Los Angeles Hikes Minimum Wage but Gives Small Nonprofits a Break

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Raise the minimum wage

May 19, 2015; Los Angeles Times

The Los Angeles City Council on Tuesday voted to raise the city’s minimum wage to $15 an hour, joining a trend and making the nation’s second-largest city a leader in the movement to boost the stagnating pay of low-wage workers.

However, the Los Angeles Times reports that the plan approved by the council would give businesses and nonprofits with fewer than 25 employees an extra year to meet the minimum wage requirement. Many of L.A.’s thousands of nonprofits employ entry-level workers, such as food handlers and student interns, or train and rehabilitate disadvantaged workers, such as the homeless or former gang members.

The council voted to raise the $9-an-hour base wage to $15 by 2020 for as many as 800,000 workers, which would make L.A. the largest city in the nation to adopt a major minimum wage increase. Chicago, San Francisco, and Seattle already have approved similar increases.

The wage hike plan would take place in stages and be implemented gradually. The first wage boost, to $10.50 per hour, would take effect in July 2016. Mayor Eric Garcetti has already promised to sign the legislation when it reaches his desk.

The Times considers the vote “the latest show of organized labor’s clout at City Hall. During nearly a year of often emotional debate, labor leaders never gave ground on their central demand that the minimum wage rise to at least $15.”

While some labor leaders were dissatisfied with the gradual timeline, the sharpest criticism of the law came from, not surprisingly, business groups, such as the L.A. Chamber of Commerce, which warned that the mandate would force employers to lay off workers or leave the city altogether. The vote came after months of public debate and backroom lobbying on the issue, which will have citywide significance.

As in other cities, the local nonprofit community had mixed feelings about the increase—on the one hand, it is consistent with their mission of lifting up disadvantaged communities and addressing the income inequality issues common in America’s large cities. In Los Angeles, considered to be the nation’s least affordable housing market, the problem is especially severe.

But many nonprofits rely on low-wage workers to carry out their missions of providing basic human services, promoting community development, and helping the down-and-out get back on their feet. Because the wage hike will not necessarily come with increased public or philanthropic funding, some of those organizations may find themselves confronting budget shortfalls that might require them to cut back on their programs and projects and negatively impact their missions.

The minimum wage campaign has been backed by well-organized labor activists at the national level and has become a focus of Democrats focusing on income inequality; in heavily Democratic California, the issue has caught on dramatically. New York City and Washington, D.C. are also considering $15-an-hour minimum wage proposals.

After 2020—or 2021 for small businesses and nonprofits—the annual wage increases would be pegged to the consumer price index. Some of the councilmembers who voted for the proposal admitted that the effects of their plan aren’t easily predicted.—Larry Kaplan