L.A. County minimum wage hike would have little effect on poverty, study says

A proposed minimum wage increase in Los Angeles County’s unincorporated areas would have “little impact, if any, on poverty,” according to a new report.

The Board of Supervisors commissioned the study by the Los Angeles Economic Development Corp. to look at the potential economic effect of gradually raising minimum pay to $15 an hour.

The city of Los Angeles earlier this month approved a plan that will increase the minimum wage within the city limits from $9 to $15 by 2020. County supervisors will vote on a similar plan on Tuesday.

A draft version of the report was released earlier this month, including results of a survey of 1,000 businesses around the county. The final report, released Friday night, added summary observations and included more a detailed breakdown of the survey results.

The economists concluded that as a result of the wage increase, “many prices will increase, including those that lower-income households commonly face; wages will rise for those in minimum wage jobs that remain employed; employment opportunities for those at the bottom of the skills ladder will be diminished” and “employment growth will slow.”

County Supervisor Sheila Kuehl, who proposed the wage increase, said she thought the business survey findings bolstered her arguments for raising the wage and called the conclusions drawn by the study “dishonest.”

“I was extremely disappointed in the bias of their executive summary,” she said. “The executive summary is not a summary of the report -- it’s an opinion piece.”

According to the report, none of the businesses surveyed thought it likely that they would close down or relocate as a result of the wage increase. The survey included a cross section of small and large businesses from different industries.

A majority of businesses surveyed -- and 96% of those that have minimum wage employees -- said they would likely raise their prices to make up for the increased labor costs.

Only 6% of the businesses overall said it was likely they would reduce the number of minimum-wage workers they employ as a result of the increased wage, but 19% of businesses with minimum wage workers said it was likely they would.

And only 2% of businesses overall -- but 7% of those with minimum wage workers -- said they would likely cut the hours of their existing low-wage employees.

A large portion of businesses were undecided on both questions.

Businesses in the city of Los Angeles employ about 40% of workers throughout the county. Another 10% are in unincorporated areas. The rest are in the other 87 independent cities within the county.

Under the plan approved by the city and being considered by the county, businesses with less than 26 employees will get an additional year to implement the wage increase in both the city and county. Those small businesses comprise a substantial majority of businesses throughout the county. According to the LAEDC report, 87% of businesses throughout the county and 86% of those in unincorporated areas have fewer than 20 employees.

Follow Abby Sewell on Twitter at @sewella for more county news.