The L.A. City Council voted 14-1 today to increase the city's minimum wage to $15 by 2020. Councilman Mitch Englander, the council's only Republican, was the sole "no" vote. The measure now goes to Mayor Eric Garcetti, who said he will sign it.
In the past, the city has adopted living wage ordinances for city contractors and hotel employees. But it has never before imposed a citywide wage floor for all workers. The vote follows similar measures in cities like Seattle, San Francisco, Oakland, San Jose and Chicago.
"We're setting a bar for the rest of the nation to follow," said Councilman Paul Krekorian.
Councilwoman Nury Martinez said the vote marks a victory for janitors, car wash workers, kitchen staff, and hundreds of thousands of other low-wage workers. She cited her own experience growing up with a father who earned $13,000 a year as a dishwasher.
"We can’t be a city that is comfortable with these folks making less than a decent wage," she said. "We as a city need to be better than that."
Most of the substance of the policy was settled last week by the council's Economic Development Committee. The committee's plan — which the council approved — calls for the wage hike to phase in over five years. Large employers will have to pay workers $15 by July 1, 2020. Employers with 25 workers or fewer and some non-profits will have an extra year, reaching $15 by July 1, 2021.
There were a few slight changes from the committee's version last week. Among the most significant was a change in the calculation of the inflation index. Beginning on July 1, 2022, the wage will rise each year to account for inflation. In the committee's version, the inflation index was based on a 20-year average of the Consumer Price Index.
That proposal, which originated with organized labor, would have resulted in a stable and predictable raise of about 2.3 percent a year. However, Garcetti last week expressed some reservations about that idea. During a recession, for example, prices would level out but businesses still would be forced to give their workers a 2.3 percent raise. The council's version, approved today, reverted to Garcetti's original proposal, which was to use the CPI index for each year.
The most significant change in today's version was announced last week. During the committee hearing, a clause was added that would require all employers to provide 12 days of paid leave. That measure caused an uproar in the city's business community, and was withdrawn. The council has pledged to study the matter further and establish a paid leave requirement by the end of the year.
The council also vowed to crack down on a "loophole" related to service charges. Many restaurant owners have suggested that they will switch from tips to service charges in response to the wage increase. Under state law, tips belong to waiters and "front of the house" employees. If restaurants switch to mandatory service charges, then those charges can be distributed to the rest of the workforce.
Labor activists warned that could lead to pay cuts for waiters and other tipped employees, and urged the council to require that service charges be treated the same as tips. The council agreed to study ways to close the "loophole."
The vote came over the strenuous objections of the business community, which warned that raising the wage floor will result in layoffs and will force businesses to move to neighboring cities.
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"There is simply not enough margin in these businesses to absorb a 50-plus percent increase in labor costs over a short period of time," said Ruben Gonzalez, vice president of the L.A. Area Chamber of Commerce. "The only way to absorb those costs is to either cut positions, cut hours, automate or move. That’s the reality and that’s what you will see."
Englander, who is running for the county Board of Supervisors, warned after the vote of "unintended consequences" and said the measure sends a message that "Los Angeles is closed for business."
Rusty Hicks, the leader of the L.A. County Federation of Labor, countered that a higher minimum wage will stimulate the economy.
"The City Council's action today creates a path for workers to succeed and gives our economy the boost it needs to grow,” he said.