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    Tuesday, May 14, 2024

    Wage hike won’t work

    The following editorial appeared recently in The Orange County (Calif.) Register.

    Los Angeles has approved increasing the city’s minimum wage by 67 percent — to $15 an hour — by 2020, but advocates of using minimum wage increases to alleviate poverty should be careful what they wish for.

    “I started this campaign to raise the minimum wage to create broader economic prosperity in our city and because the minimum wage should not be a poverty wage in Los Angeles,” Mayor Eric Garcetti said in a statement.

    But “(i)n contrast to the myth that a common minimum-wage worker is a poor single mother head of household struggling to make ends meet, the typical minimum-wage worker is actually a second- or third-earner, in their 20s, from a nonpoor household,” San Diego State University economics professor Joseph Sabia told the Seattle Times when Seattle was considering its $15 minimum wage measure.

    A study by Beacon Economics for the Los Angeles Area Chamber of Commerce found that L.A. County workers earning less than $13.25 an hour account for just 38 percent of total household income, on average. In addition, 43 percent live in households with income above $55,000 (the median level for the county).

    It also estimated that the resulting higher labor costs would mean a loss of between 73,000 and 140,000 jobs over five years.

    Raising the minimum wage is ineffective at reducing poverty because many, if not most, minimum-wage earners are not poor. Moreover, doing so merely redistributes wealth; it does not grow the economic pie. Low-wage workers who manage to keep their jobs will benefit, but only at the cost of forcing other workers to lose their jobs and making L.A. an even less attractive place in which to do business.

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