Los Angeles now joins two other bastions of progressive political activism in setting the new minimum wage level to $15/hour.
Los Angeles became the largest US city to raise its minimum wage to $15 an hour on Tuesday, as a wage increase bill passed the city council by a vote of 14-1.
It is now up to city attorney Mike Feuer to draft an ordinance to implement the new minimum wage requirements. The ordinance will then return to the council for a final vote before becoming law. Under the proposed legislation, the city’s minimum wage would increase to $10.50 in July 2016, and would increase incrementally every year until it reaches $15 in July 2020. For small businesses with 25 or fewer employees, the wage hike would come on a modified schedule with the incremental increases starting in July 2017 and the minimum wage reaching $15 by July 2021.
The current minimum wage in California is $9 an hour and is set to increase to $10 in January 2016.
In the past year, two other US cities have approved similar wage increase measures. In June 2014, Seattle moved to increase its minimum wage to $15 by 2017. Last November, San Francisco voted to increase its minimum wage to $15 by 2018.
It will be interesting to see the economic fallout from this decision. As many aspiring actors and actresses work fast food jobs and hold entry-level service positions to survive while catching their big break, I would anticipate that Hollywood will be feeling the pinch in a much more limited pool of talent. And that is likely to be only one of many unintended consequences of this vote.
The politicos on the LA city council did not pay attention news about Seattle’s small business economy. Restaurants around the city were preparing to close their doors, unable to pay for enough staff while for government mandated health insurance coverage.
Other eateries are being a bit more creative in passing the cost to customers: They are adding a set service fee instead of relying in tips.
“Three popular Seattle restaurants are doing away with tipping and replacing it with a new service fee for all customers.
The move is in response to the city’s quest to increase the minimum wage and add other benefits for workers.
The restaurants — the Whale Wins, Walrus and the Carpenter, and Barnacle — will soon implements an 18.5 percent service fee on all meals. To offset that added cost, the restaurants are banning tips.
Jeremy Price, owner of the Whale Wins, said the change in policy is a reaction to the city’s higher minimum wage and the added costs associated with the Affordable Care Act.
“All those things kind of started us thinking about all this,” he said.
The change won’t happen until May, but customers seem to be okay with the added fee.
“It just removes the ambiguity. It makes it easier to keep track of everything. It’s the way they’ve been doing it in Europe for years,” one resident said.
Given Europe’s rather tepid economy, I am not comforted by this new fiscal model.
And this trend is also hitting a less obviously progressive area: Kansas City, MO. Social justice warriors are trying rushing to get a measure on the ballot for an August vote, and being met with resistance by the mayor.
But the council’s deadline to approve August ballot language is next Thursday, which Mayor Sly James said leaves little time to sort through conflicting economic studies on the effects of raising the minimum wage.
“I’m looking for fairness,” James told a crowd of more than 80 people.
The mayor said he worries about unintended consequences, such as driving businesses out of the city or providing a small wage increase that just causes people to lose child care and Medicaid benefits.
He can now add restaurant “service fees” to the list of unintended consequences about which to be concerned.DONATE
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