Wage Mandate Puts Jobs on the Line

For months now, the writers of the UC Berkeley policy briefs on the potential impact of a minimum wage hike in Los Angeles have been saying that a proposed 66 percent increase in the minimum wage will have a negligible impact on jobs.

Data now beginning to trickle out from our neighbors to the north – San Francisco and Oakland – should be raising alarm bells here in Los Angeles. Those cities approved wage mandates of $15 an hour and $12.25 an hour just last fall.

A commentary that appeared in the Wall Street Journal last week entitled “The Unappetizing Effect of Minimum-Wage Hikes” reported that in San Francisco and Oakland, restaurants are closing. The Abbot’s Cellar, rated as one of San Francisco’s top 100 restaurants, closed with the owners saying that they had no way to absorb the added costs. A popular vegetarian restaurant, named The Source, closed citing the higher minimum wage. Borderlands Books, a renowned bookstore, was only able to remain open, when customers put on a fundraiser to counter its added costs. In nearby Oakland, 10 restaurants and grocery stores decided to permanently close as a partial consequence of the wage hike.

The commentary reported that Ken Jacobs, one of the authors of the UC Berkeley study, responded to the negative reports by explaining that they were just labor-market “churn”.

I wrote last week that this same Berkeley study has predicted that there will be a net gain of 3,666 jobs by 2017 and 5,262 jobs by 2019 because of the “multiplier” effect of minimum wage workers having more money to spend.

However, Beacon Economics has predicted that the minimum wage increase would have a chilling impact on the creation of jobs by businesses. The Beacon report says that if the plan is put into place “it will reduce job growth in the City from an expected 1.8 percent per year for the next five years to less than half that and potentially eliminate growth altogether. In other words, expected job growth would go from 30,000 jobs per year to somewhere between 2,000 to 15,000 jobs.”

Michael Saltsman, the author of the Wall Street Journal story, concluded by saying “It’s probably too late to save other Oakland and San Francisco businesses. But it’s not too late for cities like New York and Los Angeles to heed the evidence before following their footsteps.”

The final hearing being conducted by the City’s Economic Development Committee on the proposed wage hikes will take place tomorrow evening (Thursday) at the Museum of Tolerance, 9786 Pico Avenue, at 6 p.m. We urge our members to show up and express your concerns about the current proposal.

The Hollywood Chamber has called on the City to take steps to protect our small businesses and nonprofit agencies. At a minimum, any increases for these businesses/agencies must be spread over a longer period of time in smaller increments. Let them know that you agree with our recommendation and that the future of your businesses is on the line.

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Leron Gubler has been serving as the President and CEO of the Hollywood Chamber of Commerce for the past 22 years. His tenure since 1992 continues to oversee the great comeback story of Hollywood.

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