County business coalition says L.A. minimum-wage plan would hurt poor

Reducing poverty "is best achieved by creating good-paying middle-class jobs" a business group says

A regional business coalition on Wednesday announced its opposition to proposals for a citywide minimum-wage increase in Los Angeles, saying such a move would worsen poverty by driving away jobs.

The Los Angeles County Business Federation, which includes the Los Angeles Area Chamber of Commerce, the Valley Industry & Commerce Assn. and more than 100 other local business organizations, argued the city should instead focus on generating jobs by phasing out a much-criticized business tax on gross receipts and making it easier to build affordable housing, among other efforts.

Reducing poverty "is best achieved by creating good-paying middle-class jobs that can actually lift individuals and families out of poverty," federation chair M.C. Townsend, president and CEO of the Regional Black Chamber of Commerce of San Fernando Valley, said in a written statement released Wednesday.

The business federation also argued that hiking the minimum wage in L.A. was "premature" because California already is slated to boost base wages to $10 next year. It added that the wage hike proposals raise a number of other concerns, including "the lack of exemptions for nonprofits, the challenge of dealing with tipped employees, enforcement mechanisms and the effects on teenage workers."

Mayor Eric Garcetti is calling for the minimum wage to rise to $13.25 by 2017. Labor activists and some council members want to go further and increase the base wage to $15.25 by 2019. Both argue that doing so will pull families out of poverty and jump-start the local economy.

Wednesday's announcement by the federation suggests a broadening and hardening of business opposition to the wage proposals, despite Garcetti's efforts to spotlight the support his $13.25 proposal has received from small businesses and business titans, such as developer Rick Caruso and billionaire philanthropist Eli Broad.

A Garcetti spokesman cited those names again Wednesday when asked about the business federation announcement, arguing that the county group isn't representative of business community views as a whole.

"Los Angeles has always enjoyed the greatest prosperity when everybody prospers and has disposable income to spend in our economy," mayoral spokesman Jeff Millman said in a statement. "Poverty is bad for business."

The Los Angeles County Federation of Labor, which supports increasing the minimum wage to at least $15 hourly, dismissed the business federation's arguments as alarmist.

"Study after study shows us that a raise will only help — not hurt — workers and the economy," its executive secretary-treasurer, Rusty Hicks, said in a statement Wednesday.

With labor gaining ground and business on the defensive in L.A. politics, it is unclear whether the federation and its allies can stop the drive to increase wages.

"No one is going to win the argument that it shouldn't go up at all … that ship has sailed, at least locally," said Raphael Sonenshein, executive director of the Pat Brown Institute for Public Affairs at Cal State Los Angeles. "The notion that the minimum wage should be increased is almost a consensus now — the real debate is over how much."

Boosting the minimum wage is now backed by "a very pro-labor council and mayor," added Jaime Regalado, professor emeritus of political science at Cal State L.A. "That's hard to beat."

The business federation also announced it opposed the selection of a UC Berkeley research team to examine the economic effects of hiking the minimum wage to either $13.25 or $15.25. Earlier, the same organization — the Institute for Research on Labor and Employment — conducted a largely favorable analysis of the Garcetti proposal.

The business federation's founding CEO, Tracy Rafter, backed a call by City Councilmen Mitch O'Farrell and Felipe Fuentes to restart the selection process for the study, saying the city needs "a truly independent analysis of the proposals."

City Council President Herb Wesson has defended the choice of the Berkeley team, saying it was "the most knowledgeable and experienced bidder" for the roughly $84,000 contract to analyze the wage proposals.

Reacting to concerns about the pick this week, a key backer of a minimum-wage increase invited the Chamber of Commerce and the county labor federation to submit their own studies of the wage increase proposals.

"Having a series of hearings on the different studies will afford members of the City Council and the public the opportunity to weigh a larger body of evidence, hear a wider range of expert viewpoints, and make their own individual decisions regarding study findings," Councilman Curren Price wrote to the chamber and the labor federation.

The two groups would have to fund the studies themselves. Price also asked city officials to seek peer reviews of the Berkeley study, as well as any other studies submitted by the chamber or the labor federation.

The chamber was unimpressed by the offer, saying it was a distraction from the "mistake" of choosing the Berkeley team.

"While we're always happy to provide information to decision makers, adding two new studies does not fix the problem.… Even with information provided by the chamber and federation of labor, we still must have a different credible and unbiased source for the city study," said Ruben Gonzalez, senior vice president of the Chamber of Commerce.

Times staff writer Peter Jamison contributed to this report.

Follow @LATimesEmily for breaking news from Los Angeles City Hall

Copyright © 2016, Los Angeles Times