LA passes $15 minimum wage; Tacoma may see proposal on November ballot

The $15 minimum wage campaign continues its march across the country. The Los Angeles City Council Tuesday adopted a $15 minimum, phased in over several years. 

Several other cities, including San Francisco, Chicago, Seattle and Oakland, Calif., have already approved increases, and dozens more are considering doing the same.

Familiar names appear in the coverage.

“The effects here will be the biggest by far,” said Michael Reich, an economist at the University of California, Berkeley, who was commissioned by city leaders to conduct several studies on the potential effects of a minimum-wage increase.

Reich was one of the economists who conducted research for Seattle Mayor Ed Murray’s minimum wage committee

Backers of a $15 minimum wage for Tacoma turned in signatures Monday. The Pierce County Auditor says the verification process will be completed by May 27. 

The initiative may not be the only minimum wage proposal on the ballot.

The $15 minimum wage issue could share the ballot with a competing measure blessed by the Tacoma City Council. Mayor Marilyn Strickland and the City Council created a task force to examine how to change the city’s minimum wage after the Tacoma-Pierce County Chamber asked her to create a group to study alternatives.

According to the proposed ballot measure, businesses making gross revenues of $300,000 per year or more would have to pay a $15 minimum wage with no phase-in period or exceptions based on a business’s number of employees.

The News Tribune editorial board recently weighed in on the proposals.
You have to credit the 15 Now Tacoma folks. With the threat of a radical ballot initiative, they’ve forced the capitalist running dogs of Tacoma — i.e., the City Council and Chamber of Commerce — to scramble for an alternative that will undoubtedly involve raising the minimum wage in the city…

The initiative, if passed, would move the current $9.47-an-hour minimum to $15 as soon as the measure is certified at the beginning of 2016. Were that to happen, Tacoma would be immortalized as a textbook case of utopian economics run amok.

…hundreds of the city’s small employers could no longer do business as usual. Some would fold; some would move to Lakewood, University Place or Fife; some would reduce hours, lay off employees or cut benefits to comply with the initiative…

A lot of workers would wind up with $0.00 an hour, which is what you earn when you have no job.

The editorial argued for an approach that raises the wage with “a degree of economic literacy.” Read the whole thing… it’s worth the time.
 
The FiveThirtyEight blog puts the $15 minimum wage in context, noting the significant variation in living costs across the country and the phase-in adopted by LA. 
According to data from the Council for Community and Economic Research, it costs workers about 40 percent more to live in Los Angeles than in the average American community. That means that $15 in LA is the equivalent of less than $11 in the U.S. overall.
That’s one reason discussions of raising the federal minimum wage quickly get complicated. FiveThirtyEight calculates the effective rate for major cities. Here’s a snapshot of the top tier. (Highlighting added.)
538 Chart
 
We’ve written about the effects of boosting the minimum wage on a metro level. 
In addition to the absolute costs of these measures, and the challenge they create in competing with other employers not subject to the same mandates, local governments’ wage and benefit regulations create compliance problems for employers operating in multiple jurisdictions…
 
Research is mixed on the effects of incremental increases in the minimum wage, but large increases are clearly associated with declining job opportunities for the young and unskilled.
For more discussion, see this Washington Research Council minimum wage analysis,  this column by Megan McCardle on the LA wage hike, and this short City Journal discussion on the effects of the higher minimum wage on young workers.

 

Olympia considers $15 minimum wage; WRC examines effect on young workers

A new poll shows 69 percent of Olympia voters favor a $15 minimum wage in the capital city. 

The poll was conducted Jan. 22-25 by Patinkin Research Strategies, a research firm based in Portland, Oregon. According to the firm, 400 registered voters in Olympia were interviewed via telephone about their preferences for a $15 minimum wage.

The poll sampled people who were likely to vote in 2015, and about 65 percent were over age 50, said Ben Patinkin, president of the research firm.

That age breakdown is interesting, particularly when you consider that the workers most likely negatively affected by the rising minimum are the young and experienced. The Washington Research Council recently updated charts telling the story.
Washington teen unemployment rate is considerably higher than the U.S. average, no doubt – at least in part – because of the high state minimum wage (with no tip credit or training wage for young workers).
 
Some of those interviewed by the Olympian expressed concern about the effect of a $15 wage on business and the community.

…Max Brown, an Olympia resident who chairs the city’s planning commission [said], “I understand the argument that you’re going to get more money in the pockets of the people, but small businesses and entrepreneurs are not going to be able to make it work.”

One problem the minimum wage issue fails to address is income inequality and the shrinking middle class, he said. For example, a higher wage isn’t the same as lifting people up into higher-paying jobs through training and education.

“Until you’re able to step aside from the politics and think about it holistically, it’s really difficult to get good answers,” he said. “It’s not a one-size-fits-all kind of thing.”

Right. Training and education expand opportunity for everyone. The elevated wage risks reducing opportunities for young workers hoping to gain the skills and experience that will be careers and expand prosperity.