It is promising to have people like my former boss, Los Angeles City Councilmember, Paul Koretz, engaged in discussions to find ways to increase the minimum wage in Los Angeles which currently mirrors that of the state of California set at $9.00 an hour. While President Obama did issue an executive order to raise the national minimum wage from $7.25 per to $10.10 in January of 2015, this increase however, is solely for federal contractors.
States and cities like Los Angeles are still working out what magical formula will solve the dichotomy of meeting the dire needs of the minimum wage worker while concurrently assuaging the change this necessity will bring for business owners who understandably believe this change will put their business in dire straits. At the moment, California has until January of 2016 before its minimum wage is set to increase to $10 an hour.
In the meantime, specific to Los Angeles, there are two discussions in play. One is being led by the Raise the Wage Coalition in Los Angeles which is seeking to enforce a $15.25 wage, and the other is the discussion featured in the Los Angeles Times which centers on restaurants and how that increase can be phased in for restaurant employees, who receive tips, while simultaneously addressing the financial concerns of restaurant owners. In both cases, the law of economics remains the same: if the wage increases at a rate in which business owners are unable to sustain their overhead costs, which includes employee salaries, then this entire process for change becomes null and void. No business, no jobs.
At the same time, it's no secret that wage has not kept pace with the cost of living. According to a May 2nd, 2015 article in The Economist, while productivity in the United States has increased by 220 percent since the 1960's, wage has not paced in tandem, increasing by less than 100 percent. In fact, since 2009, the federal minimum wage remained unchanged for five years, with 2008 marking the period in which our economy would take a downturn not experienced since that of the Great Depression.
At the end of the day, we can point fingers, run data regarding how to ease this financial gap so that the economics of this equation work out, but before we start narrowing the possibilities regarding who to blame and where to begin change, let's start with ourselves. Each of us plays a role regarding minimum wage and must consider the most fundamental elements if we want to effect change:
1)If you're not already living on $15 an hour, try it for one month and then share your experience. At $15 an hour and a maximum of 40 hours per week, that's $600 per week, $2400 per month, or $28,800 per year. Things to include in your budget: rent/mortgage, utilities (gas/electric, water, phone, cable, telephone, internet), food, clothing, transportation (fare, car, car insurance, car maintenance) and medical for the basics. Don't forget taxes (income & property if you own) + withholdings (social security, medicare) (here's a link to guide you: federal, state and City if you're a 1099 employee) and other monthly costs you need to set aside for the end of the year to pay like: your tax accountant, any holiday gifts and/or donations, and most importantly, the amount of money you plan to save every month should you become unemployed, decide to start a family, and/or seek higher education for you or your child or children.
2) Check out MIT's already living wage calculator:
Simply input your information and voilà, here's how much it costs to live in your city. For Los Angeles County residents, click here: As a single mother to two children, I need to earn a bare minimum of $27.15 to live in Los Angeles. If I have one child, that decreases to $23.53. And if I earn $7.00 or less per hour, after all of the above expenses, I am living in poverty. With a minimum wage of $9.00 an hour, it's easy to see why California has the nation's highest rate of poverty.
3)Let's all acknowledge that housing costs are the best measure of poverty thresholds NOT food. Currently, Los Angeles has been named not only the "least affordable U.S. City in which to reside," (with 57 percent of the Los Angeles population living beyond their means) but the City has also been dubbed the "City of Roomates" as nearly half of all adults in Los Angeles must "bunk up" to get by. In fact, according to a January 2015 report via Southern California's public radio station 89.3 KPCC, Los Angelenos, in order to afford the average L.A. County apartment rental price of $1,716 per month, must earn at least $33 per hour.
And for employees that are not earning that $33 wage or worse, just scraping by, are there moments of feeling bitter about people that receive government subsidies? To just touch upon this issue, please know that in order to qualify for any assistance program, individuals and families must live at a poverty threshold which is provided every year by the United States Census Bureau. In 2014, for example, a family comprised of 3 people must earn $19,013 OR LESS in order to qualify for assistance. Moreover, did you know that assistance program calculations are based on the cost of food comprising one third of one's budget and NOT the fact that rent, particularly in a City like Los Angeles, is the largest component of a budget? Needless to say, at a median rent of $1716 per month or $20,400 just for rent, no one who receives assistance is "living large" at all; it is a mathematical impossibility. In California, more than six million people live in households with incomes below the federal poverty level children largely comprising the population. To read more about how poverty is determined see this link.
4)Business owners need to determine if they want to be like a Google, Gravity or Treehouse? Or more like a Walmart, McDonald's, Starbucks, Macy's, or Kroger? The latter group are companies that pay American employees the lowest wages. WalMart, who continues to be the largest private employer in the United States, just recently raised their wage for some employees after decades of providing salaries that consistently rank "in the lowest paid one-fifth of U.S. workers" according to the Brookings Institution. OR does the business owner see their business style, their approach to growing their business, aligning with that of Seattle CEO, Dan Price, of Gravity payments who last week raised every single one of his employees salaries to $70k after reading this article on happiness which affirmed that it is money that makes a big difference in the life of employees at this stage of our economic history. Or how about Treehouse who did something "radical" per CEO, Ryan Carson, and went down to a four day work week? What's wrong with treating employees well and providing humane working conditions and salaries? Isn't that what makes us Americans, that distinguishes us as a country as opposed to the rest of the world that we once needed to assist in order to help raise others to our higher standard of living and life?
