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LA City Council Sets Minimum Wage to $15/hour

LA City Council Sets Minimum Wage to $15/hour

To address $15/hour wages, Seattle restaurants now charging “service fees”.

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.

Chicago and New York are moving toward a $15/hour minimum wage…because they have to keep up with West Coast’s fiscal insanity.

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.

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Future LA Times: As L.A.’s moves forward with its plan for a strict $15 per hour minimum wage, the city is experiencing a rising trend in restaurant closures.

The shut-downs have idled dozens of low-wage workers, the very people advocates say the wage law is supposed to help. Instead of delivering the promised “living wage” of $15 an hour, economic realities created by the new law have dropped the hourly wage for these workers to zero.

Advocates of a high minimum wage said businesses would simply pay the mandated wage out of profits, raising earnings for workers. But many restaurant owners complain they operate on thin margins with average profits of 4% or less, and that the business is highly competitive.

Councilman SoAndSo- “Sadly, it appears many business owners would rather go out of business than do the right thing and give up their profits.”

    redc1c4 in reply to JohnC. | May 20, 2015 at 10:31 am

    the LA Slimes won’t cover the story that honestly.

    Not A Member of Any Organized Political in reply to JohnC. | May 20, 2015 at 12:30 pm

    No One needs to “eat out” that badly.

    I predict a big new fashion trend of “do it yourself” gourmet lunches and dinners put together from self bought speciality shops and other stores’ grocery items.

    EXPECT AN EVEN BIGGER, MUSHROOM BOOMING GROWTH IN FOOD TRUCKS IN LA AND OTHER CITIES THAT IGNORE THE REALITY IF ECONOMICS!

    JimMtnViewCaUSA in reply to JohnC. | May 20, 2015 at 2:10 pm

    Stupid idea, but at least it’s being implemented by elected officials so voters have recourse if they choose to do so.

    For Dems it’s all good: businesses fail due to healthcare and wage costs? Expand welfare! Get more dependent voters hooked on the gov’t for survival. Like in Europe.

    Mike-in-Mass in reply to JohnC. | May 21, 2015 at 1:14 pm

    May 20, 2015: The day Capitalism died a slow unnoticed death in LA.

    Don’t forget, the future LA Times articles will masterfully blame the Detroit-like appearance of LA on the Republicans, Global Warming or the Koch brothers.

Why stop at $15.00??? Might as well throw in a four bedroom house next to a city councilwoman.

    guyjones in reply to clerk. | May 20, 2015 at 10:06 pm

    My thoughts exactly, and, a perfect rebuttal to the idiocy that is inherent in this conceit. Surely, these poor people deserve vacation homes and sports cars, too, don’t they? Why are the Leftists so stingy? Make it $50 an hour. Or, $100. But, wait. That might not be enough. Make it $150…

healthguyfsu | May 20, 2015 at 8:15 am

How cute that they are thinking of small businesses with a slower rollout?

Tell me, how do you plan to cut the bite of new small businesses that open up after the rollout time frame? Oops, didn’t think about that.

Nothing happens in isolation.

Wage and price controls do not work in a free market. They haven’t worked for student loan programs-an oafish situation that has driven up the cost of a trigger happy college education.

LA is repeating a history of bad economics to win sympathy re-election votes.

Chicago: I will bring my lunch from home and I will purchase whatever I need outside the city limits. After a min. wage increase and the already heavy sales tax burden in Chicago, who wants to buy anything here. Who can afford Chicago?

Go to this web page and enter 60602 (Richard J. Daley Center, Chicago)and $10.00. The sales tax is $0.93-total sales tax rate 0f 9%.

http://www.tax-rates.org/illinois/sales-tax-calculator?action=preload

Taxes include Illinois Sales Tax ($0.63); County Sales Tax ($0.08); Chicago Sales Tax ($0.13); Special Sales Tax ($0.10)=$0.93 sales tax due (9.0% sales tax rate) on $10.00 in Chicago.

Now add the increased cost of minimum wages yearly.

METRA just raised its rate 15% and will raise rates every year for the next nine years.

And beside sales taxes there are tons more, including:

http://www.natlawreview.com/article/more-tax-money-city-chicago-2015-broader-bases-increased-rates-and-lesser-credit

In city and state struggling to make ends meet, millions were spent on a Maggie Daley Memorial Park. A beautiful open garden space was removed so as to clutter and trinket-ize the lakeshore.

