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LA Just Decided to Raise Its Minimum Wage to $15 an Hour

The city council of the second largest city in American just passed a major minimum wage hike by a vote of 14-1.

by Mike Pearl
May 19 2015, 10:06pm

Photo by the author

With a vote of 14-1, the Los Angeles City Council just passed an increase in the minimum wage that will bring wages up to no less than $15 an hour by the year 2020. Much of the effort behind the plan came from Councilman Paul Krekorian, who told the LA Times this week that Los Angeles "is leading the nation."

Since Seattle passed a measure that will raise its minimum wage to $15 last year, progressives in cities around the country have taken up the $15 an hour banner; San Francisco adopted a similar plan later in 2014, and New York City Mayor Bill de Blasio has endorsed the $15 mark as well. But LA is the largest city yet to officially embrace the idea.

Related: Three people in LA are trying to trademark "emo."

According to the Times, the first phase will happen on July 1 of 2016, with wages going up to $10.50. After that, they'll increase every subsequent July 1 to $12.00, $13.25, $14.25, and finally $15 in 2020, although businesses with staffs of 25 or fewer will have an extra year to comply. After 2020, the minimum wage will continue to rise annually based on the Consumer Price Index.

Watch 'Oil of LA' for more on the Los Angeles economy.

This wage hike is going to affect a lot of people. According to a 2013 AFL-CIO report on wages in Los Angeles, 46 percent of workers with conventional wage or salary pay structures were paid less than $15 an hour, while a pro–wage raise group called Economic Roundtable puts the current number at 40 percent.

With LA's high cost of living and status as the single poorest of America's big cities the wage hike will be a huge relief for many. University of California, Berkeley, economist Michael Reich told the New York Times that "the effects here will be the biggest by far," and said that this will change wages "in a way we haven't seen since the 1960s."

"There's a sense spreading that this is the new norm, especially in areas that have high costs of housing," Reich added.

In March, the LA County Board of Supervisors formally began a study into the effects of a similar increase county-wide. That would include incorporated cities fully or partially surrounded by Los Angeles like West Hollywood, Long Beach, and Compton. Without a county-wide increase, such cities may form islands of lower wages within the borders of Los Angeles.

That analogy has also been used by critics of the wage hike, who argue that Los Angeles will become a "wage island," that pushes business into the outlying communities.

Last year, Stuart Waldman, president of the Valley Industry and Commerce Association, and a staunch opponent of the wage plan, criticized it in theLos Angeles Daily News, saying "It is crucial that our government begins gearing policy toward attracting and retaining business. Once businesses are comfortable, well-paying jobs will follow."

Only time will tell what effects the new minimum wage rules will have.

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