Los Angeles Raises Minimum Wage to $15 an Hour
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No. 17
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PostPosted: Tue May 19, 2015 2:45 pm    Post subject: Los Angeles Raises Minimum Wage to $15 an Hour

I wonder who's going to end up paying for this...



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The nation’s second-largest city voted on Tuesday to increase its minimum wage to $15 an hour by 2020 from the current $9 an hour, in what is perhaps the most significant victory so far in the national push to raise the minimum wage.

The increase — which the Los Angeles City Council passed in a 14-1 vote — comes as workers across the country are rallying for higher wages, and several large companies, including Facebook and Walmart, have moved to raise their lowest wages. Several other cities, including San Francisco, Seattle and Oakland, Calif., have already approved increases, and dozens more are considering doing the same. In 2014, a number of Republican-leaning states like Alaska and South Dakota also raised their state-level minimum wage by referendum.

The impact is likely to be particularly strong in Los Angeles, where, according to some estimates, more than 40 percent of the city’s work force earns less than $15 an hour.

“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 here to conduct several studies on the potential effects of a minimum-wage increase. “The proposal will bring wages up in a way we haven’t seen since the 1960s. There’s a sense spreading that this is the new norm, especially in areas that have high costs of housing.”

Tuesday’s vote could set off a wave of minimum wage increases across Southern California, and the groups pressing for the increases say the new pay scales would change the way of life for the region’s vast low-wage work force.

Indeed, much of the debate here has centered on the potential regional impact. Many of the low-wage workers who form the backbone of Southern California’s economy live in the suburban cities of Los Angeles. Proponents of the wage increase say they expect that several nearby cities, including Santa Monica, West Hollywood and Pasadena, would follow Los Angeles’ lead and pass ordinances for higher wages in the coming months.


http://www.nytimes.com/2015/05/20/us/los-angeles-expected-to-raise-minimum-wage-to-15-an-hour.html
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marga86
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PostPosted: Tue May 19, 2015 2:56 pm    Post subject:

sigh
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PostPosted: Tue May 19, 2015 2:57 pm    Post subject:

hmmm.... yaaay as a salary middle manager that means I get a pay increase
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PostPosted: Tue May 19, 2015 3:02 pm    Post subject:

Damn. So that means I should get bumped to about $40 per hour, right? Right?!
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PostPosted: Tue May 19, 2015 3:06 pm    Post subject:

How many Mom & Pops are going to go under because of this? How many are not going to be financially able to hire the communities they service?

Small business will be affected.
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PostPosted: Tue May 19, 2015 3:08 pm    Post subject:

jodeke wrote:
How many Mom & Pops are going to go under because of this? How many are not going to be financially able to hire the communities they service?

Small business will be affected.
100% and prices of everything goes up.
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No. 17
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PostPosted: Tue May 19, 2015 3:08 pm    Post subject:

Prices will go higher and that $15.00 in 2020 will end up with the buying power of a $9.00 today.
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PostPosted: Tue May 19, 2015 3:15 pm    Post subject:

No. 17 wrote:
Prices will go higher and that $15.00 in 2020 will end up with the buying power of a $9.00 today.


It actually doesn't end up working like that. More buying power among the people who spend most of their income boosts business volumes in a direct and immediate way, so the price offset is almost never equivalent to the wage increase. Plus, the labor component of goods and services is often less than people think.
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PostPosted: Tue May 19, 2015 3:19 pm    Post subject:

PLATNUM wrote:
Damn. So that means I should get bumped to about $40 per hour, right? Right?!


i sure hope that's the case, i'm aiming that too
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PostPosted: Tue May 19, 2015 3:22 pm    Post subject:

2020 is a ways away. But it's still a step in the right direction.
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PostPosted: Tue May 19, 2015 3:23 pm    Post subject:

24 wrote:
No. 17 wrote:
Prices will go higher and that $15.00 in 2020 will end up with the buying power of a $9.00 today.


It actually doesn't end up working like that. More buying power among the people who spend most of their income boosts business volumes in a direct and immediate way, so the price offset is almost never equivalent to the wage increase. Plus, the labor component of goods and services is often less than people think.


