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Minimum Wage

Richard Kraus, Librarian III, Business Department,
Minimum wage Living wage
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The minimum wage, first introduced nationally in the United States through the Fair Labor Standards Act of 1938, has been an issue of concern and controversy ever since.  In the past few years it has been very much in the news and debated by politicians and economists nationally and locally.

Should there be a minimum wage at all?  Does the minimum wage help or hurt workers?  Will increasing the minimum wage cause a loss of jobs?  What effect does the minimum wage have on business profits and the economy?  How does the minimum wage relate to poverty levels?  How does the minimum wage compare to concepts of a “living” wage?  What is an appropriate level for the minimum wage and what is the purpose or goal of having it?  If the minimum wage is to be increased or lowered, what factors should be considered in making that change?  Should the minimum wage be set only at the national or even state level, or might it be changed locally? 

The federal minimum wage is set by law at $7.25 per hour effective July 24, 2009 (http://www.dol.gov/whd/minimumwage.htm ).  Some states set higher minimum wages: in California it is $9.00 per hour effective July 1, 2014, and will increase to $10.00 per hour effective January 1, 2016 (http://www.dir.ca.gov/dlse/faq_minimumwage.htm ).

The Mayor of Los Angeles, Eric Garcetti, has proposed increasing the minimum wage within the City of Los Angeles in stages: $10.25 in 2015, $11.75 in 2016, and $13.25 in 2017 with increases in 2018 and thereafter to be based on increases in one of the federal government’s Consumer Price Indexes (CPI-W).  (http://www.lamayor.org/raisethewagela )

Two studies have been conducted on the minimum wage proposal for the City in 2014 and 2015, from the University of California, Berkeley, Institute for Research on Labor and Employment, Center on Wage and Employment Dynamics:

The Mayor of Los Angeles’ Proposed City Minimum Wage Policy: A Prospective Impact Study (September 2014)   http://www.irle.berkeley.edu/cwed/briefs/2014-05.pdf

The Proposed Minimum Wage Law for Los Angeles: Economic Impacts and Policy Options (March 2015) http://irle.berkeley.edu/cwed/briefs/2015-01.pdf

 

Two competing reports offering different opinions and recommendations were sponsored and conducted by other organizations:

The City Council is conducting hearings in March and April 2015 about the issue.  Meanwhile, the Los Angeles County Supervisors voted on March 31, 2015 to study what would happen if they raised the base pay for county workers and for employees of county contractors and wage earners in unincorporated areas http://www.latimes.com/local/lanow/la-me-ln-county-minimum-wage-20150330-story.html .

Several other wage concepts are part of the discussion and debate.  Each of these serves different purposes and is determined very differently.

  • Poverty thresholds are updated each year by the Census Bureau and are used mainly for statistical purposes, such as estimating of the number of Americans in poverty each year (http://aspe.hhs.gov/poverty/15poverty.cfm ).  These thresholds are set nationally, not locally, at different levels depending on the number of people in the family.
  • Poverty guidelines are issued each year in the Federal Register by the Department of Health and Human Services (HHS).  The guidelines are a simplification of the poverty thresholds for use for administrative purposes, such as determining financial eligibility for certain government programs (http://aspe.hhs.gov/poverty/15poverty.cfm ).  These guidelines are set nationally, not locally, at different levels depending on the number of people in the family.
  • Living wage is defined in Investopedia as “A theoretical wage level that allows the earner to afford adequate shelter, food and the other necessities of life. The living wage should be substantial enough to ensure that no more than 30% of it needs to be spent on housing. The goal of the living wage is to allow employees to earn enough income for a satisfactory standard of living.”  (http://www.investopedia.com/terms/l/living_wage.asp ).  It varies by location and by size of the family and may also vary among different researchers studying the concept or among different organizations supporting or opposing the issue.
  • Living wage ordinance (LWO): in some areas, a living wage has been set by law.  It does not vary according to family size as the theoretical one does. The primary local examples are in the City of Los Angeles and the County of Los Angeles.
  • City: Living Wage Ordinance in the City of Los Angeles Administrative Code, Section 10.37 et seq., adopted in May, 1997, amended in January, 1999, and expanded to include the Los Angeles Airport in 2009/10  (http://bca.lacity.org/index.cfm?nxt=lco&nxt_body=content_lwo.cfm  ).  It “requires employers who have agreements with the City to pay their employees at least a minimum “living wage” and to provide certain benefits.”  In The living wage amounts are set each July 1st and are posted by the Department of Public Works, Bureau of Contract Administration, Office of Contract Compliance (OCC) at http://bca.lacity.org/index.cfm?nxt=ee&nxt_body=div_occ_lw_list.cfm  For July 1, 2014-June 30, 2015, the living wage is set at $11.03 + $1.25 per hour in Health Benefits or $12.28 per hour for full cash wage.
  • County: http://doingbusiness.lacounty.gov/living_wage.htm  The County Board of Supervisors) approved the Living Wage Ordinance (LWO) which became effective on October 22, 1999 and increased the living wage rates which became effective June 15, 2007.  The LWO is applicable to all County Proposition A and cafeteria services contracts. Proposition A contracts are those services that could be performed by County employees, but are more economically performed by contractors.  Full time contract employees must be paid a living wage of $9.64 per hour with health benefits of $2.20 per hour or more or a living wage of $11.84 if health benefits are not provided.

 

For more background on the history, law, data, and economic debate behind the minimum wage:

United States, Dept. of Labor, Wage and Hour Division: history and law of federal minimum wage: http://www.dol.gov/whd/minimumwage.htm

State of California, Dept. of Industrial Relations: law along with questions and answers about the minimum wage in the State of California http://www.dir.ca.gov/dlse/faq_minimumwage.htm

The Economic Policy Institute, a nonprofit, nonpartisan think tank focusing on the needs of low- and middle-income workers, offers its own “Family Budget Calculator” which also determines a family budget for different size families in communities across the United States: http://www.epi.org/resources/budget/

Following up on the Economic Policy Institute’s project is a website hosted by MIT: The Living Wage Calculator.  It compares poverty level, minimum wage and “living” wage for different size families in cities, counties, and states across the United States: http://livingwage.mit.edu/

Some resources from the Los Angeles Public Library:

Opposing Viewpoints in Context database offers articles and reports, along with opposing viewpoint essays

http://www.lapl.org/collections-resources/research-and-homework#O

For more articles from magazines, journals, and newspapers:

General OneFile (Gale): http://www.lapl.org/collections-resources/research-and-homework#G

ProQuest Newsstand: http://www.lapl.org/collections-resources/research-and-homework#P

A selection of titles available from the library on the subject may be found in the library catalog here: http://ls2pac.lapl.org/#section=search&term=minimum wage&page=0&sortKey=Relevancy&db=ls2pac


 

 

 

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