Los Angeles Living Wage Move Might be a Game Changer for Some

 Members of Unite Here Local 11 in the Los Angeles City Council chambers on Tuesday before the Council voted to increase the city’s minimum wage from $9. Credit Jenna Schoenefeld for The New York Times
Members of Unite Here Local 11 in the Los Angeles City Council chambers on Tuesday before the Council voted to increase the city’s minimum wage from $9. Credit Jenna Schoenefeld for The New York Times

Little Rock       Lower wage workers might not be reading the paper, but it won’t take long before the word gets to everyone that Los Angeles, the nation’s second largest city, just took a giant leap forward by almost unanimously passing an ordinance to raise wages from $9 per hour where they stand now to $15 by 2020.  They join Seattle, San Francisco, and Emeryville, California in the Bay Area in moving the needle forward.   For some, and maybe for many, this could be a game changer.

Besides raising wages, the LA move knocks down some other barriers as well.  The wage is indexed to inflation so even after 2020, it will “keep giving” and stay up with the economic times.  There might just be a knife, or at least a pinprick, as well in the heart of the tip-regime for servers, which would be huge in changing the culture of the workplace for restaurants, coffeehouses, and similar locations.  California is one of a minority of states, eight to be exact, that do not allow a sub-minimum or tip-credit wage, so literally all boats will rise to $15, rather than just some.  The restaurants are already whining that they want to be able to add a “service charge” to help pay for the increase, and if they are successful, that will be an even deeper plunge into the heart of the servile versus service tipping culture, because the customers will get the message even more clearly that they are being asked to directly pay the wages of the restaurants’ workforce.  Only the rich and Hollywood big spenders are going to willingly agree to essentially pay twice.  This is almost as exciting as living wages!

Will it cost jobs?  Will it raise prices?  My answer would be “maybe, but….”

Most studies have established that the job loss numbers will be minimal to marginal.  In places dominated by the service industry, they can’t move, so they have to stay where the customers are.  In other lower wage jobs, like small manufacturing, warehousing, and the like, most of them have already moved out of Los Angeles into the Imperial Valley or Nevada where land costs are cheaper.  Others need to be close to the port corridor so for them it’s location, location, location as well.  The more interesting question for Los Angeles and other cities that take the plunge will be the impact on “wage compression,” as it’s called:  will wages between $9 and $15 also push up towards the $6 number in coming years in order to hold onto valuable staff that are now being paid $10, $12, or $14 and told to like it and they’re lucky not to be at $9?  This will be an important and interesting fight for labor in Los Angeles, so well worth watching.

That’s jobs, so how about pricing?  The nice thing about an area-wide increase like this one is that everyone is in the same stew, so there is no competitive disadvantage to raising prices to reflect real costs as opposed to the problem that places like our own Fair Grinds Coffeehouse face.  The fact that we are fairtrade only and therefore pay a premium for our coffee that is many multiples higher than all of our competition does not mean that we can charge the true price for a cup of coffee.  In Los Angeles, prices will rise to some level, but luckily they are rising in reaction to wages, rather than this being Buenos Aires where prices are rising and wages are stagnant.  We could all live with this and in fact the New York’s, Sydney’s, London’s, and elsewhere that prices seem sky high while people continue to stream in prove something as well.

The Lakers and Dodgers might not be all that anymore, but the Los Angeles City Council is a team worth watching and rooting for!

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The Expendables – Minimum Wage

 

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Minimum Wage Increases for Tipped Employees are Critical

tipsLondon    Great news from Seattle as a major US city stepped up and put workers on track to make $15 per hour.  Regular minimum wage workers would see their wages in smaller enterprises go up steadily until 2021 to achieve that level.  Big employers with 500 or more workers, like Amazon, would get there between 2017 and 2018 depending on their health insurance.

Council members said they were going someplace people had never been.  Really, they are only going there first.  Professors asked for comment said they had never studied the impacts of “a doubling of the minimum wage.”  But, as we discussed recently, this is not as radical as the chest thumping presumes.  The current minimum wage in Washington State is not the measly $7.25 federal level but a more robust $9.32, indexed to inflation with annual bumps.  So, going to $15 per hour is a jump of $5.68 over 7 years or 81 cents annually, rather than the annual 70 cents per year increase that we saw with the last federal increase under Bush many long years ago.  No one was foolhardy here.  They kept in line with established precedents and practice in raising minimum wages, they just got there first and led the way, and hip-hip-hooray for them!

Importantly, tipped workers are fully covered in this jump, and given the number of areas around the country where they have been frozen at bare pennies above two dollars per hour for the last twenty-two years, that’s huge in and of itself.  To Washington’s credit tipped employees have been fully covered by the state minimum wage already, joining a select crowd, largely in the West that includes only Alaska, Oregon, Montana, Nevada, California, and, oh, yeah, let’s keep it nice in Minnesota, too, and give Hawaii some props for only being a quarter under the minimum there.

Crazily in an early story on this victory, a bartender in Bellevue was quoted saying that $15 per hour would lower his tips, so he was betting he would still do better in Bellevue with the lower state minimum wage than bartenders would do in Seattle.  How silly?  Like he’s going to stay behind that bar for 7 years to find out?  Or, like bar customers are going to think that their tender or servers getting another 80 odd cents per hour every year aren’t still depending on their tips.  This is the kind of economic analysis that is keeping this guy behind the bar and servicing an exploitative business model in the food and beverage industry throughout the country.

What workers really know is that their regulars tip more than casuals and the home folks way, way more than tourists.  You get good tips for good service from people who care about you and care about the kind of service they get at your establishment.  As long as there are tips, that doesn’t change, only the local tradition and culture in the country, where believe it or not there are places in the world where workers turn back tips as a professional insult, or where wages are seen as decent so the level of tipping is more minor or more American.  Tipped workers in Seattle are always going to do better than tipped workers now in Bellevue and most other places in the country, because they’ll have a higher minimum wage to start with, rain or shine, and weather does matter, and, let’s face it, their regulars make more money in Seattle than the rest of Washington, even Bellevue, and certainly than America, so they’ll always do better, dude.

Recently when the Michigan legislature bit the bullet and raised their minimums to try and take the steam out of a ballot initiative, the head of the Restaurant Opportunities Centers (ROC) continued to clamor that it didn’t work because it didn’t raise up tipped workers.  She’s right and the Bellevue bartender is wrong.  We have to do better across the board here, so that all boats rise when the minimum wage goes up.

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