L.A. city panel split over which group should study minimum wage

A Los Angeles city panel that considered several outside companies before picking one to analyze two proposals to raise the minimum wage was divided on which firm had the best bid, according to documents released Tuesday.

City officials released the documents after facing a flurry of criticism over the choice: Business groups and other critics have challenged the selection of UC Berkeley’s Institute for Research on Labor and Employment because it did an earlier analysis of a plan promoted by Mayor Eric Garcetti to boost the minimum wage to $13.25 by 2017.

That study concluded the wage boost was unlikely to significantly hurt overall employment. The new, broader study is supposed to analyze the potential effects of both that plan and another proposal to boost the wage even higher, to $15.25 by 2019.

Two city councilmen, Mitch O’Farrell and Felipe Fuentes, have argued that the city should redo the selection process to select “a neutral source” instead of returning to the same group that had been tapped by Garcetti.


But other city officials have defended the process and the group that was ultimately picked. City Council President Herb Wesson recently called Berkeley “the most knowledgeable and experienced bidder” among those that competed for the job.

Scoring sheets show that Berkeley got the highest overall score -- an 88.8 out of a possible 100 -- compared to overall scores of 86, 80.3 and 71.8 for the other companies. The other bidders were Beacon Economics, Applied Development Economics and the Economic Roundtable.

“Best among the proposers, due to their considerable experience and the fact that they have already begun work on this analysis, an important consideration given the aggressive schedule set by the city,” one panelist wrote, giving Berkeley their highest ranking of 91 out of 100.

But the scores also show that the city panel that evaluated the bidders was divided, with two of the four panelists giving Beacon higher overall ratings than the Berkeley team.


One of those panelists said the Beacon proposal “drills down to a level beyond request.” But Beacon lost points with other panelists, including one who noted that the group “seems to focus on negative impacts.”

The city did not release the names of the individual members of the panel, which included representatives from the offices of the chief legislative analyst, the city administrative officer, the economic development department and the harbor department.

An explanation posted on City Administrative Officer Miguel Santana’s website said that “the public interest served by withholding the records [identifying the panelists] clearly outweighs the public interest served by records’ disclosure.”

The bidding documents also reveal other differences between the proposals put forward by the companies: Berkeley said its analysis would cost roughly $84,000. Applied Development Economics put forward a price tag of nearly $88,000, the Economic Roundtable estimated it would cost $100,000, and Beacon estimated it would charge nearly $43,000.

One of the panelists noted that Beacon “did not include time for presentations and meetings in the cost.” The same panelist added, however, that “assuming they add for that, the price would still be lower than all other proposers.”

Beacon is now working with the Los Angeles Area Chamber of Commerce, a group that opposes the minimum wage proposals, to analyze the possible effects of the plans. Councilman Curren Price recently invited the chamber and the county labor federation to submit their own studies on the wage proposals to be discussed at public meetings.

The documents released Tuesday also show that the Berkeley team plans to work with a local researcher, Manuel Pastor of USC, who will advise them on statistical modeling, guide them on estimating the effects on local neighborhoods and serve as a “liaison with groups in Los Angeles and support at City Council presentations.”

Amid the pitched national debate over the minimum wage, the Berkeley institute has also faced criticism from conservative groups that argue its research is skewed.


The Employment Policies Institute, a conservative think tank critical of raising the minimum wage, recently issued a news release pointing out that researcher Ken Jacobs served in the past as co-director of the San Francisco Living Wage Coalition, which worked to increase the wages the city paid to contractors and recently backed upping the minimum wage in San Francisco.

Institute director Michael Reich has also been criticized by the group because decades ago he helped found the left-leaning Union for Radical Political Economics, which focuses on “radical analysis of political and economic topics.”

Some local groups have chimed in: Ruben Gonzalez, vice president of the Los Angeles Area Chamber of Commerce, argued that “when individuals have a history of staunch, passionate and singularly focused advocacy in favor of wage regulations they cannot be trusted to act as honest brokers sharing unbiased analysis on that exact same subject.”

Reich said it had been decades since he was involved “organizationally” with the Union for Radical Political Economics and that he had a long record of distinguished work. In a letter to the council, Reich wrote that their research “meets the highest academic standards.”

“Some outside commentators have nonetheless sought to impugn our work as biased, a claim that we rigorously and unequivocally reject,” Reich wrote.

Jacobs told The Times that his work with the San Francisco Living Wage Coalition more than a decade ago got him interested in the effects of labor standards and policies.

If the city had been looking for someone to evaluate its earlier study, “then it would have made no sense for us to bid on it and we wouldn’t have,” Jacobs said Tuesday. But lawmakers were seeking to answer “an expanded set of questions … questions that weren’t looked at in the previous study.”

The documents do not indicate what other research groups were approached about the job. Rand Corp. was invited to bid, but its researchers “determined that we would not be able to do justice in a substantive way to the topic, given the project’s tight deadlines,” spokesman Warren Robak told The Times in an email. The city wanted a draft study by the end of January.


The battle over who should do the study has erupted as the larger debate over boosting the minimum wage continues to simmer. The Los Angeles County Business Federation, which includes more than 100 business organizations, recently came out against hiking the minimum wage in L.A., arguing that the city would lose jobs as a result.

Backers of a minimum wage boost have fought back by spotlighting businesses that support their plans. They argue that a higher minimum wage will spur spending in the local economy. 

Garcetti has drawn attention to developer Rick Caruso and billionaire philanthropist Eli Broad, who back his $13.25 plan, while Councilman Mike Bonin released a survey this week showing that 55% of more than 200 business owners surveyed in his Westside district supported upping the minimum wage.

In a statement, Bonin argued that the results ran counter to “the recent rhetoric that Los Angeles businesses oppose the proposals.”

“The businesses that give life to our neighborhoods and create the bulk of the jobs in Los Angeles understand that a better wage will be good for workers, good for business and good for Los Angeles,” Bonin said.

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