http://www.latimes.com/opinion/op-ed/la-oe-broad-minimum-wage-20140902-story.html
September 1, 2014, 2:33 PM
Of all major cities in the country, Los Angeles has the highest percentage of population living in poverty. After decades of slow job growth and stagnant wages, 28% of Angelenos — 1 million people — today live below the poverty line. Our city's African American and Latino residents face disproportionately higher rates of poverty. The situation is heartbreaking and unconscionable.
That's why I'm supporting the plan that Mayor Eric Garcetti announced Monday to raise the minimum wage to $13.25. The men and women earning minimum wage deserve, at the very least, a paycheck that enables them to support their families. An increase in the minimum wage would not only be good for low-wage workers. It would also be good for the city, good for the economy and, in the long term, good for business. It is, simply put, the right thing to do.
Supporting a family with a minimum-wage salary — or even two such salaries — has become increasingly difficult in recent years. Los Angeles' poverty line is $30,000 for a family of four with at least one full-time and one part-time wage earner. If you are someone who earns more than that, think for a moment about how difficult it would be to find a decent place to live, feed your family and pay for health insurance, child care, transportation and utilities — much less save for retirement, birthday presents for the kids or a rainy-day fund — on $2,500 a month before taxes. The sad truth is, many families in Los Angeles survive on even less.
Across the country over the last several years, wealth and income gaps have widened even as the economy has ticked upward since the recession. Those in the top 1% have seen their bank accounts grow dramatically, while the bottom fifth have either seen incomes decline or remain steady. As someone fortunate enough to have lived the American dream, I'm deeply troubled by that.
Increasing the minimum wage is a start. Garcetti proposes to increase the minimum wage so that it reaches $13.25 by 2017 — and ideally $15 an hour not long after. In the very short term, 600,000 people would be lifted out of poverty, and wages could rise as much as $6 billion.
Those increased wages would be a great boost to our local economy. Workers would spend their higher wages on groceries, clothes and other basics for their families, putting the money right back into local businesses, which would, in turn, create jobs.
That's why I don't agree with some business leaders who say higher wages will cost jobs or hurt business. In fact, this year 600 economists — including Nobel laureates — signed a letter supporting a federal minimum-wage increase and citing as evidence studies that show increasing the minimum wage has little or no negative effect on employment of minimum-wage workers and could stimulate the economy.
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Eli Broad repeats the often heard claim that one should be able to support a family on the salary of an entry level job. But why should that be the case? An entry level job requires little or no experience, so there's no reason to expect it to pay enough to support more than one person (if that), since, by definition, it's a job that anyone can do, which means it isn't worth very much -- jobs that require even a modest level of skill pay more than the minimum wage.
Another obvious point that is rarely (if ever) made regarding complaints about the difficulty of attempting to support a family on the minimum wage, is that having a family is a lifestyle choice -- certainly no one is required to have a family. Having a family is an important responsibility that takes planning and commitment. A couple that can't easily afford to support several other individuals besides themselves has no business having a family. To claim otherwise is absurd -- how is it reasonable for a couple to attempt to support children, if they can barely afford to support themselves?
Having a family without the ability to provide the proper support -- as Eli describes above -- is an expression of irresponsibility, not some kind of market failure as advocates of a minimum wage often try to imply. Individuals must choose to start a family, and so they bear the responsibility for all the things that choice entails.
Saying that a couple can't afford to support their family is no different than saying they can't afford any other particular expense -- like a luxury car loan or a home mortgage -- it just means they are spending beyond their means.
And notice that Los Angeles is already dead last among major U.S. cities in job creation --
http://labusinessjournal.com/news/2014/apr/07/los-angeles-has-work-do-job-creation/
Los Angeles Has Work to Do on Job Creation
OP-ED
By EDWARD E. LEAMER and JUDY D. OLIAN
Monday, April 7, 2014
Cleveland and Detroit – cities that have become shorthand for widespread urban failure – have nothing on Los Angeles when it comes to long-term decline in payroll jobs. Dead last among major U.S. cities, Los Angeles has lost a painful 3.1 percent of its payroll jobs since 1990, even as the population grew nearly 11 percent. By contrast, payroll jobs in the United States overall grew by 26 percent during the same period.
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Do people really believe that increasing the price of labor in Los Angeles will prevent further job losses in the city and help low skilled workers support families they already can't afford?
The widespread support for minimum wage laws is based on a number of fallacies, and one of the more interesting is the assumption that wages can be controlled at all with law. But with a little reflection it's easy to see why this assumption is absurd.
Wages are not set by law, or by employers -- wages are set by customers. Every person that has money and makes purchases (expresses demand), plays a role in determining prices, and, therefore, wages. Wages are set by what individuals are willing to pay for what a person attempting to earn a wage has produced.
The only way to eliminate the problems faced by the working poor, as described by Eli Broad, is to somehow make customers willing to pay significantly more for the products the working poor are producing -- but the law cannot change human desires. Raising the price of labor won't magically make others willing to pay more for the affected products -- as the price moves higher customers start to fall away, and beyond a certain price point a business will fail completely.
How much would you pay for a hamburger from one of the major fast food chains, for example? 10$, 20$? Would it make a difference to you if they told you they were trying to pay a 'living wage' after they tripled their price, to try to eliminate the problems described by Broad?
Maybe McDonald's or Burger King, etc. could stay in business, if their cheapest burger cost $20, but anyone who claimed that they would have anywhere near the current level of customers is either a fool or a liar. Customers (not the employer) would eliminate a huge number of those jobs by their refusal to pay more for something than they thought it was worth, regardless of how noble some claim doing so to be.
And if you think that simply cutting CEO salaries can raise worker's salaries dramatically, you need to do the math to prove to yourself that that won't help either -- eliminating the management entirely and distributing their annual compensation to workers wouldn't give a worker enough to get one person into Disneyland -- never mind an entire family.
'Hiking' the minimum wage is an especially bizarre recommendation from a successful businessman like Broad. He should now better.
But in one sense Eli's right -- it is a 'win-win' and a 'no-brainer' for pandering politicians and the dull ignorant electorate that they appeal to -- Garcetti will increase his popularity while doing only harm, and the electorate can smile in smug satisfaction under the deluded pretense that they've helped everyone.
But if you're one of the poor workers whose skills are not worth the higher minimum wage, and you lose your job as a result, well too bad -- sacrifices must be made to maintain the moral pretenses of the hoi polloi.
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