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Los Angeles Approves Minimum Wage Increase to $15 by 2020

By Christopher Coble, Esq. on May 23, 2015 | Last updated on March 21, 2019

There seems to be a new trend in minimum wage increases across the country.

Los Angeles is now the latest city to approve, in a 14-to-1 vote, increasing the minimum wage to $15 an hour. Los Angeles follows in the footsteps of Seattle and San Francisco, which have already approved $15 minimum wages.

Los Angeles' Minimum Wage Increase

The new wage hike actually isn't as dramatic as headlines proclaim. The city's minimum wage, currently $9 per hour, won't actually reach $15 per hour until 2020. Once the minimum wage reaches $15 in 2020, the rate will increase automatically every year starting in 2022 to keep up with inflation and the increase in cost-of-living.

Comparison With Other Minimum Wages

With the higher minimum wages, employers are probably wishing they could return to the federal minimum wage. The federal minimum wage hasn't been raised since 2009, when it rose from $6.55 to $7.25 per hour.

However, throughout the country minimum wages are on a rising trend.

In Chicago, the minimum wage will rise to $13 by 2019. In Washington the minimum wage increases to $10.50 on July 1 of this year. In New York City, Mayor Bill De Blasio has proposed increasing the minimum wage to $13 in 2016, and $15 by 2019.

Worries For Business Owners

A recurring complaint from business owners is that small businesses will not be able to support a $15 minimum wage. However, the increase may not be as devastating to business owners as you may expect.

Lower turnover

Proponents of the higher wages claim that higher wages could cut the company's turnover rate, saving them the cost of hiring and training new personnel. Studies have shown that losing an employee can cost you as much as twice their annual salary. Also, lowering employee turnover can increase employee productivity and engagement, resulting in higher earnings for you.

Add more jobs

When Seattle introduced its new $15 minimum wage for large companies with 500 or more employees, critics feared that businesses in the area would close down. However, since the wage hike, Seattle businesses have added 60,000 new jobs and unemployment dropped from 5.6 percent to 4.6 percent.

Employers may find themselves adding more jobs, despite the increased wages.

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