Major cities across the nation have been implementing minimum wage hikes, with many more considering the measure. In San Jose, a minimum wage increase has gone into effect with troubling results. In a survey of San Jose restaurants, two-thirds were forced to increase prices, 42 percent reduced staff and 45 percent cut staff hours. This reality echoes the warnings of numerous studies performed in the last couple of decades – that minimum wage increases result in job losses. Many are pointing to the mostly positive results of a recent UC Berkeley study of a proposed wage hike in San Francisco as proof that the benefits of a minimum wage increase will outweigh the costs once implemented in Los Angeles. However, they also fail to realize that San Francisco is a city of just over 800,000 – compared to Los Angeles’ almost 4 million – and with a much lower poverty rate. On Labor Day, Los Angeles Mayor Eric Garcetti announced his plan to increase the city’s minimum wage by $1.50 annually over the next three years, bringing it to $13.25 by 2017. The proposal also calls for yearly increases based on the Consumer Price Index thereafter. His stated objective is to lift Los Angeles’ working poor out of poverty. While the Valley Industry & Commerce Association (VICA) agrees with the mayor that something needs to be done to help the city’s low-income families, simply raising the minimum wage by nearly 50 percent would have a devastating effect on local businesses, and as most studies have shown, those effects would be directly passed on to the working poor. The mayor’s proposal would up annual costs for businesses by $9,360 per full-time employee over the next three years. That figure only accounts for salaries, not additional costs like workers’ compensation and insurance. According to the Congressional Budget Office, even a $3 increase to the federal minimum wage would result in 500,000 jobs lost. By that math, the City of Los Angeles’ $13.25 minimum wage would result in a loss of 275,000 jobs. Most proponents of a minimum wage increase don’t deny the fact that it would force employers to cut jobs and raise prices. There is no study that shows a wage increase having no negative effect on a municipality. However, many don’t seem to consider the fact that it’s those living in poverty who suffer those seemingly negligible, or at least absorbable, consequences. Price increases disproportionately affect low-income residents, and losing a job is a devastating blow for an unskilled worker with few prospects. Furthermore, not every entity has the option of cutting jobs and upping prices. Charitable organizations, for example, would have no option but to cut services in the face of a minimum wage hike, further to the detriment of the people who rely on those services. Because a Los Angeles minimum wage hike would put the city’s wage above that of the state, there is a possibility that residents receiving public assistance such as Section 8 housing or other state-sponsored benefits could move out of the threshold for benefits. While the mayor’s proposed wage increase is huge, it probably wouldn’t make up for the loss in total income once residents no longer qualify for assistance. The mayor himself has said that Los Angeles has 165,000 fewer jobs than it did in 1980. Since then, the population has increased by about 1 million. To once again make Los Angeles business-friendly, the city is going to need more than an artificial injection of capital. VICA urges city leaders to present to the business community their plan to create 275,000 jobs to make up for those cut by the minimum wage hike, as well as the 165,000 lost since 1980. Our organization looks forward to working more closely with the mayor to create policy that benefits businesses and creates good, well-paying jobs. During his campaign, then-L.A. City Councilmember Garcetti ran on a platform of job creation. VICA agrees that the mayor’s first priority should be creating jobs, and looks forward to hearing from city officials about a comprehensive job creation program. The Valley Industry and Commerce Association (VICA) is a business advocacy organization based in Sherman Oaks that represents employers throughout the Los Angeles County region at the local, state and federal levels of government. – How to reach us GUEST OPINIONS: Op-ed pieces must be 700 to 800 words and on topics about the San Fernando Valley business community. Please submit op-ed ideas to [email protected].