Hed — L.A.’s foolish wage

Bad news for Los Angeles: The terribly misguided living wage proposal is headed to the City Council, where there appears to be more than enough votes for passage and maybe even enough to overturn an expected veto from Mayor Richard Riordan.

It was only after the impressive and highly unusual lobbying effort by a coalition of area businesses that the measure was significantly watered down.

The scaled-back measure would require holders of city service contracts worth $25,000 or more and lasting at least three months to pay their employees at least $7.25 an hour with paid days off and health care benefits, or $8.50 without benefits.

The original proposal floated last summer by Councilwoman Jackie Goldberg would have required slightly higher wages affecting almost any company that had any business relationship with the city.

While it’s a relief that the proposal has lost much of its earlier punch, we continue to question its reasoning and effectiveness.

Goldberg and other living wage advocates have based their campaign on overly simplistic grounds of market inequity: Low-wage earners, many of them recent arrivals to the United States, are taken advantage of by the capitalist class, Goldberg concludes.

The only solution, the argument goes, is for government to step in and artificially inflate wages.

The problem, of course, is that artificially set wages have never proven to be an effective tool in raising the standard of living. That’s one reason why last year’s vote by Congress to increase the federal minimum wage received scant notice: Very few industries rely on the minimum, and according to numerous studies, many of the workers receiving those wages aren’t bread winners.

As for the revised living wage proposal, a UCLA study estimates that only 5,000 workers would be affected a fraction of L.A.’s overall work force and barely enough to have even a symbolic impact on the local economy.

We question, first and foremost, whether it is the role of a local municipality to determine how much a privately run firm should pay its workers. But never mind differences in economic philosophy if the Council was truly interested in raising the standard of living among L.A. workers, it would stick to the engine for making it happen: economic growth.

While many Council members refuse to believe it, prosperity cannot be railroaded by government fiat; it must happen through government accommodation.

An interim report by a group of private consultants points to the many inequities in the city’s tax structure a key reason why five health maintenance organizations are threatening to leave L.A. if they don’t get relief in the way they are taxed.

The long-awaited report comes on the heels of a study that, to no one’s surprise, placed the City of Los Angeles at the bottom of the list of area municipalities in terms of the cost of doing business. The main culprits? Taxes and fees.

If businesses leave or expand elsewhere, job growth is bound to stagnate. And that will affect wages much more than any artificially inflated government mandate.

We would hope that such a reasonable concept could be readily appreciated by members of the Council. Only if it were so

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