Depends on the size of the business. I can speak as far as our family businesses, a 50% increase in labor would immediately shut down 2/3 of our pharmacies. Labor by far the biggest cost for us. We pay higher than $15 to our tech's so it doesn't impact us (nor are they located in LA for that matter) but I can beyond see the tiny mom and pop stores suffering.
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PostPosted: Tue May 19, 2015 3:28 pm    Post subject:

jodeke wrote:
How many Mom & Pops are going to go under because of this? How many are not going to be financially able to hire the communities they service?

Small business will be affected.


I would hate to launch a small business in today's climate.
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PostPosted: Tue May 19, 2015 3:35 pm    Post subject:

ringfinger wrote:
jodeke wrote:
How many Mom & Pops are going to go under because of this? How many are not going to be financially able to hire the communities they service?

Small business will be affected.


I would hate to launch a small business in today's climate.


I was looking to open up a franchise and for this particular one, they were explicit on the # of full/part tme employees that must be hired The startup and first two years cost were astronomical from labor alone. This is a small little shop and having spoken with other franchisees as a part of the final steps and knowing the amount of employees they're mandated to hire and what most of them net, I can't see how they can stay in business at $15/hour.
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PostPosted: Tue May 19, 2015 3:41 pm    Post subject:

jonnybravo wrote:
24 wrote:
No. 17 wrote:
Prices will go higher and that $15.00 in 2020 will end up with the buying power of a $9.00 today.


It actually doesn't end up working like that. More buying power among the people who spend most of their income boosts business volumes in a direct and immediate way, so the price offset is almost never equivalent to the wage increase. Plus, the labor component of goods and services is often less than people think.


Depends on the size of the business. I can speak as far as our family businesses, a 50% increase in labor would immediately shut down 2/3 of our pharmacies. Labor by far the biggest cost for us. We pay higher than $15 to our tech's so it doesn't impact us (nor are they located in LA for that matter) but I can beyond see the tiny mom and pop stores suffering.


The minimum wage doesn't tend to inflate next level salaries much, so in your case, not a problem. Mom and pop would perhaps have to increase prices, but then again, they are probably paying techs at least that.
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No. 17
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PostPosted: Tue May 19, 2015 3:43 pm    Post subject:

jonnybravo wrote:
24 wrote:
No. 17 wrote:
Prices will go higher and that $15.00 in 2020 will end up with the buying power of a $9.00 today.


It actually doesn't end up working like that. More buying power among the people who spend most of their income boosts business volumes in a direct and immediate way, so the price offset is almost never equivalent to the wage increase. Plus, the labor component of goods and services is often less than people think.


Depends on the size of the business. I can speak as far as our family businesses, a 50% increase in labor would immediately shut down 2/3 of our pharmacies. Labor by far the biggest cost for us. We pay higher than $15 to our tech's so it doesn't impact us (nor are they located in LA for that matter) but I can beyond see the tiny mom and pop stores suffering.


There will be some inflation and job cutting. Some small businesses will have to cut jobs to be able to stay in business. The money lost due to wage increase such as this will have to come from somewhere. I guess 'somewhere' means the business' customers.
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PostPosted: Tue May 19, 2015 3:45 pm    Post subject:

jonnybravo wrote:
ringfinger wrote:
jodeke wrote:
How many Mom & Pops are going to go under because of this? How many are not going to be financially able to hire the communities they service?

Small business will be affected.


I would hate to launch a small business in today's climate.


I was looking to open up a franchise and for this particular one, they were explicit on the # of full/part tme employees that must be hired The startup and first two years cost were astronomical from labor alone. This is a small little shop and having spoken with other franchisees as a part of the final steps and knowing the amount of employees they're mandated to hire and what most of them net, I can't see how they can stay in business at $15/hour.

Is this a clandestine method of big business squashing attempts of small business to serve small portions of communities?

The wage minimum should be coupled to business size. eg. Walmart should pay the minimum, Mom & Pop what they can afford.
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PostPosted: Tue May 19, 2015 3:58 pm    Post subject:

now fewer minimum wage jobs will be available and even fewer 8 minimum wage jobs.
And then how will employers make wage tiers if everyone is starting off at $15/hour? If they keep everyone at the minimum then nobody has an incentive to try and promote making an even weaker class of low skill workers.
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PostPosted: Tue May 19, 2015 4:22 pm    Post subject:

I feel sorry for anyone that was making $15/hr. Now you're making minimum wage. Lmao.
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PostPosted: Tue May 19, 2015 4:32 pm    Post subject:

So a fast food restaurant owner who makes $120,000 per year profit has 4 full time employees working at all times for minimum wage and open 12 hours per day.