5)We need to ask ourselves, what kind of consumers are we and are we being realistic regarding our personal finances? When I read about companies like WalMart or Starbucks that pay their CEOS exorbitant amounts of money, I ask, why do we continue to shop there? Why do I still buy a drink at Starbucks at least once a week? What's my responsibility in that? If I purchase a $5 shirt at H&M do I realize that I 1)Have now instantly lowered the wage rate for U.S. labor employees to that level? And/or 2)I've now also exploited labor in another country and quite possibly a child? Ask ourselves the hard questions, like: Will my attitude truly remain positive when a restaurant employer increases their menu prices slightly to accommodate for the wage increase? How are things going to change if we collectively keep feeding the beast that also holds us down?
As for the conditions in which we live, I will continue to be a champion for our most marginalized and our most impoverished, particularly since the issue of racism and other injustices are indeed factors regarding inequities and other disparities. But at some point, and this goes for myself, for example, if I am not able to find a job in California that pays $33 an hour, I will most likely not be able to live here any longer. That is a reality. I don't want to be a candidate for assistance, nor do I qualify, and so this is a decision I will need to figure out upon graduation from graduate school when all my loans come flooding in. The sad fact is not everyone can afford to live in California. And unless government funding increases for our state, California will not even be able to sustain our most marginalized populations. The hard truth is: If you're poor or homeless, while the sunshine will save you in terms of warmth, that's about all California can offer you. You will live in extreme poverty, as will your children and you will most likely feel very unhappy and unsafe. Even with some of the best non profits in the world and amazing volunteers doing overtime, California is still a very expensive choice.
6)Let's change our attitudes regarding wage and profession needs to change within society. I read an article last week about a garbage man in Los Angeles that makes $96,000 a year. I read another about several teachers earning over $100k. Both of those stories made me extremely happy. What's wrong with allowing, if not encouraging Los Angeles restaurant, fast food and hotel workers and any other notoriously low paying employment to finally pay a living wage? While we can open the lines of discussion and find out how business owners approach their company's growth and ask the hard questions like: What's wrong with restaurant workers earning $15 an hour PLUS tips? What's wrong with minimum wage employees, a population disproportionately comprised of women by more than 50 percent earning NOT ONLY a living wage, but a wage that allows employees to actually save money and build a secure future? Why does it always feel like the answer, that the policy, is always focused on what's the minimum employees can live on? Policymakers and busy owners should embrace the style of living first hand for a week to truly comprehend the mental and physical toll the violence of poverty has on his/her employee. According to a 2013 study from the Economic Policy Institute, single people need approximately, $34,324/year or $16.50 an hour to meet basic needs as a Los Angeles resident. For a parent with one child, that budget jumps to $60,600 or $29.13 per hour. Are all of these studies inaccurate? And if they are not, I can only hope that every single employer that is paying their employees less than these amounts and reading this article? Are you aware of this concrete statistical data that affirms your employee is suffering?
7) Let's ask our policy makers to be a part of the solution. I hope policymakers will take a moment to review the above statistics and do please try living on a $15 an hour salary for one month and make the effort to understand, what folks in that income bracket are juggling. I'm not even including the safety and life threatening issues our most marginalized encounter on a daily basis in one's neighborhood or income brackets that are even lower and pose so many more challenges. I also hope that legislators who are paying these wages immediately identify their employees and raise their wage. I simply do not and have never understood how legislators could pay paltry wages in an effort to gain public support for not being deemed frivolous regarding spending? SERIOUSLY? It starts with you. And if you're not leading by example in your offices, why would you ask that of corporate leaders too? Do you really think you're going to receive a backlash from the public for providing a living wage for your employees? It was incredibly painful to read this story about Charles Gladden who works in the U.S. Senate cafeteria but is homeless.
As for other possible concrete solutions regarding business owners, it would be nice to see some policies that increase affordable housing and business rents, provide tax incentive to companies that do provide a living wage and what about taxing items like soda, alcohol, unhealthy food, products with big profit margins like marijuana versus anything that adversely affects our most marginalized. Do the research regarding best models and practices of cities like Seattle and states like Massachusetts who are making change and succeeding. Finally, lobby our federal government to offer an additional 5-10 percent tax credit to business that raise the wage to $15 for the first two years.
The time has come to raise the minimum wage in America to a salary that is a real living wage where people not only survive, but thrive. While it's really terrific that Democratic leadership last week started the push for a $12 an hour wage increase, I hope that leadership will also give the MIT wage calculator a look and identify what states will not be all that impacted from that wage increase. In the meantime studies like this one from 2006 via the Harvard Business Review affirm that turnover costs companies more money long term and that wage is a top reason why people leave their job. If restaurant owners are concerned with the change please look at this 2013 study which affirms that rising food costs do not result in a decrease of those dining out. In fact, convenience was more important than cost. America, it seems, is ready for this change. All that remains is, are you?