Friday, October 28, 2016

Raise the minimum wage to $15 an hour? What it could mean for Echo Park businesses and workers

By Hayley Fox

Echo Park coffee house worker | Lucy Guanua

Some civic and big business leaders are talking about raising the minimum wage for all workers across the city, with some proposing hiking the hourly minimum to $15 an hour — nearly double California’s current minimum. If city leaders eventually decide to hike the minimum wage, it could mean major changes for the way many small businesses in Echo Park and elsewhere operate. Many neighborhood business owners, who are often working on shoestring budgets, rely on minimum wage workers to keep their businesses afloat. These employees are pouring you beers, serving you lunch and cooking your dinner.

Serena Herrick is a bartender at Allumette in Echo Park. She’s been working there for a little more than a year and has been in the service industry since she was 15. Herrick said a higher minimum wage could cause customers to tip less, but may make for more productive businesses. “Generally speaking fairly paid employees do better work,” she wrote in an email. “Feeling adequately appreciated via compensation makes a better work environment overall…”

And although bartenders and servers make most of their money from tips, not a paycheck , Herrick said a minimum wage hike would be especially helpful for those in the back of the house. Employees who work long hours in the kitchen and must live solely off a minimum wage check.

The L.A. City Council is currently considering a minimum wage of $15.37 an hour for hotel workers at more than 80 hotels within the city. But now billionaire Eli Broad said he favors gradually raising the minimum hourly wage to $15 for all workers across the city while Councilman Gil Cedillo, who represents a portion of Echo Park, favors a “more comprehensive approach” according to the L.A. Times. “I want to talk about the entire city, not just one industry,” he told the Times.

But while $15 an hour would be a welcome change for employees, it could be the downfall of some local businesses. As operation costs increase, owners will offset the money elsewhere in their budget. For restaurants, this could mean a reduction in food quality or a surge in menu prices. For other businesses, this could mean scaling back in staff.

Liz Garo owns Echo Park’s Stories Books and Cafe on Sunset Boulevard. She said if the minimum wage was $15, they could cut employee hours and the owners would work more themselves. They may also have to lay-off a portion of their employees entirely, and increase prices in the shop and café.

Garo said small businesses don’t have much room for “frivolousness”, so they’re extremely conscious of every nickel and dime spent. Rent and employees are the biggest costs for a small business, she said, so a dramatic increase in one could dramatically alter operations.

Garo said a higher minimum wage could lead not only to a smaller staff, but a less eclectic one. For $15 an hour, she said she’d be likely to hire more “corporate,” buttoned-up personnel and would lose the “cool kookiness” that makes up the charm of Stories – and many other small businesses in the area.

Hayley Fox is an L.A. native now living in Echo Park. After getting her master’s in journalism at the Annenberg school, Fox worked at public radio station KPCC 89.3 where she wrote and produced stories for online and on air. She covered mostly downtown L.A. and South L.A. news, as well as covering city-wide crime, breaking news and the occasional adorable animal story.

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  1. I think “cool kooky” people deserve a living wage too!

    • Rachele Huennekens

      Amen, sister.

    • What is a “living wage?” I know people who cannot live on $100K/year.

      Can we agree that the wages of some people should be higher than others? Should skilled worker make more than semi-skilled workers? should semi-skilled workers make more than unskilled worker? Obviously, YES.

      Are those making $15/hr going to continue to make $15/hr when the minimum reaches that level? Of course not. If the unskilled wages go up 30%, semi-skilled wages will go up 30% & skilled wages will go up 30% and the minimum wage worker will be right back where s/he started – at the bottom of the totem pole – not able to afford the things that someone making $25/hr can afford.

  2. So does this mean everyone will get a $6 raise across the board? I doubt it very much. And if the minimum wages does go up, then I think those certain food and drink establishments should remove the dumb trip jar from the counter!

  3. You know, if all the people who can’t afford to live in LA left.. and moved somewhere cheaper (which is what most people without some kind of entitlement mentality would do)… LA wouldn’t be so expensive or crowded.

  4. Why would a raise in the minimum wage decrease tips? Most people tip according to the price of their order (which would go up or stay the same), or according to their own wages (which would also go up or stay the same). I could believe that some places would lose profitability, or raise prices. But I suspect that the kind of places that are being driven out by gentrification are exactly the sorts of places that will have more sales and more business as their customers can start affording to spend more.

