The push to increase the minimum wage has occurred on the national stage with promises from President Obama as well as on the local stage as cities such as Seattle, Portland, and San Francisco have all made pushes to increase the citywide minimum wage. On Tuesday, March 31, the county Board of Supervisors unanimously voted to study the raising of the minimum wage. The campaign specifically would like to implement a wage raise to $13.25 as soon as 2017 specifically in Los Angeles County, which would affect approximately 4 million residents. However, there are plans to increase the wage to $15.25 by 2019 as well as expanding the coverage area to include another 1 million residents surrounding Los Angeles County.
Theoretically, this increase in the minimum wage could drive up unemployment as firms fire employees in order to keep costs constant while still abiding by this minimum wage. Another option would be a decrease in profits as firms struggle to pay their current staff the increased minimum wage. Many lobbyists are worried that the proposed increase in minimum wage could see many firms relocated outside of the affected area in order for their wages to remain low, which would then negatively impact the city with reduced tax revenues from those firms. The county board, however, would like to focus on the examples of Seattle, Portland, and San Francisco which have all seen increased productivity from their populations after the implementation of a significant wage increase. These cities have also seen significant gentrification movements as well as decreased income inequality as well as decreased crime rates after the new policies.
I would argue that there are some key differences among the economies of Seattle, Portland, San Francisco, and Los Angeles. First and foremost, Los Angeles has a significant illegal immigrant workforce that would not hesitate to work for below to minimum wage if the minimum wage were to increase. Raising the minimum wage would only incentivize firms to utilize this illegal immigrant workforce within their firms and would drive citizen workers out of the market. Second, Los Angeles is a significant manufacturing center on the west coast and in the United States in general. Many manufacturing plants have unions with collectively bargained wages that are held constant in the long term. The proposed increase would raise the minimum wage above these collectively bargained wages, with no incentive for firms to raise the collectively bargained wages until the agreement runs out. This increase would then drive workers out of those firms, leaving a significant revenue stream lacking labor, which feeds back into the first difference that I have stated. On the flip side of the coin, the raise in minimum wage could have a positive impact despite rising unemployment. Los Angeles, especially compared to San Francisco has a significant problem with underemployment, where people are employed, but do not earn a sufficient wage to support themselves. This problem exists due to the large supply of part-time jobs within the economy as manufacturing plants hire part-time laborers and the entertainment industry does not provide steady labor. The increase in the minimum wage would definitely increase the unemployment rate temporarily, but could bring some people who are underemployed into full employment. As the labor market adjusts, the increase unemployed people could move out of the city or to another city entirely in order to find work. While the increase in full employment is a benefit with this policy, I believe that overall there are multiple differences between the economies of Los Angeles and Seattle, Portland, and San Francisco which prevent those cities from being templates for Los Angeles and make this policy untenable.
http://www.latimes.com/local/lanow/la-me-ln-county-minimum-wage-20150330-story.html#page=1
Theoretically, this increase in the minimum wage could drive up unemployment as firms fire employees in order to keep costs constant while still abiding by this minimum wage. Another option would be a decrease in profits as firms struggle to pay their current staff the increased minimum wage. Many lobbyists are worried that the proposed increase in minimum wage could see many firms relocated outside of the affected area in order for their wages to remain low, which would then negatively impact the city with reduced tax revenues from those firms. The county board, however, would like to focus on the examples of Seattle, Portland, and San Francisco which have all seen increased productivity from their populations after the implementation of a significant wage increase. These cities have also seen significant gentrification movements as well as decreased income inequality as well as decreased crime rates after the new policies.
I would argue that there are some key differences among the economies of Seattle, Portland, San Francisco, and Los Angeles. First and foremost, Los Angeles has a significant illegal immigrant workforce that would not hesitate to work for below to minimum wage if the minimum wage were to increase. Raising the minimum wage would only incentivize firms to utilize this illegal immigrant workforce within their firms and would drive citizen workers out of the market. Second, Los Angeles is a significant manufacturing center on the west coast and in the United States in general. Many manufacturing plants have unions with collectively bargained wages that are held constant in the long term. The proposed increase would raise the minimum wage above these collectively bargained wages, with no incentive for firms to raise the collectively bargained wages until the agreement runs out. This increase would then drive workers out of those firms, leaving a significant revenue stream lacking labor, which feeds back into the first difference that I have stated. On the flip side of the coin, the raise in minimum wage could have a positive impact despite rising unemployment. Los Angeles, especially compared to San Francisco has a significant problem with underemployment, where people are employed, but do not earn a sufficient wage to support themselves. This problem exists due to the large supply of part-time jobs within the economy as manufacturing plants hire part-time laborers and the entertainment industry does not provide steady labor. The increase in the minimum wage would definitely increase the unemployment rate temporarily, but could bring some people who are underemployed into full employment. As the labor market adjusts, the increase unemployed people could move out of the city or to another city entirely in order to find work. While the increase in full employment is a benefit with this policy, I believe that overall there are multiple differences between the economies of Los Angeles and Seattle, Portland, and San Francisco which prevent those cities from being templates for Los Angeles and make this policy untenable.
http://www.latimes.com/local/lanow/la-me-ln-county-minimum-wage-20150330-story.html#page=1
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