The impact of A $15 minimum wage on

los angeles

Dakota Hughes

Masters of Public Administration Program

Tseng College

California State University, Northridge

Why the minimum wage?

• Currently hot political topic

• Many people work on low wages

• Statistics on minimum wage workers

• Income inequality has skyrocketed in the U.S.

What does $15 mean?

• #15NOW Campaign

• Arguments in favor

• Arguments against

Regression Analysis

• What is a regression and why is it helpful?

• yi= ß0+ ß1x1 + ß2xi2 + ... ßpxip + i for i = 1,2, ... N

• P value

• Coefficient

Will it increase Unemployment?

It Will Increase

• The wage adds to the employers production cost

• Companies will close jobs and demand more from higher paid workers

It Won’t Increase

• Less turnover

• Those who work for hourly wages spend almost their entire paycheck

• CEO compensation is increased, so why not labor?

David Card and Alan Krueger

1994

• Surveyed fast-food restaurants in contiguous counties along the border of Pennsylvania and New Jersey

• Comparing employment level based on surveys after a minimum wage change increase in New Jersey

• Findings: No impact, possibly slight positive impact

Previous Research

Dube, Lester, and Reich

2010

• Took Card and Krueger’s method and applied it to all contiguous counties with minimum wage increases over 16 year period

• Findings: No significant impact on employment or inflation

Previous Research

Can firms remain profitable?

• Firms will not make as much money due to the increased cost of labor, especially in labor intensive industries such as fast food and retail

• Firms will ship jobs away!

• Automation?

Pollin and Wicks-Lim

2013 & 2015

• Analyzed whether fast-food restaurants could remain profitable at both $10.50 (2013) and $15 (2015) per hour

• Results: Both of these are feasible with modest price increases. This is accounting for the ripple effect that would be felt by those earning above the new minimum.

Previous Research

Well what about prices?

• It is thought that prices increase due to the wage increases

• If minimum wage is increased by X% then prices go up by X% as well so it cancels out

• Contiguous counties

Lemos 2004

• Examined minimum wage increases impact on prices in Brazil

• Findings: A 10% increase in the minimum wage created a 0.02% increase in prices 2 months before the wage increase and a long run change of 0.07%

Previous Research

Impact on los angeles

• Los Angeles is expensive

• Wages are low

• $5.9 billion stimulus

• Over $414 million in tax revenue

• Create over 46,000 jobs in consumer-oriented industries

Impact on los angeles

• There are roughly 238,000 people who are in poverty and working currently

• This would affect over 700,000 workers

• Education, Healthcare, Retail Trade, and Food Service and Accommodations industries are most impacted

• Of those living in Los Angeles some cities like Burbank employ many in low wage jobs

• Would result in over $341,000,000 saved

Impact on Los Angeles

Impact on Los angeles

Impact on los angeles

Questions?