The city of Los Angeles’ decision to increase the minimum wage there to $15 an hour is causing turmoil for the surrounding county, where an effort to match the city’s rate has stalled.
County Supervisor Hilda Solis, whose support is crucial, stunned advocates by opposing the proposed increase during a board of supervisors meeting Tuesday, citing concerns about its impact on local businesses.
“I support an increase in the minimum wage, but I also want to protect small businesses and promote economic development at the same time. #smallbiz,” Solis said in a Facebook posting Tuesday evening. She has requested unspecified assistance for those businesses from the county.
An increase of some sort is likely to be adopted this summer, but sources on both sides of the debate now expect it to be significantly less comprehensive than the city’s across-the-board $15 hike. That would create a two-tiered wage system in the Los Angeles metro region, a situation that higher minimum advocates had hoped to avoid.
Solis’ opposition was a surprise. Formerly President Obama’s labor secretary, she’s a liberal who has previously spoken in favor of a higher wage. But she also represents a heavily Latino region with numerous family-owned restaurants and stores.
A Solis staff member who requested anonymity said she is in talks with the rest of the five-member board to back an increase but has said offsets for small businesses are “imperative.”
A key figure in the higher wage coalition who requested anonymity described Solis as the crucial third vote advocates need. However, the source said they didn’t know how they could accommodate her without undermining the point of having a $15 minimum. Either way, they could end up with a patchwork of different wage levels, which would disrupt the metropolitan area economy, the source said.
The situation has created an opening for local business groups. While resigned to having a higher wage, they believe the precarious situation will create room to lessen the effect of the eventual increase.
One move would be to expand the definition of a small business, who have six years to phase in the increase as opposed to four years for all other employers.
“Right now, they have definition as businesses with 25 employees or less. We want to get that pushed up to 100,” said Dustan Batton, policy analyst for the Los Angeles County Business Federation.
It’s not clear what would be the economic impact of having two different minimum wages in areas so close because there is little to compare it to. Local minimum wages that differ from the state or federal level are a fairly new idea. Minimum wages are usually raised in much smaller increments than what’s called for in the current $15 proposal and they are usually raised in a broad-based manner, either statewide or nationwide.
Michael Tanner, an economist with the libertarian Cato Institute, expects that few Los Angeles businesses would move to avoid the increased minimum. Smaller businesses typically cannot afford the costs of moving, while larger ones that can afford to already typically pay their employees well above the minimum.
“Where it is going to have an impact is where new businesses choose to locate,” Tanner said, arguing they will avoid the city if possible, directing economic growth away from it.
David Cooper, an economist with the liberal Economic Policy Institute, pointed to a recent study by the University of California at Berkeley’s Center on Wage and Employment Dynamics.
“LA has a sizable apparel manufacturing industry. What they note [in the study] is that there might be some incentive for them to move outside of the city bounds because they are pretty labor-intensive,” Cooper said.
There’s even talk that some businesses might seek to be annexed to other cities or counties, a concern raised by County Supervisor Michael Antonovich Tuesday.
California currently has a statewide $9 an hour minimum wage. It is set to increase to $10 next year.
The city’s increase has other problems for the county as well. Last week, the board approved raising the wages for in-home caregivers who are subsidized through a combination of federal, state and local money. The increase will cost county taxpayers an estimated $42 million over the next four years alone.
–Washington Examiner
