Tuesday, June 2, 2015

FORECAST A $15 Minimum Wage Will Cause a 36 Percent Drop in Hours Worked in Fast Food

By Salim Furth

The Los Angeles City Council voted to raise the city’s minimum wage to $15 an hour by 2020, a move that will help some workers at the expense of others and lead to higher prices for consumers as businesses pass along the new expense.

Occupational Employment Statistics estimates that there are 837,000 people in Los Angeles County working in professions where at least 75 percent of the employees make less than $15 in 2020 inflation-adjusted dollars. (In 2020, $15 will buy what $13.41 bought in 2014, according to the Congressional Budget Office forecast.) Those professions include one in seven workers in the county. Since the proposed law only applies to the City of Los Angeles, workers elsewhere in the county will be exempt.

Which professions will see the largest impact? Job losses are most likely in sizable professions where current wages are far below $15 an hour and which can easily be relocated or replaced with a substitute for cheap labor.

One of the largest affected groups is food-service workers. In the four lowest-wage food-service professions, including dishwashers and fast-food cooks, most workers earn less than $10.31 an hour. Food-service jobs are safe from relocation—nobody wants to drive to Pasadena for a hamburger—but studies show that customers are very sensitive to prices. And higher costs could lead to a decrease in employment for food-service workers.

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