Why I voted no on $15

Los Angeles Times - - OPINION - By Mitchell Eng­lan­der Mitchell Eng­lan­der is Los An­ge­les City Coun­cil pres­i­dent pro tem­pore.

On June 10, I cast the City Coun­cil’s lone “no” vote on the $15-an-hour min­i­mum wage pro­posal. While ev­ery­one agrees that there is gen­uine poverty in the city of Los An­ge­les, no wage in­crease can be high enough to off­set the ef­fect of job loss or re­duced work­ing hours that will re­sult from a rem­edy that puts the com­plete bur­den on the backs of busi­ness.

Hav­ing been both a busi­ness owner and a low-wage ser­vice worker, I know first­hand about the strug­gles that busi­ness own­ers and their em­ploy­ees face ev­ery day. I’ve had days when pay­ing my em­ploy­ees meant that I did not take my own pay­check.

This wage in­crease may hurt the very peo­ple it is de­signed to help. Most min­i­mum wage jobs are in low profit-mar­gin in­dus­tries or small busi­nesses that are eas­ily re­lo­cated to one of more than two dozen cities bor­der­ing Los An­ge­les. Many of th­ese cities have min­i­mum wages sub­stan­tially lower than $15 an hour. This com­pet­i­tive dis­ad­van­tage doesn’t sup­port lo­cal job cre­ation or re­ten­tion.

Bloomberg View re­ferred to the City Coun­cil’s min­i­mum wage vote as “L.A.’s Min­i­mum Wage Ex­per­i­ment.” My col­leagues on the coun­cil have ex­pressed their hope for this ex­per­i­ment’s suc­cess, but I have to note what the pos­si­bil­ity of fail­ure may bring.

Rep­re­sen­ta­tives of both the busi­ness and non­profit/char­i­ta­ble com­mu­ni­ties tes­ti­fied that they will be forced to re­duce hours or staff size to com­ply with the new pol­icy. Some job providers tes­ti­fied that they will be re­quired to make tough choices on re­duc­ing or even dis­con­tin­u­ing worker pro­tec­tions, in­clud­ing em­ployee pen­sion and health­care benefits. What then for low-wage work­ers?

The wage in­crease may not help low-in­come work­ers as much as pro­po­nents claim. Bea­con Eco­nomics re­ported that “less than one in four dol­lars paid out by Los An­ge­les City busi­nesses and con­sumers through this plan will ac­tu­ally ben­e­fit the work­ers who are tar­geted.”

More­over, un­til the re­gion gets se­ri­ous about cre­ation of af­ford­able hous­ing, a $15 min­i­mum wage will not en­able work­ers to live lo­cally and use their in­creased buy­ing power here. The av­er­age apart­ment rental in the city is more than $2,000 a month and, ac­cord­ing to af­ford­able hous­ing ad­vo­cates, re­quires a salary of $33 an hour if the oc­cu­pant is spend­ing just 30% of a pay­check on hous­ing.

Min­i­mum-wage in­creases by them­selves do noth­ing to ex­pand the mid­dle class. In or­der to do this we need to cre­ate an ed­u­cated work­force, bring­ing back trade train­ing and shop classes to our high schools and en­cour­ag­ing a clear and af­ford­able path­way from two-year col­leges to four-year uni­ver­si­ties and be­yond.

On the city’s part, we need to elim­i­nate the dra­co­nian gross re­ceipts tax and raise the small­busi­ness tax ex­emp­tion to $500,000 from $100,000. We also need to cre­ate an in­cen­tive for hir­ing lo­cal work­ers that was lost when the state’s En­ter­prise Zone des­ig­na­tion was elim­i­nated.

The very last thing that we should be do­ing as a city is cre­at­ing a com­pet­i­tive dis­ad­van­tage for our busi­nesses with those in neigh­bor­ing cities. That move can only hurt job cre­ators and re­in­force the be­lief that Los An­ge­les is closed for busi­ness.

I voted no on the in­crease be­cause cost-ben­e­fit analy­ses show that the dis­pro­por­tion­ate bur­den to busi­ness is not bal­anced by a guar­an­teed ben­e­fit to the im­pov­er­ished, or to the lo­cal econ­omy.

The so­lu­tions to poverty in Los An­ge­les re­quire all sec­tors — public, pri­vate and non­profit — to have skin in the game to ben­e­fit ev­ery­one. This means an ar­dent com­mit­ment to ex­po­nen­tially in­creas­ing af­ford­able hous­ing in the re­gion, to pro­vid­ing tax in­cen­tives for job cre­ators to hire lo­cal work­ers, and to ed­u­cat­ing a work­force des­tined for mid­dle-class ca­reers, not long-term min­i­mum wage jobs.

The new min­i­mum wage may hurt those it was de­signed to help.


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