the Los Angeles Area Chamber of Commerce—which opposes the wage boost—concluded that the increase would slow job growth and provide few benefits to the city.

“The benefits are just too diffuse, they’re offset by job losses and ultimately the costs to the economy is far too high,” Christopher Thornberg of Beacon Economics, which completed the study on behalf of the Chamber of Commerce, told the Los Angeles Daily News.

A wage increase appears to have the support of Los Angeles politicians. Hours after the council announced its plan, Garcetti jumped on board, announcing his support the council members’ plan.

Following the three studies released in March, Los Angeles County supervisors have said they will examine how a wage increase could affect the county.

Supervisor Sheila Kuehl, who along with Supervisor Hilda Solis is pushing to commission a study on county wage increases, told the Los Angeles Times that they’ll focus on finding a number that works for the county.

“If you simply grab a number and enact something, you could hurt the city, and that hurts the workers, or you could hurt the county, and that hurts the workers,” she said. “The number has to work for the county, period. But if we were part of the movement to raise minimum wage, that covers almost half the people who live in the county…It could be a real signal to the rest of the state that we are serious in this county about the benefits of raising the minimum wage.”