On Wednesday, a Los Angeles City Council committee, determined to expedite the process of driving businesses out of state, endorsed a proposal raising the citywide minimum wage from its current $9 an hour to $15 an hour by 2020.
If the proposal, which entails forcing businesses with over 25 employees to raise the wage to $10.50 per hour by July 2016 and increase the wage every year based on the average increase in the consumer price index over the last 20 years, is approved by the entire City Council next Tuesday, City Attorney Mike Feuer would have to draft an ordinance to set the yearly increases into law.
Councilman Gil Cedillo chortled, “This is perhaps the greatest shift of wealth in the history of this city.” City Council President Herb Wesson echoed, “This is dramatic; this is huge,” according to the Daily News.
But Laphonza Butler, a leader of the Raise the Wage Coalition and president of the Service Employees International Union (SEIU) California, whined, “It’s not what workers in Los Angeles need. But it is a far cry from where we were.” Elena Popp, executive director of the renters advocacy group Eviction Defense Network, moaned, “While this is a significant step, it is inadequate.”
The American Legislative Exchange Council reported in 2014 that a 2013 study by the California chapter of the National Federation of Independent Business (NFIB) “projected the potential negative effects of the state’s 2013 legislation that raises California’s minimum wage rate to $9 per hour in 2014 and again to $10 by 2016,” adding:
It estimated the increase to the wage rate would shrink the California economy by $5.7 billion in the next 10 years and result in approximately 68,000 jobs being cut from the state. The study further projected that 63 percent of the estimated 68,000 jobs lost would be from small businesses that could no longer afford to pay their employees.
Last September, Mayor Eric Garcetti pushed for wages to rise to $13.25 by 2017, while other city lawmakers wanted the wage to increase to $15.25 by 2019.
Business owners, as well as business leaders, were bitter; Mark Echeverria, chief financial officer for The Musso & Frank Grill in Hollywood, told the Los Angeles Times that the restaurant would cut 30% to 50% of its staff if the proposal is approved. Stuart Waldman, president of the Valley Industry and Commerce Association, told the Times that even if the $15 requirement took seven years to implement, jobs would be cut. He added, “It’s great that there are employees that are going to be making more. But there are a lot of employees that are going to be making nothing.”
Ruben Gonzalez of the Los Angeles Area Chamber of Commerce argued that implementing automatic increases was tantamount to “a runaway train without anyone to steer it.”
According to the proposal, businesses with 25 or fewer workers and non-profits would not have to reach a $15 an hour wage until 2021. The same would be true for nonprofits of that size. Nonprofits that are largely funded by the government would also have permission to wait the extra year.