Lawndale Tribune AND lAwNDAle News The Weekly Newspaper of Lawndale Herald Publications - Inglewood, Hawthorne, Lawndale, El Segundo, Torrance & Manhattan Beach Community Newspapers Since 1911 - Circulation 30,000 - Readership 60,000 (310) 322-1830 - April 14, 2016 Winners, Losers and Myths of the Minimum-Wage Law By Rob McCarthy California’s $15 minimum-wage law is being watched closely by business owners and labor economists who expect the slow annual increases beginning next year to eliminate some jobs and possibly have unintended consequences. Gov. Jerry Brown signed the law on April 4, and set in motion annual increases in the state’s minimum wage for five consecutive years beginning on Jan. 1, 2017. Business groups, including the California Chamber of Commerce, lined up against making California’s minimum wage the highest in the nation, along with New York’s base wage. “This is too much too fast,” said CalChamber President and CEO Allan Zaremberg. “It is unfortunate the Legislature didn’t take advantage of the opportunity to address the issue in a more balanced manner.” California’s minimum wage is $10 per hour, and will move to $10.50 in January for employers with 25 or more employees. Smaller businesses are exempt from the raise until 2018. After a second 50-cent increase in 2018, the state minimum wage will jump by $1 per year until it reaches $15. The law calls for that to happen in 2022, though there is a provision in the law that allows the governor to delay implementation of the annual wage increases in the event the economy tanks. An unintended consequence could be higher prices and expenses for workers’ compensation, uniform and tool reimbursements, and overtime, according to the California Chamber. “These additional costs will significantly burden those companies that may not ordinarily pay minimum wage,” it warned. The winners of a higher base wage are minimum-wage employees, of which there are 1.9 million in Los Angeles County, according to the UC Berkeley Labor Center. Orange County ranked second at 605,000 people working for the state’s minimum hourly rate. The majority of those are employed in the restaurant and hospitality industries, both of which are huge in the South Bay. University of California economists - one at Berkeley, the other at the Irvine campus - are divided over whether the law will reduce jobs because of higher employment costs for businesses. Michael Reich, a UC Berkeley economist, believes a $15 minimum hourly wage will barely affect employment or the economy. Low-income workers will have more income, which should offset the higher labor costs for some, but not all businesses. Almost everyone agrees small business in rural communities could suffer more than those in larger, urban areas like L.A. County. “Minimum wages stimulate increased worker productivity, reduce employee turnover and are paid for primarily by very small price increases that are spread among all consumers,” said Reich, who has studied the effects of a $15 minimum hourly wage. David Neumark at UC Irvine foresees a workforce reduction of 10 percent or more in the lower-skilled segment of the job economy statewide. “While some gain, others lose,” he told The Orange County Register. Other winners include: • Big businesses that can automate some labor will have an advantage over their competitors who cannot. • Some union contracts are tied to the minimum wage and will see automatic increases. The losers of a higher minimum wage seem to be the employers, including smaller businesses and local governments whose labor costs will rise annually through 2020. Local governments don’t have the ability to raise taxes, and it’s possible that city and county services could be affected if local governments can’t afford to hire additional staff or fill vacant positions. Other projected losers seniors whose Social Security benefits didn’t increase this year and might not again in 2017. Prices may only increase 1 percent or 2 percent, but Social Security checks aren’t expected to grow because of low inflation. If you are a senior, you could be paying a larger portion for food, housing, and medical expenses out of your Social Security check. Middle class workers could be squeezed, too if employers choose to tighten their business costs and charge more for food, goods and services, including rents. High school students looking for a summer job next year could find it more difficult to land a minimum-wage job if employers reduce hiring. That could be true for college students who need to earn money for school or young adults entering the workforce. The U.S. Department of Labor refutes the dire predictions about an increase in the minimum wage. The labor department lists among its myth busters that small-business owners oppose paying their workers more and don’t support raises in the minimum-wage level. “A July 2015 survey found that 3 out of 5 small business owners with employees support a gradual increase in the minimum wage to $12,” according to the labor department. “The survey reports that small business owners say an increase would immediately put more money in the pocket of low-wage workers who will then spend the money on things like housing, food, and gas. “This boost in demand for goods and services will help stimulate the economy and help create opportunities,” the labor department reports. Another belief about minimum wage is that an increase is bad business, which the Labor Department says is flat untrue. “Academic research has shown that higher wages sharply reduce employee turnover which can reduce employment and training costs,” it countered. Nor is increasing the minimum wage bad for the economy, based on historical data dating back to the post-Depression era. “Since 1938, the federal minimum wage has been increased 22 times. For more than 75 years, real GDP per capita has steadily increased, even when the minimum wage has been raised,” the labor department says. It’s a common misperception that the current minimum wage is higher than it was decades ago, when Ronald Reagan stepped into the Oval Office. Again, the Labor Department refutes the common notion, noting that buying power doesn’t keep pace with the federal $7.25 minimum wage rate. President Obama is asking Congress to raise the federal rate. “While the federal minimum wage was only $3.35 per hour in 1981 and is currently $7.25 per hour in real dollars, when adjusted for inflation, the current federal minimum wage would need to be more than $8 per hour to equal its buying power of the early 1980s and more nearly $11 per hour to equal its buying power of the late 1960s,” the labor department explains on its web site. California raised the state minimum wage to $10 on Jan. 1, and the city of Los Angeles will bump the rate to $10.50 in July. • Inside This Issue Certified & Licensed Professionals.......................5 Classifieds............................3 Film Review..........................3 Finances...............................6 Food.......................................5 Hawthorne Happenings....3 Legals............................2, 6-7 Pets........................................8 Police Reports.....................2 Sports....................................4 Weekend Forecast Friday Sunny 73˚/59˚ Saturday Sunny 75˚/57˚ Sunday Sunny 75˚/57˚ Lawndale Elementary School District Recognized For Innovative Attendance On April 5, State Superintendent of Public Instruction announced Lawndale Elementary School District will be one of this year’s honorees for the prestigious recognition. School Attendance Review Boards (SARB) from throughout the state apply annually for the Model SARB Recognition Program, which awards SARBs that use superior strategies to promote attendance improvement and dropout prevention. Photo by Enrique Pivaral
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