Los Angeles City Council approves landmark minimum wage increase

A landmark ordinance boosting the minimum wage in Los Angeles won approval Wednesday from the City Council despite a variety of unresolved issues about how the law would work.

The law, which would raise the minimum wage to $15 an hour by 2020, affects hundreds of thousands of workers and makes Los Angeles the largest city in the country to mandate higher pay for workers at the bottom of the income ladder. Backers predicted the action here could reverberate across the nation, ultimately aiding millions of Americans.

“The winds in this country do blow from the west to the east,” Council President Herb Wesson said. “And cities throughout the United States will watch what we do, and they will do the same.”

But council members opted to defer, at least temporarily, some of the most divisive issues surrounding the wage ordinance. Several amendments could be made before the law takes effect.

One lingering, highly contentious question is whether unionized companies should be allowed to negotiate for a sub-minimum wage with their employees. The Los Angeles County Federation of Labor sought to add that provision to the ordinance in the final days of the debate, saying that it would help avert legal challenges and allow union workers to trade pay increases for other benefits as they saw fit.

Business groups angrily attacked it as a ploy to prod companies to unionize. Deluged with criticism, council members agreed to study the provision further.

Lawmakers say that they also will decide on a provision sought by organized labor that would increase the number of paid sick days over what the state has required.

Other sensitive, pending issues include whether to loosen the minimum wage requirement for programs that train the disadvantaged and disaffected for jobs. Another unresolved matter is whether to restrict restaurants’ use of surcharges to offset added labor costs.

Lawmakers are also examining how the wage law would apply to out-of-town companies whose workers venture into Los Angeles. Several council members also asked for a report on whether to exempt small businesses — those with up to 50 workers — when the value of employee benefits meets or exceeds the wage requirements.

Asked why they approved the ordinance with so many issues in flux, council members said they wanted to give businesses and workers time to plan for the new wage mandates.

“There’s a tremendous sense of urgency on this because people are living below the poverty line and they need to know what’s going to be going on in their lives,” said Councilman Mike Bonin.

The vote puts the city at the forefront of a national campaign to lift workers out of poverty.

It represented a win for organized labor and for Mayor Eric Garcetti, who helped kickstart the City Hall debate nine months ago with his own plan to raise wages.

“This victory is a testament to the undeniable power of everyday people coming together in full force against income inequality,” said Bob Schoonover, president of Service Employees International Union Local 721, one of the proponents of the wage increase.

But business leaders such as Stuart Waldman, president of the Valley Industry and Commerce Assn., said elected officials are ignoring the more crucial need to attract companies to the city that will increase the number of high-paying jobs. Wednesday’s decision is a sign, he argued, that city leaders have accepted the idea that the bulk of Los Angeles jobs going forward will pay minimum wage.

“They’re doing nothing to bring in good paying jobs,” Waldman said. “The city needs better and deserves better than that.”

Uncertainty remains over how the wage boost will affect the Los Angeles economy. Three different studies, one sought by labor, one by the Los Angeles Area Chamber of Commerce, and one by the city, drew sharply different conclusions about its economic effects, ranging from the ominous to the optimistic.

Labor and community activists insist that the higher wages will stimulate the local economy. But leading business groups warn that the new law could end up hurting workers as employers cut jobs to survive.

“Today, you made the American dream for so many harder in Los Angeles,” Ruben Gonzalez of the Chamber of Commerce told lawmakers.

Even some scholars who said the wage plan would have a positive effect cautioned that their predictions hinge on economic factors that could change.

“The high density of low-wage jobs in Los Angeles means that the benefits of raising the minimum wage will be considerable,” a UC Berkeley research team stated. “It also means that the risks of unintended effects are greater, especially at higher wage levels” that take effect in later years.

Also unclear is how many cities in Los Angeles County will follow suit.

Officials in West Hollywood and Santa Monica say they plan to pursue their own minimum wage hikes. And the Los Angeles County Board of Supervisors is set to consider its own set of increases for unincorporated areas such as Altadena and East Los Angeles.

But in El Segundo, which borders Los Angeles, two council members have publicly dismissed the idea. In nearby Torrance, one official said there was no plan to follow Los Angeles’ lead.

“While I respect what Mayor Garcetti has been able to accomplish, I really believe that minimum wage is an issue that is better addressed by the state,” said Mayor Pat Furey.

Sacramento lawmakers are weighing legislation that would increase pay statewide to $13 per hour by the middle of 2017, a year earlier than anticipated under the Los Angeles ordinance. And a healthcare workers union is leading a statewide ballot effort to raise California’s minimum wage to $15 an hour by 2021.

Passage of the Los Angeles wage hike “absolutely helps” the chances of that proposed ballot measure, said Dave Regan, president of Service Employees International Union-United Healthcare Workers West. “It demonstrates to people that this is an achievable goal.”

Either state measure could ease fears that Los Angeles will lose businesses to neighboring cities with lower labor costs. Councilman Gil Cedillo said his worries about potential job losses subsided as a state minimum wage increase gained momentum.

Because the wage ordinance did not pass unanimously — Councilman Mitch Englander opposed it — it requires a second, procedural vote next week before it can be sent to the mayor for his signature.

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Times staff writer Abby Sewell contributed to this report.