$6 per hour increase x 4 employees x 12 hours per day x 365 days per year = $105,120 per year in increased labor costs which reduces take home annual profit to $14,880 while his employees make $31,200 per year.

Why would he keep the doors open?


Last edited by JerryMagicKobe on Tue May 19, 2015 4:33 pm; edited 1 time in total
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PostPosted: Tue May 19, 2015 4:32 pm    Post subject:

LAKERSCMXCIX wrote:
hmmm.... yaaay as a salary middle manager that means I get a pay increase


Sssuuuuurrrreee you will.
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PostPosted: Tue May 19, 2015 4:33 pm    Post subject:

kikanga wrote:
2020 is a ways away. But it's still a step in the right direction.


can you please elaborate on what the "right direction" is?
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PostPosted: Tue May 19, 2015 5:16 pm    Post subject:

JerryMagicKobe wrote:
So a fast food restaurant owner who makes $120,000 per year profit has 4 full time employees working at all times for minimum wage and open 12 hours per day.

$6 per hour increase x 4 employees x 12 hours per day x 365 days per year = $105,120 per year in increased labor costs which reduces take home annual profit to $14,880 while his employees make $31,200 per year.

Why would he keep the doors open?


What we've seen here in the Seattle metro area since our wage increases is that instead of shutting their doors and rejoining the labor market as employees as the chicken littles had promised would happen, they are instead investing in opening more locations and using economies of scale to makeup for anticipated shortfalls. So now they are actually earning more instead of less. So far NOTHING that was warned about has started to occur. Business is still booming in calender year 2015 here in Seattle.

They've been at $15/hr for over a year in Seatac, and the same thing occurred there. Instead of closing doors, business sought to expand and increase their bottom line. There actually isn't enough labor supply to keep up with the demand. When Seatac first increased to $15, folks from around the region flocked there for jobs. Turns out that people still kept quitting those crappy jobs, even at $15, and the wage has had to go above $15 to stem the tide.

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Some time back I wrote a piece entitled “We can predict the effects of Seattle’s $15 an hour minimum wage.” It’s here. And without going into boring detail it essentially said that we’d see what we would expect to see from a rise in the price of something, that is a fall in the demand for it. Ever since I’ve had comments from people insisting that human labor just doesn’t work that way. That if wages rise then actually more people are going to get employed. An example came in only this morning:

Between January and December of 2014, while Seatac’s business owners (and their customers) were absorbing the cost of paying minimum wage employees $15, unemployment decreased 17.46%, falling from 6.3% to 5.2%. It turns out that you CAN increase the minimum wage (even in large increments) and increase overall employment at the same time.

No one at all has ever doubted that it is possible to increase employment and the minimum wage at the same time. The impact of the general economy is usually going to be larger than the impact of the minimum wage. The impact of that general economy could mean that employment rises, stays the same or falls, whatever happens to the minimum wage. But that’s not the interesting thing we’d like to know. Which is, what is the effect of raising the minimum wage on unemployment? Freed from the impacts of everything else happening in the economy? And there the standard answer is that it will raise unemployment and no, no one has managed to come up with a convincing case against this standard wisdom.


Minimum Wage Increase Boosting Economy
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PostPosted: Tue May 19, 2015 5:39 pm    Post subject:

Oh, there has been an effect on prices:

Big Macs went up 15 cents
The fast food restuarants eliminated about 1/4th of their "Value / Dollar" menu

Five Guys raised their burger price for a standard double from $6.75 to $6.85

Red Mill increased their double from $6.55 to $6.85

My bar tabs haven't changed, but I'm not sure if the prices actually went up or not? I pay monthly and I could just be getting a break, but I haven't heard the daily payers complaining so I'm guessing prices are pretty much the same. I'll ask tonite.
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PostPosted: Tue May 19, 2015 5:58 pm    Post subject:

People really care that their burgers went up a few cents?
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PostPosted: Tue May 19, 2015 6:02 pm    Post subject:

Prices will be readjusted no doubt and be passed onto customers....then $15 will be seen as low again..
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