Los Angeles Mayor Eric Garcetti is circulating a plan to raise the city’s minimum wage to $13.25 an hour over three years, followed by annual boosts keyed to inflation, according to business representatives and City Hall officials.
The action is expected to be announced on Labor Day.
So far, the proposal has received a cool reception from major business groups worried about the effect on payroll and the possibility that higher wages could drive jobs out of the city. Even some labor leaders dislike it because the hourly wage does not immediately rise to at least $15, a goal that unions have been pursuing for months to help their members cope with the city’s high cost of living.
“There is a crisis in wages for the working poor and we feel strongly about the largest increase as soon as possible,’' said Maria Elena Durazo, chief of the Los Angles County Federation of Labor, a powerful coalition of regional unions.
Durazo pointed to union studies that show 46% of Los Angeles workers make less than $15 an hour.
Through a spokesman, Garcetti would not confirm the plan, but said helping the working poor rise out of poverty was part of his election campaign last year. He acknowledged having met with business, labor, community and faith leaders in recent weeks “to discuss ways to help L.A. families and our economy thrive.”
Business representatives initially said Garcetti was calling for an hourly minimum wage to reach $13.50 by 2017. But City Hall officials, who spoke on the condition they not be named, later clarified that the wage target would be $13.25. The current hourly wage of $9 would rise to $10.25 immediately, then increase by $1.50 in each of the two succeeding years.
Starting in 2017, the new minimum would rise at a rate tied to the consumer price index for metropolitan Los Angeles, officials with knowledge of the plan said.
Gary Toebben, chief executive of the Los Angeles Area Chamber of Commerce, said he was told by the mayor’s team last week that the goal is to eventually get the minimum wage to $15 an hour, possibly by 2020 or 2021.
Garcetti and members of his administration met with Toebben; Stuart Waldman, president of the Valley Industry & Commerce Assn.; and Carol Schatz, CEO of the Central City Assn.; along with labor officials, in meetings last week. The business leaders said news of Garcetti’s plan caught them by surprise.
Schatz said the mayor took a conciliatory tone, suggesting he would move to eliminate the business license tax sometime next year. But he made no promises that he would do so in exchange for their support of his minimum wage plan, she said.
“It seemed that he put this together very quickly without outreach,” she said.
The idea of a minimum wage increase to as much as $15 an hour, largely pushed by labor, has been gaining steam in the state and elsewhere. Los Angeles activists in July said they would pursue a ballot measure raising the minimum wage to $15 for workers across Los Angeles, following in the footsteps of a Seattle boost.
Separately, City Council members are drafting an ordinance that would boost pay to at least $15.37 an hour, but only for workers at the city’s largest hotels.
On Tuesday, businessman and philanthropist Eli Broad added his general stamp of approval to a “potential increase in the minimum wage.”
“If Los Angeles is to maintain our standing as a world-class city, we need to increase the minimum wage,” Broad said in a short statement. “Raising the minimum wage would help lift people out of poverty and stimulate our local economy.”
Leaders of major business groups representing a wide swath of industrial, retail and service economy employers said they would brief their members on the mayor’s proposal once he provides details and then take a position. VICA, the San Fernando Valley-based business group, is expected to vote on the plan Thursday based on what it has learned, Waldman said.
The first-blush response of his group’s members has not been positive, Waldman said. A $4.50 increase over three years, on top of a $1-per-hour hike recently made statewide, is a “huge amount of money to expect a business to shoulder,” he said.
He predicted job losses as businesses move to locations with cheaper wages.
“Businesses will have to address the increased costs,’' Waldman said. “They will either increase their prices or lay people off or move their business.”
Councilman Mike Bonin, who is pushing for the minimum-wage hike for hotel workers along with council members Nury Martinez and Curren Price, said Garcetti’s plan probably would meet with widespread support on the council.
Bonin said he believes it would overlap, and complement, efforts to increase wages to $15.37 for hotel workers. “The goal is to raise the floor of the economy,” Bonin said. “The hotel wage thing would likely get voted on and passed first.”
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