NCPA - National Center for Policy Analysis

Pay Hike Strikes Fear in Los Angeles Garment Industry

July 21, 2015

Los Angeles still boasts more jobs making jeans, jackets and other apparel than any other part of the country. Manufacturers and designers now fear "Made in L.A." is under threat from a new law to boost the city's minimum wage to $15 an hour by 2020.

The city's wage law, which will raise the base pay by 50 percent over five years, serves as a test for urban minimum wages. Advocates say it will provide much needed help for working families but manufacturers warn it will undercut their competitiveness and drive them out of town.

San Francisco and Seattle have already moved to establish an eventual $15-an-hour pay floor, but Los Angeles marks the first time a city with a large low-wage manufacturing base has decided to raise its wage floor so high. As a result, what happens in Los Angeles will be closely watched elsewhere. At least eight cities, including St. Louis, New York and Washington, D.C., are now evaluating their own proposals to raise the minimum to $15 an hour.

A study by University of California-Berkeley economists commissioned by the city council found that a minimum-wage increase to $15.25 an hour would result in a raise for more than 600,000 workers while costing the city fewer than 3,500 jobs. The study identified apparel manufacturing as an industry most likely to be affected. Payroll costs were estimated to increase 17 percent, double the rate of other manufacturers.

Brian Weitman, chief executive of STC-QST LLC, a supplier of items such as zippers, pocket linings and buttons, says the higher minimum wage will likely speed the conversion of the downtown area from warehouses and small factories to luxury lofts and high-end restaurants. "Five years from now, there won't be manufacturing in the city anymore," he said.

Source: Eric Morath and Alejandro Lazo, "Los Angeles' Garment Industry Frets Over Pay Hike," Wall Street Journal, July 15, 2015.

 

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