This article centers around Mayor Eric Garcetti's proposal to raise the minimum wage in Los Angeles to $13.25 by 2017. He says that the plan will increase the wages of nearly 570,000 workers and lift many above the poverty line. With about 1 million people living below the poverty line, the wage increase could be vital to those struggling to survive. If the increase is approved, LA will have one of the highest minimum wages in the country, among Seattle, SeaTac, and New York.
However, others in favor of small businesses argue that the wage raise will cause layoffs and hurt smaller businesses because of increased costs.
LA is a huge place, home to large corporations as well as small businesses, so the effects of the proposal should vary. I'll be interested to see if the proposal passes and what the consequences are if it does.
A rapid rise in minimum wage from the national average of $7.25 to $13.25 in a large metropolitan area such as Los Angeles would be devastating for the local economy. A large increase in the minimum essentially "pushes" the already employed up as well. This would cause a larger expenditure in wages that some companies and small businesses couldn't afford. Hours would be cut, non-essential workers fired, and a drop in production would occur and a possible loss of a multitude of companies. The only possible way to raise the minimum wage to this level is gradually over a larger period such as 10 years, not 3 years.
ReplyDeleteEven though this seems like a very good plan, increasing the wages, especially to such a high number, is going to decrease the amount of labor needed, and could have a opposite effect of what they want. They would be putting more people out of jobs and possibly adding onto the poverty line, while also helping those that are still employed.
ReplyDeleteBy increasing the minimum wage companies that can't afford such an increase will have to take drastic measures, such as wage cuts for higher paid workers, lay-offs, and production decreases. Such an effect might even cause smaller businesses to go under, and even if they only decrease production and sales this will have a sizable impact on the economy. In turn, this will have a negative effect on the economy because although the amount of impoverished people will decrease, those who will become unemployed will be seeking unemployment, and only put a damper on the rest of the country. Also, an increase in the wage will most likely cause everything else in the surrounding economy to increase proportionally, otherwise the economy will be imbalanced. However, something has to be done to boost the LA economy and help the impoverished citizens, it just doesn't seem like raising the minimum wage will be more beneficial than not.
ReplyDeleteI agree with everyone that a dramatic increase in the minimum wage could hurt the economy. However, if this idea is as obviously bad as it seems, I would guess the Mayor of L.A. would be smart enough not to propose it, so I am looking at where the upside could be. If more people are making more money, then more people should spend more money. This "more money" goes back to the firms as revenue and could potentially cover the increased costs of the higher wages.
ReplyDeleteI'm not a fan of this proposal of increasing wages to $13.25. On one hand, yes, I can see why Mayor Garcetti would want this proposal to pass in order to help out the million people below the poverty line. But with this being passed, it also increases the wages of those employed as mentioned in the article therefore certain companies can't afford to undergo this increase. If the company can't follow the approved plan then we will see people losing jobs, hours decreased, even wages that were pushed up ultimately lessened. I don't think it is the smartest proposal, although, if it can be moderated to a lower wage price perhaps closer to the existing wages today then I believe businesses would have a better chance of coping.
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ReplyDeleteI agree with Joshua in the sense that raising the minimum wage in such a rapid way would have a devastating impact on the local economy. However, I think it is also important to acknowledge that in cities such as Los Angeles, the cost of living is much higher than the rest of the country. Perhaps minimum wage should be adjusted according to the cost of living in a particular area or city.
ReplyDeleteI don’t see this rapid wage increase as a smart economic move. Once the wage gets increased, I think it is going to make it difficult for some business to pay their employees the amount the law requires so they will have to lay some workers off causing more unemployment.
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