If you want to help people don’t do stupid stuff.

Midwest Rhino | May 20, 2015 at 8:50 am

I’d guess a lot of waiters will make less with a set service fee. They used to get that service fee as a tip, and share a little with the help. Now it will go to the restaurant directly. At least now they will have to pay taxes on all their tips.

Maybe more conservative states could pass their own law that prevents “progressive” cities from passing their own minimum wage laws. Missouri and 14 other states do that.

http://www.fwbusinesspress.com/news/from-drilling-to-plastic-bags-states-saying-no-to-cities/article_e9238476-fd46-11e4-9a21-9f81d4026d49.html

    ConradCA in reply to Midwest Rhino. | May 20, 2015 at 2:04 pm

    The service fee will go to paying the $15 per hour. The waiters and waitresses won’t get it.

      Midwest Rhino in reply to ConradCA. | May 20, 2015 at 7:55 pm

      That’s what I meant, guess I wasn’t clear. They’ll have to pay taxes on the $15/hr, which will all be taxed as income. Before they could claim a smaller amount, and pocket the extra cash they got in tips.

      As I recall, stores used to have to pay waiters less than minimum wage, and a certain amount of tips had to be reported to the IRS. But real tips were usually much more, at a basic TGI Fridays, for example.

MaggotAtBroadAndWall | May 20, 2015 at 9:36 am

The experiment has already been run in Europe. These are the results:

“Youth Jobless Rate 26% in Europe for Countries w/Min Wage vs. 12% for Countries w/No Min Wage?”

https://twitter.com/Mark_J_Perry/status/587255222197690369

The minimum wage OUTLAWS jobs.

    Sammy Finkelman in reply to MaggotAtBroadAndWall. | May 20, 2015 at 10:27 am

    Western Europe has a different problem. It’s very difficult to fire anyone. There are all kinds of costs associated with that.

    The result is, in the long run, many people don’t get hired in the forst place. They get temprary contracts.

      tom swift in reply to Sammy Finkelman. | May 20, 2015 at 1:09 pm

      many people don’t get hired in the forst place. They get temprary contracts.

      So what? Anyone working on a temporary contract is still “hired” by somebody, and paid for his time and labor; he’s not “jobless”.

Henry Hawkins | May 20, 2015 at 9:51 am

But you get more unemployment once laid off from the higher minimum wage job.

I laugh when I hear about minimum wage. Seriously, I love to hear all the little children whine – demanding society give them an allowance so they can buy their drugs and recreational toys. A complete crash in the economy will be entertaining if nothing else.

For the first 3 years I was in the work force I baled hay, tossing wet bales of Timothy at 6:30 in the morning, before the heat/humidity came up. Winter time was school work or cleaning barns, but farm work paid $.75/hour for light bales of 40-50#, and $1.00/hr for heavy 75-95# during baling season – that was considered good money too! Driving the equipment or shoveling waste was just $.75/hr. in the winter.

We were to tired to spend it until there was a break in the work anyway.

nordic_prince | May 20, 2015 at 10:05 am

These progs never seem to grasp the fact that the true minimum wage is $0.

Idiots.

They also blithely ignore that minimum wage jobs are meant to be the bottom of the ladder. Want more pay? Increase your skill set (like some basic math so you can count change – that would be a nice improvement). Or get another job (even though your hero Zero has made sure that will be next to impossible, thanks to Zerocare).

Better yet: why not go into business for yourself? Then you’ll see how “easy” it is to deal with red tape, regulations, and all the other crap the government throws at businesses. You can have the joy of working 80+ hour weeks. And you can hire your very own set of whiners who will demand $15/hr from whatever profits you manage to make.

    Sammy Finkelman in reply to nordic_prince. | May 20, 2015 at 10:35 am

    These progs never seem to grasp the fact that the true minimum wage is $0.

    Idiots.

    No, the true minimum wage is a negative $40,000 or more a year, or maybe something like about $128 an hour. (You could calculate it a number of different ways)

    And they are all for it, at least when the employer being paid by the employee is a nonprofit corporation.

    It’s called college.

    What they oppose is any kind of wage between $0 and $15 an hour. Negative wages are fine with them, and they make it work with loans and grants.

