Raising the minimum wage may not improve the quality of life of the poor according to a new report. The Board of Supervisors authorized the study by the Los Angeles Economic Development Corp. to look at the possible economic effect of raising pay gradually to $15 per hour. The City of Los Angeles approved a plan within the city limits of Los Angeles to increase the minimum wage from $9 to $15 by 2020. The County of Los Angeles also approved the increase following the guidelines of the city legislation passed earlier.
A draft version of this report was released in June, which included a survey of 1,000 businesses around the county and its results. The report’s final version, also released in June, had more of a detailed breakdown of the results and observations. What the economists concluded was “prices will increase, including those that lower-income households commonly face: wages will rise for those in minimum wage jobs that remain employed; employment opportunities for those with few job skills will be less, and there will be slow employment growth”. According to the report, none of the businesses that were surveyed thought that they would close down or move because of the proposed increase.
Most of the businesses, and 96% of the ones that have employees making minimum wage, said they would raise prices to offset the greater labor costs. Only a few businesses, 6% of those surveyed, said they would reduce the number of minimum wage workers they have if the wage increased, but 19% of businesses with minimum wage workers said it was likely they would reduce the workers employed.
Only 2% of businesses surveyed overall, but 7% with minimum wage workers said they might cut the hours of their low wage employees. Businesses in the city of Los Angeles give jobs to about 40% of the workers throughout LA County. 10% are in unincorporated areas. The rest are in the other cities within LA County. Under this plan approved by the City of Los Angeles and LA County for the unincorporated areas of the city, a business with less than 26 employees will get an extra year to incorporate the wage increase. According to the report, 87% of businesses throughout the county and 86% of those in unincorporated areas have less than 20 employees.
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