6-06-05,8:15am
June 3—Los Angeles’ living wage law raised pay for some 9,500 mostly low-income workers and produced little of the job loss its critics predicted, according to a new study released June 2.
The Los Angeles City Council in 1997 overrode then-Mayor Richard Riordan’s (R) veto and approved the law, which requires city contractors and companies doing business on city property to pay a living wage indexed to inflation. The wage currently is $10.03 an hour or $8.78 if the employer also contributes $1.25 an hour to an employee’s medical coverage. The study, Examining the Evidence—The Impact of the Los Angeles Living Wage Ordinance on Workers and Businesses, found most of the workers benefiting from the living wage law are low-income or families at the poverty level. Seventy-one percent of such workers have a high school education or less, and only 4 percent are teenagers.
Los Angeles is among many local governments enacting living wage laws. With the federal minimum wage frozen at $5.15 since 1997, local union leaders and activists from New York City to Santa Monica, Calif., have helped pass more than 100 living wage ordinances nationwide. The first such law passed in Baltimore in 1994.
Living Wage Did Not Eliminate Jobs
Despite dire warnings of massive job loss by the law’s critics, the study found 81 percent of affected firms did not eliminate jobs due to the living wage and the overall job loss totaled about 112, or less than 1 percent of the estimated 22,000 jobs at 475 firms covered by the law, according to the report.
On average, employers have recovered 16 percent of the increased costs of the living wage through reductions in employee turnover and absenteeism, the study shows.
However, the law has not led to as significant an increase in health care coverage for workers as the law’s backers had hoped. Some companies that already were providing health benefits to low-wage workers extended them to more workers, improving benefits for an estimated 2,236 employees, but 31 percent of workers still lack any health insurance.
The cost of providing such coverage might be an impediment to employment-based health benefits, the report found. Based on a 2003 survey by the Henry J. Kaiser Foundation, an employer would need to dedicate $1.49 an hour toward health coverage to cover a full-time worker and about $4.09 an hour to provide that same worker with family coverage, the study said.
The report’s authors are David Farris, professor of economics, University of California Riverside; David Runsten, associate director of the North American Integration and Development Center, University of California Los Angeles; and Carolina Briones and Jessica Goodheart, both of the Los Angeles Alliance for a New Economy, a low-income worker advocacy group.
