Minimum Wage Study Released by Los Angeles Economic Development Corporation

The long-awaited minimum wage study from the Los Angeles Economic Development Corporation (LAEDC) was released today, and so begins the community review process that was unanimously approved by a Long Beach City Council vote in September.

The report lists the pros and cons of instituting a proposed minimum wage hike to $15 per hour as cities like San Francisco, Los Angeles and Seattle have already voted into law.

The report does offer quite a bit of wiggle room for proponents on both sides of the wage battle, noting that while certain short-term results could negatively effect minimum wage workers in Long Beach, it could in theory result in surrounding municipalities raising wages as well, making the market less competitive for both employees seeking work in Long Beach and employers seeking to relocate to cheaper, local markets.

“It is important that we move forward with a community process that is collaborative, open and balanced,” Mayor Robert Garcia said in a statement released regarding the study. “I encourage residents, workers, and employers to participate in these six meetings and roundtables over the next couple of months.”

To do so, the city scheduled six outreach meetings regarding the minimum wage study process, with three more opportunities left for stakeholders to again join in the dialogue over the merits of potentially raising the wage in the city. The next is set for Tuesday, November 17 during a mayor’s roundtable meeting at Admiral Kidd Park.

A best-case/worst-case scenarios were presented by the study’s authors, showing that if the wage was increased by the city, around 33,000 employees would see their wages rise by a total of $940 annually by 2017 and 45,700 would see a spike of over $5,000 by 2020. The worst-case scenario laid out a situation where, in that same time frame, 14,000 workers could see reduced hours, job loss or job substitution by 2017. That number would rise to just under 21,000 as the minimum wage topped out at $15 in 2020.

“What can be said with some certainty is that increasing the minimum wage will increase the hourly wages paid to employees who are affected,” one part of the study read. “What happens next is more uncertain, and depends on the responses of employers, employees and non-working job seekers and how these in turn generate downstream impacts.”

It estimates that 81 percent of Long Beach businesses currently have workers that make below the proposed minimum wage of $15. However, of the 600 businesses that completed the survey conducted by the LAEDC, 40 percent of businesses reported their work force was made up of less than 10 percent of minimum wage workers. The survey’s average was 17.9 percent of the workforce. 

The 23-question survey was administered to about 600 randomly-selected businesses from all regions of the city to assess the feelings of business owners on the possible implementation of higher minimum wage.

Despite 93 percent of business owners finding it likely that prices would need to increase to offset higher wages and 70 percent stating that they would expect current workers to be more efficient and take on more tasks, only 10 percent believed that eliminating jobs was imminent and 3 percent responded that they would likely cut hours.

Nearly 80 percent of respondents believed that a higher minimum wage would result in happier, more productive workers, regardless if they would benefit from the the proposed wage hike. 

The study proposed some mitigation efforts that could be taken on by the city to help reduce the loss of revenues to surrounding cities. It could follow suit and institute exemptions for small businesses, unions and non-profits as other cities already with wage hike programs in place. Los Angeles defines a small business as one with 25 employees or less. Long Beach is overwhelmingly composed of small businesses, with 84 percent of businesses in the city having less than 20 employees, according to 2014 figures.

Now that the study has been released, the city’s Economic Development Commission—the group charged by the mayor to make recommendations to the city council regarding the LAEDC’s report—can formally start its process. Last month, the commission asked for and was granted an extension of its original deadline for recommendations that was set for early December. The hearing now isn’t expected back inside the council chambers until early 2016.

The commission will host the last of the three remaining meetings open to the public November 24 inside city hall.

“I am pleased to see the LAEDC has been engaged to fully study the impacts of changing the minimum wage and business incentives in the City,” said Vice Mayor Suja Lowenthal in the release. “It’s important for the community to have ample opportunity to receive information and offer their feedback.”



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