Viewpoint

$15/hour? A risk in L.A.

From an editorial on Bloomberg View:

You can’t call the Los Angeles City Council timid. In voting to raise the city’s minimum wage to $15 by 2020, from $9 today – an increase of two-thirds, big by any standard – it’s taking quite a gamble. That’s why the results, assuming the change gets final approval, will be instructive.

Supporters say it will make inroads against the struggles of the working poor. Opponents say it will destroy jobs.

It’s better to run this kind of experiment– make no mistake, that’s what it is – in a city rather than across the nation.

Local experiments allow local conditions to be taken into account. A minimum wage of $15 an hour isn’t as disruptive in a high-cost city like Los Angeles as it would be in, say, New Orleans.

Still, an increase this big is entirely untested, even allowing for the city’s high costs and for inflation, which will erode the $15 over the next five years.

The safest way to raise the incomes of the low-paid is to subsidize low-wage employment with measures such as the earned income tax credit. This reduces poverty for those who are still employed while adding to the demand for workers rather than reducing it. Ideally, the EITC would be broadened and made more generous. This superior approach is harder to sell, however, because its costs fall on taxpayers.

Raising the incomes of the low-paid is a worthy goal. And if wage mandates aren’t the best way to do it, they might be one feasible way. By all means, let Los Angeles find out. Other big cities should wait and see what happens.

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