How will LA's wage hike affect its workers and businesses?
On Tuesday, July 7, AirTalk’s Larry Mantle convened a panel of industry leaders and workers, government officials, and employment strategists to address the effects and implications of LA City Council’s influential vote to increase the minimum wage to $15 per hour by 2020 for KPCC’s live event “Minimum wage: The future of the hourly worker in LA” at the historic El Portal Theatre in North Hollywood. Panelists included George Abou-Daoud, Kathy Hoang, Michaela Mendelsohn, Paul Krekorian, Nicole Shahenian, Tracy Rafter, and Chris Till.
L.A.'s City Council voted last month to raise the city’s $9 minimum wage to $15 by 2020. Only one council member voted against the hike.
On Tuesday, July 7, AirTalk’s Larry Mantle sat down at the historic El Portal Theatre in North Hollywood with local representatives, employment strategists, industry leaders and workers affected by the pay boost to address the implications of L.A.’s wage increase.
“The impact of a higher minimum wage has been positive on local economy and job growth for the restaurant industry in San Francisco and Seattle,” said Kathy Hoang, Director of Restaurant Opportunities Center of Los Angeles.
But can Angelenos expect the same?
We rounded up a few points from Tuesday's talk, including the three big questions that Mantle and his panelists addressed:
How will the minimum wage increase likely affect LA’s restaurant industry?
- Alleviating workers’ strain. “70 percent of hourly servers in restaurants earn less than $25,000 a year. This vote was passed to help those who need it most,” said Hoang. “The very people who are serving and preparing our food are not able to put food on their own tables.”
- Pressing small-business owners. "I do agree that wages need to go up, but I think restaurant owners shouldn't be taking the brunt," said Mendelsohn, owner of El Pollo Loco franchises. George Abou-Daoud, Co-founder of The Neighborhood Restaurant Coalition of Los Angeles agreed. "I want to keep my people, but to dramatically spike my prices to adjust for cost of labor just won't work," he said. “No one is flourishing, so no one can accommodate."
- More technology, fewer jobs? El Pollo Loco's Mendelsohn said they’ll have to cut employee hours by 20 percent because of the wage hike. And how will they compensate for the cut in hours and in labor? Automated self-serve kiosks. Mendelsohn said that if necessary, technology can replace real human workers in order to compensate for the wage raise.
How will the wage hike transform the City of Los Angeles?
- A monetary boost. “Studies and economists have told the council that this will add $6 billion per year to L.A.’s economy,” said L.A. council member Paul Krekorian.
- A landscape of brand-name eateries. "It's too much too fast for the smaller businesses. We need a longer phasing period," countered Nicole Shahenian, Vice President of Government Relations at Hollywood Chamber of Commerce. “The only restaurants that will be able to survive this are the Applebees of the world. Who wants a Hollywood full of chain restaurants? I think this is a disservice to the community."
What is the regional impact of L.A.’s minimum wage raise?
- Complications for neighboring cities. Places like Torrance, El Segundo, and Glendale have made no moves to raise their minimum wage. “It will be a bit crazy because one side of the road to the other, there’s going to be different rules of the road,” said Tracy Rafter, CEO of the Los Angeles County Business Federation. “Many businesses operate in different cities, different jurisdictions. How they’re going to navigate managing that—recruiting, hiring, selling, and competing—is going to be tricky.”
- The same number of jobs. “In most cases, the effects of raising the minimum wage in one county and not the surrounding ones are very small, not statistically significant, it nets to close to zero change in jobs.” said Chris Tilly, Director of UCLA's Institute for Research on Labor and Employment. “Historically, with an increase in minimum wage, employers increased prices, which resulting in increase of productivity,”
The L.A. County Board of Supervisors is looking to follow the City of Los Angeles’s lead and is likely to pass a wage increase that would ultimately go to $15 by 2020, affecting the unincorporated parts of L.A.
"It's a bold experiment, but we need some bold experiments. Inequality has grown so much, it's time to really try to raise the floor and diffuse those benefits," said Tilly.
What do you think of the wage hike? How do will it affect you, your community? Do you agree or disagree with our panelists? Let us know in the comments!
George Abou-Daoud, Restaurant Proprietor and Chef; Co-founder of the Neighborhood Restaurant Coalition of Los Angeles - representing over 1,000 independent LA restaurants
Kathy Hoang, Director, Restaurant Opportunities Center of Los Angeles
Michaela Mendelsohn, Owner of El Pollo Loco franchise locations with over 33 years of experience in the industry; transgender activist
Paul Krekorian, City Councilmember for the 2nd district encompassing the San Fernando Valley
Nicole Shahenian, Vice President of Government Relations, Hollywood Chamber of Commerce
Tracy Rafter, Founding CEO, Los Angeles County Business Federation, also known as BizFed
Chris Tilly, Director of UCLA's Institute for Research on Labor and Employment
This event is part of the AirTalk 30th anniversary tour.