    What they hate is anything that would be in form of a paid internship or a training wage.

    Midwest Rhino in reply to nordic_prince. | May 20, 2015 at 11:50 am

    “whiners who will demand $15/hr from whatever profits you manage to make.”

    They will demand it even if you have no profit. Minimum wage for owners is negative, with no overtime pay or other benefits. Many a bar or restaurant owner have watched $100K or so go down the drain.

    Where is the Obama law making sure owners make a profit? I guess that only applies to big CEO’s and Solyndra style donors, the very fat cats Obama pretends to disdain.

I personal welcome our new robotic servers of food and beverage!

Let the age of the robot rush in…!!!

    Midwest Rhino in reply to Ragspierre. | May 20, 2015 at 11:54 am

    I’ve been doing my own checkout at Wal-Mart for almost a year now. One person mans eight stations. I wonder how much theft occurs though.

      Not A Member of Any Organized Political in reply to Midwest Rhino. | May 20, 2015 at 12:48 pm

      Probably no more theft than with those 10 finger customer discounts……

      healthguyfsu in reply to Midwest Rhino. | May 20, 2015 at 1:27 pm

      Regarding walmart theft…I would guess that the total “shrink” loss either intentionally or unintentionally from self-checkouts is much, much less than the cost of paying 8 cashiers hourly with benefits and liability insurance. You also need less managers to manage fewer employees so the cost savings reach even further.

    Not A Member of Any Organized Political in reply to Ragspierre. | May 20, 2015 at 12:47 pm

    Robots on Verge of Replacing Human Anesthesiologists

    Those in medical school pondering career specialties need consider which fields may soon vanish to robots. Anesthesiology is one field in the robotic spotlight.

    http://globaleconomicanalysis.blogspot.com/2015/05/robots-on-verge-of-replacing-human.html

    healthguyfsu in reply to Ragspierre. | May 20, 2015 at 1:26 pm

    Would you like fries cooked to the precise temperature with IR and served on my custom warming tray with that?

So-called minimum wage laws should also require their progressive legislators to prove their ideological sincerity by paying an extra $15 at every shop, grocery store, gas station and taco stand.

it will be interesting to see if the rising costs of labor encourages employers to hire middle aged Americans who have been forced out of the labor pool over your average illegal alien, or if they will keep paying the flojos out of habit…

i’m not optimistic, since the vast majority of the population here in #Failifornia seems to have lost their fing minds.

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.

So much for food servers bending over backward to please their customers. Now folks will be served by surly wannabe bus drivers.

Has no one seriously tried to sue and stop this type of legislation? Speaking from a non-lawyer standpoint, I would think that this is not within the scope of a city’s ability to make law, but rather one that only exists at the state or federal level. You’ll end up with sections of Los Angeles that have this law (all the “City”-incorporated parts) and some that don’t (all the county unincorporated parts).

Well, at least they’ll now be making enough money to take Governor Moonbeam’s high speed choochoo back and forth.

In the long term, math will always trump politics.

This is one of the fundamental truths of the universe (along with 1… there is no such thing as too much horsepower and 2… there is no thing as a skirt that is too short).

I don’t understand how on one hand, they can be all science! and on the other hand totally ignore economics.

After many years of watching this sort of thing, I’ve come to the conclusion that liberals have a cognitive disability when it comes to money.

They seem to think that the value of a given dollar depends on the moral worth (as judged by liberals) of the person who has it AND the moral worth (same) of what that person does with it.

This leads to the misconception that taking money from people they perceive as rich, has no consequences – since the money had no value in rich people’s hands anyway. But giving it to people who they see as more deserving suddenly makes that money valuable.

It’s a bizarre kind of but I see it in discussions of issues such as the minimum wage, every day.

