Two economists, hired by the city of Los Angeles to analyze the findings of three recent minimum wage studies, concluded that the city would likely benefit from a $13.25 per hour minimum wage hike. The city has spent many months considering the impacts of a minimum wage increase, which was first proposed by Mayor Eric Garcetti last year.
The economists, UCLA's Till von Wachter and Jeffrey Wenger, a visiting fellow at the RAND Corporation, conducted a "peer review" of studies from UC Berkeley's Institute for Research on Labor and Employment, Beacon Economics, and the Economic Roundtable & UCLA's Labor Center.
In their report, which was obtained by KPCC, the economists write most favorably about UC Berkeley's study, which was commissioned by the city of Los Angeles. That study found that the benefits of raising L.A.'s minimum wage would outweigh the costs.
"If the debate were over raising the minimum wage to $13.25 per hour by 2017, we would argue that the Berkeley-IRLE-estimated impacts are the most likely scenario," they write in their report.
Wenger and von Wachter also tipped their hat to the other two studies, noting that they provide valuable contributions.
Los Angeles's minimum wage currently stands at $9 per hour. After Garcetti proposed raising the minimum wage to $13.25, some members of the council proposed increasing the wage to $15.25 per hour by 2019. Wenger and von Wachter were less confident about the outcomes of that increase because that is longer time period and a larger wage increase than any city has previously experienced.
"Whatever avenue is chosen, we highly encourage the City Council to follow the example of other city minimum wage ordinances and monitor the economic situation in the city," the two economists continue. "We highly recommend developing complementary programs to aid both workers and firms that are most affected - should the benefits of the proposed increase in the minimum wage be lower or the adverse effects larger than anticipated."
The city of Los Angeles began studying the minimum wage impacts back in October when the L.A. City Council's Economic Development committee first called for a study. City staff selected the team from Berkeley to do the work. Then the Los Angeles County Federation of Labor and the L.A. Chamber of Commerce commissioned their own studies. Ultimately, city officials wound up with three to consider. While the city's and labor federation's studies came to somewhat similar conclusions, the study commissioned by the L.A. Chamber of Commerce found that a minimum wage increase would hurt small businesses in the city, and drive some of them out of Los Angeles.
The peer review is hardly scintillating reading, though it is a sign that raising the minimum wage will not be a simple exercise. The two economists will present their findings to the City Council's Economic Development Committee next week.