Starting July 1, the minimum wage a worker can earn in Los Angeles, California, will go from $15 per hour up to $16.04.
Though the minimum wage rate is based on the Consumer Price Index (CPI), the six percent pay increase doesn’t keep pace with record levels of inflation, which just surged to a 40-year high.
The pay increase will affect more than 600,000 L.A. residents, according to the Mayor’s office.
“We fought to raise the minimum wage because hard work should always be met with the dignity, respect, and opportunity that fair pay brings,” said L.A. Mayor Eric Garcetti. “Our decision to end poverty wages in L.A. caused a ripple effect across the nation, and this additional increase is the latest reason to celebrate today — and a reminder of how our fight for better wages is far from finished.”
According to a notice released by the city, the pay increase applies to employees who perform at least two hours of work within the geographic boundaries of the city and who are eligible to earn the state’s minimum wage.
“We will ensure that workers in unincorporated L.A. County are protected and aware of the updated minimum wage, and we will work with our sister departments to support employers that may need assistance with information, compliance, and access to resources,” said Rafael Carbajal, county Department of Consumer and Business Affairs Director.
Proponents of minimum wage laws argue that the pay increases are necessary to provide workers a “living wage” that keeps up with inflation, so they can maintain a certain standard of living.
Opponents often say that operating costs associated with running a business are fixed and artificially raising the cost of labor pinches their already tight margins. Their concern is that employers would simply fire workers to cut costs.
A study by the Congressional Budget Office, conducted in 2019, estimated that raising the minimum wage to $15 per hour would result in 1.3 million workers becoming jobless.
The CBO found:
In general, increasing the minimum wage tends to reduce employment in two ways. First, higher wages increase the cost to employers of producing goods and services. The employers pass some of those increased costs on to consumers in the form of higher prices, and those higher prices, in turn, lead consumers to purchase fewer goods and services. The employers consequently produce fewer goods and services, so they reduce their employment of both low-wage workers and higher-wage workers.
Second, when the cost of employing low-wage workers goes up, the relative cost of employing higher-wage workers or investing in machines and technology goes down. Some employers therefore respond to a higher minimum wage by reducing their low-wage staff and shifting toward those substitutes. That reduces employment among low-wage workers but might increase it among higher-wage workers.
Although, for workers who are able to retain their jobs, the higher income would provide benefits to their family.
“Our Office of Wage Standards will remain committed to protecting vulnerable workers from experiencing wage theft to advance labor standards in the city,” John L. Reamer Jr., inspector of public works and director of the Bureau of Contract Administration, said in a statement. “This is an important step to address economic realities for every Angeleno who is working hard to support themselves and their families.”
Santa Monica, West Hollywood, Malibu, and Pasadena also have higher minimum wage requirements beginning July 1.