    I suspect a rising minimum wage hurts the kind of people that buy million-dollar houses in the hills, and open hipster boutiques, while helping the kind of people that are renting in the flats, and little hole-in-the-wall ethnic restaurants.

    • Simply playing devils advocate, it might affect tips at ‘tip jars’ because a lot of people would think it was not as needed. And if it leads to higher food prices, then some people may dine out less. Less diners means less tips. However, if more people are making more at their minimum wage jobs, then they may dine out more.

      Raising minimum wage won’t hit the millionaires that hard. they will simply pass the cost as ugh as they can onto the middle and lower classes. It may increase automation of some jobs like fast food, but frankly that automation is going to happen anyway.

      To me the elephant in the room is automation. We need way less workers in industry and service today because of computers and machines. What happens in another 50 or 100 years when we still have billions of people but need very few (if any) actual blue collar workers? Can we have a society of all professionals? Even some creative jobs will be able to be done by machines eventually.

  5. While I support a living wage, I don’t think that a sudden increase to $15 makes sense. It would be too difficult for small businesses. Maybe up to $12 over 4 years?

  6. An increase in costs to a business means higher prices to the consumer. Does anybody really think that a business owner is going to take less profit? No, the cost is passed down. Higher costs means less people will buy and eventually that business will close down leaving its employees with no job. Is that what we really want? No increases should take place until the economy starts growing again.

  7. What does a $15 minimum wage mean to college graduates struggling to find a $13 an hour job? It means even menial jobs will demand unreasonably high qualifications.

    One thing it doesn’t mean is more jobs. It means far less jobs. Many of the boutique stores and shops you see in developing neighborhoods are simply not remunerative to support $15 for their employees. Those will go out of business too.

    • Echo Park resident

      I graduated college less than 5 years ago, and the first position I took paid me $15/hr. Most of my friends work in the entertainment industry, and a common starting rate for assistants was $10-12/hr. when we were leaving school. Now, with a MA degree, I still only make $25/hr.

      I’m for raising the minimum wage — but you do have a point in saying that it will make qualifications go up while pay stays stagnant. There has to be a smarter way to do this — perhaps segmented out by industry? A coffee shop barista (requires no education) shouldn’t make more than an office assistant (those positions almost always require a degree these days). $!5 is just shooting way too high; something like $10 or $11 might be more beneficial.

      • The problem here, when we start trying to say one job type “should” make more than another, is there is some type of value judgement… which is subjective. How do you measure what jobs should pay more than others? What I think is important or valuable to society may be drastically different than what you think.

        Personally, I think the free market should figure it out. If a certain skillset is in high demand, wages for that skillset will rise. If there’s a glut of workers in a particular industry, wages will fall. I don’t always agree with what the free market comes up with… like, I don’t think sports or entertainment mega stars should make even a fraction of what they do.. and I think (great) teachers and science researchers should make a heck of alot more. But, the benefit of the free market.. even if it gets it wrong in my opinion, is that you don’t have an entity, like the government, picking the winners and losers.

      • Do you really need a Masters or Bachlors to be an entertainment assistant?? No. Your friends are taking those jobs becase they are looking to network or move up to a better position. Their bosses pay low wages, because every recent grad living on the eastside want to work in the “industry” and brag to their friends (and everyone in earshot) what amazng new project they are working in. I find it very elitist for you to suggest that the barrista making the coffee that your assistant friend is picking up for her boss deserves to make less money. Everyone deserves a living wage.

  8. I’m willing to pay a bit more food and services, if I know it’s going to the worker and not just up to the very top as it usually does. But I think they would have to phase this in over a few years so as not to completely screw small business owners. Maybe there needs to be a tax break for small businesses to offset the cost.

  9. Rabbi Neil Comess-Daniels

    Thus far the proposal for LA city is ONLY for 87 hotels with 100 beds or more, most of them run by corporations that can well afford the increase. It’s NOT about small businesses. Running articles like this will scare people away from supporting this important but limited beginning. Economic studies have demonstrated time and again that a true Living Wage bolsters the local economy and the small business like those mentioned in this article will only benefit. Responsible reporting should only be talking about the merits of the proposal currently on the table, not fear-generating hypotheticals. For better information, see this article in the LA Times: http://www.latimes.com/local/lanow/la-me-ln-la-minimum-wage-hike-hotel-workers-20140114,0,2611025.story#axzz2vD8w4MOf.

