Los Angeles Mayor Eric Garcetti announced on Thursday that Los Angeles’ minimum wage will go up from $15 an hour to $16.04 an hour beginning July 1st.
Minimum wage rose dramatically in California and Los Angeles beginning in the mid-2010’s due to rising costs of housing and other costs associated with inflation and higher than national average prices within the state. For California, the SB 3 law passed in 2016 installed a yearly minimum wage increase of $1 an hour. The $10 minimum wage at the start of 2016 grew to $15 an hour for all businesses with 25 employees or more at the beginning of this year, with the final bump, $15 an hour for businesses with 24 or fewer employees, to be instilled next year.
Meanwhile, Los Angeles roughly kept slightly above pace during this time. In 2015, a wage hike ordinance championed by Mayor Garcetti pushed LA’s minimum wage from $9 an hour in 2015 to $15 in 2020. Other cities in California, such as Mountain View and Emeryville, also moved minimum wages in recent years to above $17 an hour, with San Francisco going up to $16.32 an hour. Seattle has the highest minimum wage in the country at $17.27 an hour.
Due to LA’s municipal code stating that wages are to improve annually, along with the ordinance basing all minimum wage jumps on the Consumer Price Index for Urban Wage Earners and Clerical Workers in the LA area, the new wage increase for 2022 was calculated to go up by $1.04 an hour.
“We fought to raise the minimum wage because hard work should always be met with the dignity, respect, and opportunity that fair pay brings,” said Garcetti in a press release. “Our decision to end poverty wages in L.A. caused a ripple effect across the nation, and this additional increase is the latest reason to celebrate today – and a reminder of how our fight for better wages is far from finished.”
According to the Mayor’s office, the wage increase will effect over 600,000 workers in the city. However, due to labor shortages, the Great Resignation causing more people to eschew lower wage jobs, lingering COVID-19 concerns, and other economic factors like inflation, many businesses with lower wage workers in the city have already been offering similar wages.
A city-wide minimum wage increase of over $1 an hour
“It’s been a competition,” said Ellie Thompson, a Los Angeles staffing agency coordinator, to the Globe on Friday. “Unlike during the Great Recession, when minimum wage jobs were being fought over, the Great Resignation is pulling people away from these jobs despite a labor shortage. People got fed up during the pandemic, found they liked working at home, or realized that if they went into work they may catch COVID.”
“The minimum wage isn’t the big thing, although it will effect many. The big thing is the labor shortage, and all the minimum wage boost will do is set a new basement that many are already above. For the businesses at minimum wage that will need to pay people more, the costs will go right to the consumer, so prices will be going up this summer, along with cut hours for some employees, maybe some layoffs. Some that can may move out of LA to neighboring cities just to avoid those higher costs too. And of course, you pay those people more, employees already making more than that will want an increase too and so on up the chain.”
“It’s the same pattern of wage increases every year.”
However, Los Angeles Bureau of Contract Administration Director John Reamer stressed on Friday that the wage increase would effect families the most.
“The annual pay adjustment is meant to ensure that workers’ wages keep pace with inflation,” explained Reamer. “This is an important step to address economic realities for every Angeleno who is working hard to support themselves and their families.”
The wage increase of $1.04 an hour is expected to come into effect on July 1st for all businesses within city limits.