Two additional problems they will have created: 1) For those businesses near the city boundaries, their competition just across the line will be handed a huge advantage, particularly in labor intensive businesses. A Burger King just outside the $15 minimum wage zone will become more attractive and more competitive than its competitor down the block locked into higher wages and prices. 2) When the minimum wage reaches fifteen dollars, there will be huge upward wage pressure on those making say $20 an hour, which will go to only five dollars over minimum wage. Having worked their way to that level, they will not want to see their jobs reduced to only slightly over minimum wage. The fixed service fee in restaurants is a terrible idea. There will be no incentive for the wait staff to give good service. And 18.5% is a bit high for low and middle price establishments, 20% is for expensive high quality restaurants.

    mekender in reply to Cicero. | May 20, 2015 at 1:11 pm

    That is right… Consider this for a minute… The average nationwide salary for a college grad is roughly $21/hr with MANY making less than that. I am in the IT field, most people I know in the field that do not have advanced degrees, certifications or 15+ years in the industry are in a pay range of below $25/hr. And the VAST majority of starting level IT jobs, like those doing tech support in call centers, start at well below $15/hr. Not to mention the non-IT call centers that do customer service.

    So where is the motivation to work up the ladder? If you can go to school for 4 years, get a degree and then you get out making $18/hr or you can go to the local diner, and start at $15/hr and still smoke pot every night, which one do you think most kids will pick?

HEY! I want mine! I ‘retired’, fixed income, etc. You keep working so uncle sugar will keep paying MY social security. And with this “living wage” driving prices UP, I WANT MORE MONEY! So raise taxes. And since I have TIME on my side, I can call legislators every day and demand more free stuff and since they KNOW I VOTE, I’ll get it.

MouseTheLuckyDog | May 20, 2015 at 1:35 pm

Ok. It’s irrelevant, but “Sly James”?

MouseTheLuckyDog | May 20, 2015 at 1:36 pm

Does that womqan in the picture look like Marilyn Mosby to anyone else?

Manyburgers | May 20, 2015 at 1:47 pm

There is a border war going on between Kansas and Missouri, and Sly James is aware of it. Kansas lowered its income taxes and attracted thousands of new jobs and businesses away from Missouri, so effectively that the Governor of Missouri asked the Kansas Governor (the much maligned Sam Brownback) to please stop. Seriously. Now, with service industries on one side of the border about to lose their margin plus some, get ready for a restaurant exodus to Kansas. Unlike LA or Seattle where there are no options, the Kansas/Missouri choice should create a real laboratory…

MouseTheLuckyDog | May 20, 2015 at 1:56 pm

Funny what this seems to do is cement the fast food franchise
In Chicago you see a lot of places like Al’s Italian Beef ( now opening their third store ). Vienna Beef Outlets, used to be that way. Pizzarias, Diners. What used to be drivein,s but now are drive throughs.

These places aren’t the rubber stamped same tasting food opf McDonald’s or Burger King or Wendy’s and add a lot of color and change of pace. They are going to be more hard hit then big franchises, which will just automate more.

Mom and Pop grocery stores will be hurt more.

In a sense it’s funny. The Democrasts claim not to like Walmart but they are introducing economic policies which make Walmart more palatable then smaller chains they claim they like.

    JimMtnViewCaUSA in reply to MouseTheLuckyDog. | May 20, 2015 at 2:17 pm

    “The Democrasts claim not to like Walmart”
    Insightful!
    It turns out that rhetoric aside, Dems like crony capitalists who are dependent on gov’t to secure their hold on markets, and reduce competition.

This is awesome! President Obama should issue an edict declaring a $15 minimum wage for the whole country!

We can call it Obamapay… “if you like your job, you can keep your job.”

(do I really need a sarcasm tag here?)

Yay! I will engage in histrionics and political agitation to get politicians to intervene on my behalf to force my employer to pay me a wage that the free market and my skill levels don’t support on their own merits. I’m not bringing $15 per hour of value to my employer, but, hey, I deserve to be paid $15 per hour, anyway. BECAUSE. I DESERVE IT. I WANT STUFF!!!

Yup. I’m not interested in going to night school, getting professional certifications, changing careers or industries, attempting to find work that might pay me a higher wage. Nope. I’d rather stay in a job that no one is forcing me to stay in, and complain, rather than exercise some personal initiative and gumption and actually apply to jobs featuring higher compensation. Peace out!

What’s funny about this, is that L.A. is surrounded by several other small cities, which will steal all of L.A.’s small business.

Wouldn’t you drive 15 minutes to save 30% on a restaurant bill (which is the increase in the wages restaurants will have to pay their lowest-skilled and most abundant workers.)

Henry Hawkins | May 21, 2015 at 11:23 am

Government imposed wealth redistribution at its simplest.

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