Mayor Garcetti: $13.25 minimum wage would bolster buying power, boost productivity
Mayor Eric Garcetti is pitching a hike for the minimum wage in Los Angeles to $13.25 an hour. Is it fair to expect businesses to shoulder a steep wage increase?
Mayor Eric Garcetti is pitching a minimum wage hike for workers in Los Angeles. The goal is to raise the minimum wage to $13.25 an hour, phased in over three years.
Critics are concerned about the effect on payroll and job retention within L.A., with some major business groups argue that higher wages could drive jobs and businesses outside of the city.
While many proponents advocate higher wages, there has been criticism even within that camp that Garcetti’s proposal doesn’t raise the minimum wage enough. Unions have been pushing for an immediate increase to $15 per hour. That proposed wage increase would immediately boost the minimum wage in Los Angeles to $10.25/hr from the current $8/hr, with a $1.50 increase each following year until inflation-based boosts began in 2017.
Garcetti joined AirTalk Tuesday to talk about his proposal. Here's an excerpt:
Larry Mantle: You see the city's overall economy benefiting. How do you see it beyond the benefit to the workers themselves?
Mayor Eric Garcetti: We looked at this proposal — which is a reasoned and reasonable proposal — that would add about $6 billion to our local economy. Most economists are saying that the recovery is lagging simply because you have no buying power at the bottom end of the spectrum. And the good news is American workers are more productive than they've ever been. Over the last three and half decades, we've seen productivity go up double digits. The top of the wage ladder: People have seen their wages go up by 17 percent. But at the bottom end, they've actually seen a reduction by 12 percent.
People are falling further and further behind, working more and more jobs. And poverty is bad for the city; poverty is bad for business and it represents now over a quarter of the population of the city. So it's important for us to make sure we reward hard work and help them keep up and to spur the economy with the added benefits of that spending power...
LM: If it is stimulative, why not raise it even more?
EG: At a certain point, that is a reasonable question. We think this is a great proposal because without doing anything, we're stuck where we are. But you can go too high and there is a point where people would see job displacement, would lose jobs. But we had economists from UC Berkeley — who are the experts in the country on this — release a report, which is available on our city's website (if you go to lamayor.org/raisethewagela). You can see that this would not disrupt the economy; it would be a net gain across the board...
LM: Are you concerned that a nearly 50 percent wage increase is going to cost jobs?
EG: Given where the state is going to already increase the minimum wage, it's about a 33 percent increase over the following three years.
[...] When you look at this, raising the wage helps reduce worker turnover — days that workers take off. It increases productivity, stability and it lowers recruiting and training costs. It really adds prosperity to the overall business and I think the canard that employment of low wage workers will decline has been disproven.
LM: If you're coming from an industry where this is your bread and butter — you run convenience stores, fast-food outlets, hospitality services — this is a significant hit.
EG: There's no question that what we have now doesn't work. Sixteen thousand dollars. When you work full-time — even doubling that with a couple kids — you can't live on two minimum wage jobs. And they're not just jobs for kids anymore, entry-level jobs. We have about 567,000 Angelenos who reply on minimum wage to support themselves and their families.
I would kind of flip the question a bit, which is to say, right now we are subsidizing poverty when we have companies that come in and pay the minimum wage for fast food or for retail. We are essentially subsidizing that poverty with food stamps, emergency room visits and all the things that happen. Let alone the social costs when a parent can't come home and spend time with their kid to go over homework — and we wonder why our schools are failing and other things.
This interview has been edited. To hear it in its entirety, click on "Listen Now" above.
Eric Garcetti, Mayor of Los Angeles
Gary Toebben, President, Los Angeles Area Chamber of Commerce