Let’s start with a key premise. Everyone wants working men and women in Los Angeles to have more economic opportunities and have a better quality of life. The current debate is not a question of WHAT our common goal is, but a disagreement over HOW do we get there?

The just released independent Beacon Economics study of current minimum wage proposals by the Mayor and City Council makes clear that the current proposals will harm the economy because they are too much and too fast. The study states that the minimum wage proposals will slow economic growth, limit the creation of jobs, limit funding for city services and not actually reach those it intends to help. In short, the current proposals will actually reduce the growth of job opportunities for working families and reduce the growth of revenue for city services that these families need.    

Businesses will simply not be able to absorb or pass on to their customers a minimum wage increase of almost 50 percent in three short years or 70 percent in five years without reducing or limiting employment. The Beacon Economics report projects that the current minimum wage proposals will cut projected job growth in half and reduce the amount of new tax revenue that the City will have for city services in the future.

The Beacon Economics study notes that 40 percent of the businesses in the City of L.A. are within two miles of another city and competition for existing customers is fierce.  Some businesses will respond by relocating outside the City of L.A. or expanding their business outside the city. The net result for the City of L.A. will be a dramatic reduction in new jobs and a reduction in the growth of revenue for the City.

The Beacon Economics report was prepared by Christopher Thornberg and his highly regarded team of researchers. The report acknowledges the high cost of living in L.A. and affirms the importance of creating more economic opportunities for working families. It extensively documents the inefficiency of the minimum wage increase as a strategy to accomplish this goal and emphasizes that only one fourth of the increase in labor costs paid out by L.A. businesses and consumers will make it into the pockets of those the policy is intended to help.

We all share the goal of better wages, more jobs and a stronger economy. The Beacon Economics report says that simply raising the minimum wage fast and furiously is not the best long-term strategy for the City of L.A. As a community, we must sit down together and find the right way to reach theses common goals.

To ensure that the projections in the Beacon Economics report do not fall on deaf ears, we encourage our members and others who would be personally impacted by the minimum wage increase to attend one or more of the four public hearings before the City Council’s Economic Development Committee. Only with business input can elected officials understand the impact of these proposals and develop a plan to provide solid economic opportunities in the future.  We look forward to seeing you there.