L.A. Minimum Wage Increases Would Boost Economy and Workers’ Incomes, Two University Studies Show

by Mitchell Hirsch

The Los Angeles City Council is considering proposals to raise the citywide minimum wage to $13.25 by 2017 and to $15.25 by 2019, and two separate research studies released yesterday show those higher wage rates would have substantially positive effects on the local economy and many workers’ earnings.

A City Council-commissioned study by researchers at the Institute for Research on Labor and Employment at the University of California, Berkeley, looked at the projected impact of both the $13.25 and $15.25 minimum wage plans and estimated they would boost workers’ spending power by $1.36 billion by 2017, and by $2.38 billion by 2019, with little impact on total employment in the City of Los Angeles and a net gain of more than 5,200 jobs countywide by 2019.

The UC-Berkeley study projected that 542,000 workers will see their average annual earnings increase by $3,200 by 2017, and that by 2019 a total of 609,000 workers would see those earnings rise by $4,800.  Businesses’ operating costs would rise by just 0.5 percent by 2017 and by 0.9 percent cumulatively by 2019, the study said.

In a separate study on the impact of the $15.25 minimum wage proposal, researchers at the UCLA Labor Center and UCLA’s Institute for Research on Labor and Employment projected even stronger economic benefits of that higher wage rate.  An estimated 723,000 workers would see increased earnings totaling $5.9 billion in 2019, according to the UCLA study, and the resulting boost in consumer spending would result in 46,400 new jobs, including 25,000 within the City of Los Angeles.

Commissioned by the Los Angeles County Federal of Labor, AFL-CIO, the UCLA study also projected that the $15.25 minimum wage would have the added benefit of reducing expenditures on public assistance by $313 million per year.

A City Council committee is scheduled to begin a series of public hearings next week on the proposed minimum wage increases, and the findings in the UC-Berkeley and UCLA studies are expected to help boost support for the higher wage rates.

Business groups opposing the minimum wage increases, meanwhile, sought to bolster their contention that the proposed increases would result in major job losses, releasing a report commissioned by the Los Angeles Area Chamber of Commerce from a private economics firm that, predictably, warns of between 73,000 and 140,000 fewer new jobs in the next five years if the minimum wage is raised to the $13.25 hourly rate.  The report assumes the job losses would largely stem from businesses presumably relocating to avoid paying higher wages.  The Chamber-backed report takes a rather condescending view of the Los Angeles minimum wage proposals – treating them as if they were like some ‘welfare’ plan, rather than public policies to set a fairer standard base value for workers’ labor.