The City of Quartz is a city of contrasts, with some of the world’s richest and poorest neighborhoods existing side by side, divided along borders of race and privilege. But what would happen to its dramatically unequal economic landscape if the city created the highest wage floor in the country?
Progressive economists have mapped out a scenario of a $15.25 hourly minimum wage in Los Angeles, phased in by 2019. The idea is not as radical as it may seem: some City Council members are actively pushing this proposal, perhaps buoyed by the momentum of the Fight for 15 protests exploding nationwide, and the effort builds off the Mayor’s minimum-wage proposal of $13.25 an hour. It would also parallel an ongoing measure—now facing stiff opposition from business leaders—to lift the minimum hourly wages of local hotel workers to $15.37.
A $15.25 base wage would place Los Angeles just ahead of Seattle, which recently led the nation in passing a phased-in $15 wage (and enjoys higher median earnings and lower cost of living than LA). California’s current statewide minimum wage is $9 an hour. Many earn even less; wage theft costs local low-wage workers some $1 billion a year.
According to a report, authored by Economic Roundtable, UCLA Labor Center and Institute for Research on Labor and Employment, with support from the LA County Federation of Labor, the new floor wage would add $5.9 billion to the income of roughly 723,000 Los Angelenos. This translates into some $6.4 billion in sales, with benefits distributed progressively to alleviate the city’s world-class levels of inequality. Job growth would be spread across both high- and low-income neighborhoods, but many neighborhoods experiencing the largest growth in community earnings would be clustered in lower-income areas. And many businesses that employ the affected workers would be concentrated in “high income, economically resilient areas.”
Despite the conservative line that raising minimum wages is a “job killer,” the report cited analyses indicating that the macroeconomic benefits outweigh the costs in terms of stimulating economic activity and earnings (with job losses partially offset by more than 45,000 newly created jobs). The cost for consumers would be manageable, since “Six of the seven industries [most affected] are in the service sector where consumer demand is expected to support necessary price increases.”