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Los Angeles Raises Minimum Wage To $15 An Hour

Raise the wage (Photo by Eric Garcetti via the Creative Commons on Flickr)
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The Los Angeles City Council voted today to raise the minimum wage to $15 per hour by 2021. Right now Angelenos scraping by on minimum wage are making $9 an hour.

The City Council voted 14-1 in favor of the law, and the council chambers erupted into cheers after the vote, according to City News Service. Councilman Mitchell Englander, the lone Republican on the council and a candidate for the Board of Supervisors, voted against the increase.

Here's how it works: Employers at businesses with more than 25 workers will have to gradually increase wages for minimum wage workers until everyone is making at least $15 an hour. The first wage hike for larger businesses comes in July 2016: $10.50 an hour. The next year it will be $12, the next year it will be $13.25, then $14.25 and then in July 2020 it will be $15 an hour. Businesses with fewer employees have until 2021 to reach the $15 an hour. Then in 2022, the minimum wage will continue to increase based on the consumer price index.

There are some exceptions. Teen workers would be paid 85 percent of the city minimum wage or the state wage—whichever is higher. And nonprofits with more than 25 workers could get a waiver under certain conditions: if their top executive earns less than five times what the lowest paid worker makes; if the nonprofit provides transitional jobs; if it provides child care provider or if is funded by government grants or reimbursements.

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The council commissioned three studies over the past eight months to figure out just how the wage hike would affect Los Angeles. There was still some uncertainty but council members said that they felt a moral obligation to tackle Los Angeles' dire poverty.

Councilman Paul Koretz said, "If anyone tells you they know exactly how this is going to go ... I don't think they're being honest with you. But he said that he was ultimately "willing to take that shot, because nobody can live well in Los Angeles ... on $9 an hour."

The Los Angeles Area Chamber of Commerce wasn't happy with the new law and said it would ultimately hurt business in the region. Spokesman Ruben Gonzales told the Los Angeles Times he expects to see layoffs and businesses reducing workers' hours: "It's simple math. There is simply not enough room, enough margin in these businesses to absorb a 50-plus percent increase in labor costs over a short period of time."

Councilman Curren Price called the vote a "moral obligation" and a "leap of faith ... led by our hearts and led by the facts that we have to do all we can to address poverty and income inequality in this city."

This law is a big deal given that we're the nation's second-largest city and right nownearly 40 percent of workers make less than $15 an hour right now. Oh and the fact that rent is getting ridiculous. Proponents of the law said it would affect 800,000 workers.

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"The effects here will be the biggest by far," Michael Reich, an economist at the University of California, Berkeley, told the New York Times. "The proposal will bring wages up in a way we haven’t seen since the 1960s. There’s a sense spreading that this is the new norm, especially in areas that have high costs of housing."

Though this wage increase only applies to people working in Los Angeles proper, Los Angeles County and other neighboring cities are expected to consider their own wage hikes.