A year after the first minimum wage hike went into effect, Los Angeles' latest wage raise starts today, bringing the city-wide minimum wage to $12/hour for businesses with more than 26 employees. Small businesses have until January 2018 to raise wages. This is the next step on the path to the $15/hour requirement L.A. will reach by 2020, which Mayor Eric Garcetti signed into law in 2015.
Los Angeles was one of the first cities to mandate the $15/hour minimum wage. A year later, Governor Jerry Brown signed it into law for the state of California, and many states and cities around the country have followed suit (including New York City, which requires $15/hour by 2018, two years earlier than Los Angeles).
566,000 workers are eligible for the raise, according to the L.A. Times, with over half working in service industry, retail, manufacturing, or healthcare. The effect of minimum wage on employment and business viability is still uncertain; just this past week, two separate studies on Seattle's minimum wage hike presented diverging results. One suggested the hike has had minimal impact on employment, while the other suggests that workers are losing hours and money from the wage hike.
In Los Angeles, many businesses are trying to beat the curve by anticipating the wage hike and making adjustments to costs and prices before the hike goes into place. This has become especially prevalent in restaurants, where many higher-end places have implemented "service charges" to fill in the gaps and guarantee fair wages for their employees. It's come with a certain amount of skepticism, however, because it involves less transparency than the classic tipping model. In January, Besha Rodell of L.A. Weekly examined the issue, finding that many restaurants keep the service charges with the intent of redistributing them across paychecks for front and back of house. Whether this redistribution is fair and equal, however, remains uncertain, either because legal language for tips often doesn't necessarily apply for service charges. As a result, employers have more power in how they handle the money. Regardless of how businesses like these decide to accommodate the wage hike, though, they still have some time before the minimum finally reaches $15 in 2020.
