Tuesday, October 7, 2014

Los Angeles is mandating that every full-time worker within the city limits must make $26,500 a year.


Los Angeles is mandating that every full-time worker within the city limits must make $26,500 a year. I’m of two minds about this. On the one hand, this will obviously raise the incomes of some workers, but it could mean that a lot of workers see their hours cut back or have their jobs moved beyond the city limits, possibly so far that they can no longer do those jobs. If you’re concerned about long-term unemployment -- and I am -- then that is worrying.
On the other hand, I’m very interested to see the experiment run. Municipal minimum wages can be a good way to look at the impact of high-minimum-wage laws, because you have control groups next door. This is far from perfect, but it does offer useful observations. And Los Angeles is particularly interesting because its municipal area is so darn big; employers in the center can’t simply move a short distance to avoid the wage.
According to the Wall Street Journal, 37 percent of the city’s labor force will be affected by the law. Half a million members of the city’s labor force are manufacturing workers, whose employers cannot simply raise prices to pass on the cost, because they’re competing with products from lower-wage jurisdictions, including overseas. Now, some of them will be on piecework, or off the books. But some are not. How will their employers handle the new rules?