Experts Disagree On LA Wage Increase

05.20.2015 | Surge Wire |

The city of Los Angeles approved Tuesday a measure to raise its minimum wage to $15 per hour despite some experts warning against the increase.

The decision by the Los Angeles City Council, with a 14 to 1 vote, to raise the city’s minimum wage by 2020 has already been met with mixed reviews. While unions and some university researchers have advocated for the increase, others warn it could result in some severe economic problems.

“It’s a move that will go a long way to ensuring that no one who works full-time lives in poverty,” International President of the Service Employees International Union Mary Kay Henry said in a statement.

“This victory was the result of a growing movement of working people standing up and raising their voices in the streets and at City Council meetings for months,” she continued. “To their credit, the city’s elected officials listened, and as a result, L.A. is on the path to having an economy that works for everyone, not just the wealthy few.”

Researchers at the University of California, Berkeley were also adamant about raising the minimum wage. In a study from September, Michael Reich, Ken Jacobs, Annette Bernhardt and Ian Perry claimed such a wage increase would have vastly positive outcomes.

“Drawing on a variety of government data sources, we estimate that 567,000 workers would benefit from the proposed minimum wage law, with the average worker earning an additional $3,200 a year (once the law is fully implemented),” the study noted.

“Our analysis of the existing economic research literature suggests that most businesses will adjust to modest increases in operating costs through reduced employee turnover costs, improved work performance, and a small, one-time increase in restaurant prices,” the study continued.

The study was backed up by research conducted at the University of California, Los Angeles, which was obtained by KPCC. Experts at the Employment Policies Institute (EPI), however, warn the findings were misleading and that in fact the wage increase is likely to cause many problems.

“Calling on an economist formerly employed by Big Labor’s think tank to provide a neutral ‘peer review’ of the Berkeley minimum wage study is almost as ridiculous as the original decision to have the Berkeley team conduct that study,” Michael Saltsman, research director at EPI, said in a statement.

“Whatever the credentials of the reviewing economists, their affiliations clearly create a conflict of interest that prevents the City Council from receiving a neutral assessment of the consequences from a $13.25 minimum wage,” Saltsman added.

Seattle and San Francisco have already been seeing problems with some businesses having to close after they passed measures to gradually increase their minimum wage to $15 an hour as well.

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