    • Thank you sir for what unfortunately needed to be clarified here. The hard working folks who (over) work in the low end of the hospitality industry deserve this increase in the minimum wage.

      • Why do they deserve it? There are no special skills required. No barrier to entry.

        If the reason they “deserve it” is because they work hard, well there’s a ton of people in a ton of industries that work hard… from laborers to doctors to computer geeks.

        Do they all deserve a nearly 100% increase too?

        • Maybe we should at least adjust for inflation?

        • Here’s an interesting read on the issue… http://www.cepr.net/index.php/blogs/cepr-blog/the-minimum-wage-and-economic-growth

          It basically states that while worker productivity has climbed for decades in the US, wages have declined. They calculate that if the minimum wage had kept up with these increases in productivity (as they did for more than 20 years after World War 2) the minimum wage would be nearly $17/hour.

          One doesn’t have to look too deep into our history to realize that the free market, when left completely to it’s own devices, renders terrible results.

          A living wage for an honest days work, seems pretty reasonable to me. Like they say, a rising tide lifts all boats.

  10. You can guesstimate what this will do to consumer costs. During a quick internet search, I found a well run restaurant should have labor costs run about 35% of net sales. So, this could go one of two ways:
    a) restaurants try to maintain this percentage, which means if you double the wage rate, you’ll double the price the consumers pay… so prices will go up 100%
    b) restaurants simply pass the cost onto the consumer, meaning labor becomes a higher percentage of sales.. so prices will go up at least 35% (prob more because other costs will go up, because the restaurant’s vendors will also have to raise prices).

    So, using restaurants as an example, we’ll see restaurant food prices increase anywhere from 35% to 100%.

  11. Most of these comments sort of skirt or miss the point. Minimum wage USED to be what you got for starting out and learning a job to enter the workforce. it was not meant to be something you lived on for life. My first job was at 14 years old. I got maybe $3 an hour. It was what I was worth. I then went on to retail at the mall for, I think it was $2.65 an hour. I was 16. I learned how to work a register, show up on time and deal with people. Then I got a raise. Then I went on to more money and better jobs.

    Who is going to hire a 16 year old for $15 an hour? So we may end up with an unemployed youth with no training in the basics of holding a job.

    That’s what happened in England when the minimum wage was raised.

    If I am given the choice of hiring an experienced person for $15 an hour or a 16 or 18 year old, what is it going to be? And all those young people, well I guess they are all supposed to go to college and become professionals. All good in theory but in practice, not every young person is going to make it to college or in college.

    LAUSD has something like a 50% dropout rate. Where are all those people going to work?

    It is not a sustainable model.

    • Grahm Wellington

      AMEN AMEN AMEN!!!! Minimum wage should not be your goal in life. Entry level jobs are just that and deserve that compensation. Those who work to improve themselves will earn more.

      Also, if you are earning minimum wage and you can’t support yourself you should not be crapping out MORE mouths to feed if you cant feed yourself.

  12. I can’t belive all of the people that are taking the time to write long comments about this. If you think the minimum wage is ever going to be raised to $15 you really are an eeeeeeeeedddddddddddiiiiiiiiiiiiioooooooooooooottttttttttttttttttt!!!!!!!!!!! Debating the issue is just a waste of time.

  13. Rachele Huennekens

    I live nearby, but will definitely boycott @StoriesEchoPark Books & Cafe, now. Ignorant comments from a greedy owner. #RaisetheWage #15forfamilies

    • Yeah, the Stories owner just lost my patronage as well.

      • I’ll admit it: I shop at Stories for used books and my weekly coffee. I support small local businesses and I think they deserve a place in our struggling economy.

        Now, I’ve gotta say Stories is off my shopping list. Good bye Stories. I’ll find a replacement soon.

        • I’m glad I’m not the only one who feels that way. Apple books here I come…

          • Grahm Wellington

            While all you boycotting dopes are at Apple books, buy a book about economics. Really? You are going to boycott a store because she stated some facts about running a biz?

    • Yeah I don’t understand her reasoning there – why does a higher minimum wage equal more “corporate, buttoned-up” employees? What, they won’t have the “quirky charm” of underfed struggling employees?? “Oh isn’t it so great that we pay our workers pennies? It makes them so eccentric!”

      Maybe they’ll lay off that mean cranky British guy who yells at everyone.

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