[Editor’s Note: Term-limited Mr. Parks, 71 years old, is in his final days on the Los Angeles City Council.]
Last Tuesday, the Los Angeles City Council adopted forthwith (14-1, for once I wasn’t the one, Mitch Englander was) a motion to allow the City Attorney to draft an ordinance that would eventually raise the minimum wage in L.A. to $15 by 2020.
Next day, I appeared on the Fox Business Network to discuss why I voted in favor of the minimum wage increase.
Check out the quick Q&A the L.A. Times put out that addresses the meat of the proposed ordinance.
The schedule:
July 1, 2016: $10.50
July 1, 2017: $12.00
July 1, 2018: $13.25
July 1, 2019: $14.25
July 1, 2020: $15.00
By 2022, the wage would continue to increase, based on the average cost-of-living increases of the previous 20 years.
Small businesses and non-profits with fewer than 25 employees would follow a staggered wage increase schedule (a year later, i.e. $10.50 on July 1, 2017, $12.00 on July 1, 2018, etc.)
The wages of those aged 14-17 would stay at 85 percent of minimum wage for 160 hours.
Transitional job programs like Chrysalis (who helps homeless/formerly-homeless individuals find employment) or Homeboy Industries (who helps rehabilitate and job-train former gang members) would be allowed an 18-month cushion to prepare for the increase.
I submitted an amending motion asking the Economic and Workforce Development Dept. through its WorkSource centers, to study how jobs can be created to mitigate any job losses caused by the implementation of this ordinance.
You can read the rest of the motion’s amendments here.
I voted in favor of moving forward on the wage increase, but not without voicing some of my concerns including:
• The new minimum wage will increase the payroll, but it may not get into the hands of employees (many employer fees are based on gross salary, e.g. Social Security, medical, pension, Worker’s Comp –minimum wage drives an increase in these fees).
• The fact that 50 percent of those who would be positively impacted by the increase don’t live in the city of L.A. They will spend their money where they live. It puts local businesses at a disadvantage when their customers purchase goods, products and merchandise because they will seek lower prices outside of the local jurisdiction
• Businesses are smart. They will do what they have to do to stay in business. The first response is to increase the price of the product/service, (which hurts the employed and unemployed), or reduce their work force, This will, in turn, reduce spending on infrastructure and goods or reduce future hiring
• A wider gap between the haves and have-nots may arise — higher minimum wage vs. unemployed, higher minimum wage vs. tipped employees
• Finally, most annoyingly, we won’t be able to study job loss until the wage increase goes into effect. Out of the three studies on which this action is partially based, only the Beacon Economics study gave a prediction that the wage increase would cost the city 73,000-140,000 new jobs. For the hotel ordinance, the American Hotel and Lodging Assn. predicted a loss of 1,400 jobs. Most studies reflect that a sizable part of the workforce will benefit and move above the poverty level, but almost an equal number of employees will lose their jobs
As I have said before, a new minimum wage ordinance must be measured, spread over several years, surgical enough to benefit the truly needy, but avoid benefiting those employees who are on minimum wage plus commission. It should also concentrate on the city’s economy and employees who are residents of the city of Los Angeles, truly balance the needs of both the business owners and the employees, and be accompanied by an extensive job creation program which may include both minimum wage and wages below minimum wage.
I know the business community is concerned and rightfully so. This is a test. We won’t know how we did until we get a report card back. I hope businesses will be able to adjust to this potential new landscape. It’s an inconvenient truth, perhaps, that the city has been collecting an increase in business taxes for the last five years. In fact for the 2015-16 year, it’s projected that the city will collect $491 million. This tells me that businesses may pout and throw a fit, but they’re fighting the good fight and they’re staying.
So now we await the draft of the ordinance from the City Attorney’s office (and a report back from the Chief Legislative Analyst on the impact of a mandatory sick-leave policy (on June 23 in Economic Development Committee).
Mr. Parks may be contacted at Bernard.C.Parks@lacity.org
