daily californian logo

BERKELEY'S NEWS • MARCH 17, 2023

Big Give is March 9th. Support the Daily Californian!

UC Berkeley faculty present study on potential impact of higher minimum wage in LA

article image

ARYA ALIABADI | FILE

SUPPORT OUR NONPROFIT NEWSROOM

We're an independent student-run newspaper, and need your support to maintain our coverage.

MARCH 28, 2015

On Tuesday, several UC Berkeley researchers and faculty members presented to the Los Angeles City Council a study on the prospective impact of raising the minimum wage in L.A.

The study was conducted by UC Berkeley’s Institute for Research on Labor and Employment after being requested by the council. It aimed to determine what possible effects raising the minimum wage — to $13.25 by 2017, and $15.25 by 2019 — would have on employees and businesses.

The wage proposal is a multistep one. Although specific steps have not yet been determined, the goal is to phase in the higher wages gradually over several years.

The impact study, authored by Michael Reich, Ken Jacobs, Annette Bernhardt and Ian Perry, found that about 41.3 percent of covered workers would receive pay increases by 2019. These pay increases would average to an approximate $4,800 rise in average annual earnings. Additionally, workers of color and low-income families are expected to see some of the highest benefits from the proposed law.

The study also conjectured that the majority of workers getting raises from the proposed wage policy will belong to the “private, for-profit sector.”

With full implementation of the proposal, operating costs for businesses would increase 0.9 percent by 2019, the study said, likely translating into higher prices for consumers.

The study found, however, that the costs of increasing the minimum wage would be offset by lower worker turnover, better employee performance and greater spending by low-income individuals and families.

“Raising prices does have some effect on demand. But you also have higher demand from those who now have more money in their pockets, and these balance each other out,” said Jacobs, chair of UC Berkeley’s Center for Labor Research and Education.

But the effect of a higher minimum wage on the economy remains contested. According to another report by Beacon Economics, paid for by the Los Angeles Area Chamber of Commerce, the proposed law could cut annual job growth to less than half of the expected rate, thereby making growth nearly or totally stagnant.

On June 10, Berkeley City Council adopted a three-stage plan to raise its minimum wage. In accordance with the plan, on Oct. 1 the minimum wage was raised from $9 to $10. In October the minimum wage is set to rise to $11, and in 2016 it will reach $12.53.

The city of Berkeley has not yet conducted a study to analyze the effects of the plan, according to city spokesperson Matthai Chakko.

 

Contact Ivana Saric at [email protected] and follow her on Twitter @ivanas26.
LAST UPDATED

MARCH 28, 2015


Related Articles

featured article
The Berkeley City Council voted unanimously at its Tuesday meeting to continue moving forward with a plan that would raise the city’s minimum wage to more than $12 by 2016.
The Berkeley City Council voted unanimously at its Tuesday meeting to continue moving forward with a plan that would raise the city’s minimum wage to more than $12 by 2016.
featured article
featured article
The Berkeley City Council abandoned a previously considered proposal for a more aggressive plan to raise the city’s minimum wage at its Tuesday meeting.
The Berkeley City Council abandoned a previously considered proposal for a more aggressive plan to raise the city’s minimum wage at its Tuesday meeting.
featured article
featured article
Just a week away from the city of Berkeley’s own consideration of a minimum wage hike, Mayor Tom Bates is pushing a proposal that will join together major cities in the East Bay behind one regional baseline pay.
Just a week away from the city of Berkeley’s own consideration of a minimum wage hike, Mayor Tom Bates is pushing a proposal that will join together major cities in the East Bay behind one regional baseline pay.
featured article