BUSINESS LA-The Los Angeles City Council tentatively voted to increase the city’s minimum wage to $15 an hour by 2020. The business community opposed the move. How business will react is unclear but there was much discussion during the debate over the issue about lost jobs and eyeing more friendly business locations.
The wage increase is to be phased in over time so the immediate impact may not be felt. Businesses ought to keep score when the effects hit so officials will be cognizant of the consequences. By no means cheerleading for negative effects here, but if the wage increase doesn’t cause economic disruptions and it appears business’s challenge to the dramatic increase in the minimum wage is just an exercise in rhetoric, the business communities credibility will suffer.
The vote to pass the minimum wage increase was 14 to 1. The council gets to vote once more on the measure after an ordinance is drafted by the city attorney but the lop-sided vote indicates there is no turning back. The council set the wage even above the recommended level offered by Mayor Eric Garcetti who proposed an increase to $13.25 an hour.
The city council’s version contains an inflation clause and offers an extra year for small businesses and non-profits to comply.
Not nearly enough breaks as far as the business community is concerned. Ruben Gonzalez of the Los Angeles Chamber of Commerce said, “There is simply not enough room, enough margin to absorb a 50-percent increase in labor costs over a short period of time.”
The Chamber’s president and CEO Gary Toebben wrote to his members about the many small business owners who testified in various hearings on the measure. He wrote, “They also talked about the likelihood that in order to provide a wage increase for some employees, they would have to reduce hours for others.”
Toebben noted wryly, “Last week, there were banners hanging throughout City Hall celebrating Small Business Week. There are many small businesses owners in LA who don’t feel like the City is celebrating them today.”
Earlier in the day of the vote, the Los Angeles County Business Federation (BizFed) released a survey on business conditions in the area. According to a release from BizFed, “The City of Los Angeles stood out again as being cited most frequently by employers as unfriendly. Santa Clarita and Glendale were ranked in the top 5 most business friendly cities, which is notable because officials from those two cities are actively courting City of Los Angeles businesses in light of the proposed City of Los Angeles minimum wage increase.” (Emphasis mine.)
So what will Los Angeles City businesses do? Once the minimum wage law takes effect will there be jobs lost or hours cut? How many businesses move to a different, friendlier, location? Business credibility is on the line. Crying wolf and not acting will damage efforts to turn around unfriendly business policies.
(Joel Fox is the editor of Fox and Hounds and President of the Small Business Action Committee. This column was posted first at FoxandHoundsDaily.com)
-cw
