Minimum Wage

Los Angeles Pulls Trigger on Massive Minimum Wage Hike; Doesn't Know Who Will Actually Have to Pay It

Demands $15 per hour by 2020.


Are you a cylon?
Credit: Wesley Wolfbear Pinkham / photo on flickr

The City Council of Los Angeles has formally said yes to a huge increase in the city's minimum wage. By 2020, businesses within the city will be expected to pay their employees a minimum of $15 per hour. The council voted in the affirmative (again) on Tuesday, but have essentially put off dealing with the controversies that have popped up over who would actually be affected by the new rules. From the Los Angeles Times:

One lingering, highly contentious question is whether unionized companies should be allowed to negotiate for a sub-minimum wage with their employees. The Los Angeles County Federation of Labor sought to add that provision to the ordinance in the final days of the debate, saying that it would help avert legal challenges and allow union workers to trade pay increases for other benefits as they saw fit.

Business groups angrily attacked it as a ploy to prod companies to unionize. Deluged with criticism, council members agreed to study the provision further. …

Other sensitive, pending issues include whether to loosen the minimum wage requirement for programs that train the disadvantaged and disaffected for jobs. Another unresolved matter is whether to restrict restaurants' use of surcharges to offset added labor costs.

Lawmakers are also examining how the wage law would apply to out-of-town companies whose workers venture into Los Angeles. Several council members also asked for a report on whether to exempt small businesses — those with up to 50 workers — when the value of employee benefits meets or exceeds the wage requirements.

And then this:

Asked why they approved the ordinance with so many issues in flux, council members said they wanted to give businesses and workers time to plan for the new wage mandates.

Have a good, dark laugh. Good luck trying to plan, businesses and workers!

There's a lot to shake one's head about here. They're actually considering trying to prohibit restaurants, which often have tiny profit margins, from passing their new costs along to customers, which is just flat-out bonkers.

Brian Doherty and Matt Welch have previously written about concerns with the Los Angeles plan, Doherty about how it could absolutely screw over non-profits who help provide work and train people on the margins of society (like ex-convicts) and Welch about how the labor unions, who have been the primary force driving this whole effort, want to exempt themselves from the law.

Let me be a little more clear: This was exactly the labor unions' goal all along. We have seen this in previous instances where cities have introduced drastic minimum wage increases, again after heavy pushes by labor unions. In fact we saw it earlier in Los Angeles when the city forced hotels with more than 300 employees to pay minimum wages even higher than this proposed plan. Union labor is exempt if they negotiate lower salaries.

This "minimum wage" is meant to actually be a tax on non-union labor. I wrote about this situation last December:

What better way to get workers to accept unionization than to force a situation where they could be laid off unless their employers agree to unionized collective bargaining to keep wages down? But the unions will claim they're the ones looking out for the workers. And they'll blame corporate greed for any layoffs while counting their union dues off in the corner.

But now the City Council doesn't seem to be excluding organized labor from the rules just yet, which would be hilarious if it sticks. But the cynic in me expects that it won't. There's still time for donations. Oops, I mean there's still time for amendments. Amendments is what I meant.