Minimum Wage in Los Angeles: Impact Study Shows Benefits of Higher Pay Outweigh Costs

The benefits of raising the minimum wage in Los Angeles “largely outweigh” the costs, according to a report commissioned by the city to examine a potential pay hike for low-income workers. Researchers from the University of California, Berkeley, looked at a proposal that would boost hourly pay from the current statewide minimum of $9 to $13.25 by 2017, and $15.25 by 2019.

“The high density of low-wage jobs in Los Angeles means that the benefits of raising the minimum wage will be considerable,” researchers found.

By 2019, more than 600,000 Angelenos, about 40 percent of the city’s workforce, would benefit from the proposed hike, according to the report. The boost would lift average annual earnings by 30 percent, or roughly $4,800. People of color would make up more than three-quarters of the affected workers.

Operating costs would rise for some employers, especially in sectors like food service, researchers said. And some of those costs would be passed along to consumers in the form of higher prices, reducing consumer demand to a degree. But overall, consumer demand would see an increase, as people have extra cash to spend. Since more than half of the affected workers live outside city limits, the benefits would spread to surrounding communities, according to the report.

Two other reports on the topic were released Thursday, the Los Angeles Times reported. One of them, commissioned by the Los Angeles County Federation of Labor, found the benefits to be even greater. The other, commissioned by the Los Angeles Area Chamber of Commerce, said a $13.25 minimum wage would do more harm than good. (It did not look at a $15.25 rate.)

A city council committee has scheduled a series of hearings on the studies over the coming weeks. Mayor Eric Garcetti supports a $13.25 minimum by 2017, but some city council members want to go further with an additional $15.25 by 2019. Votes on legislation are not expected until after the hearings.

As proposals to increase the federal minimum wage stall in Washington gridlock, Los Angeles is the latest metropolis to embrace the wage cause on its own. Chicago, San Francisco and Seattle, among other major cities, passed hikes last year. Seattle’s new wage law -- which mandates a $15 minimum for large employers by 2018 -- kicks in next month.