The city of L.A.’s living wage law has boosted wages for an estimated 10,000 workers while only leading to minimal layoffs by contractors and other companies subject to the city’s ordinance, according to a study released Thursday.
But most of the 475 employers covered by the ordinance who were not previously offering health insurance still did not do so `after the law took effect in 1998, despite financial incentives built into the city ordinance.
And bearing out predictions made by business opponents smaller companies appeared to be disproportionately impacted by the law. Facing higher costs, they laid off disproportionately more workers or lost out on bids to larger companies better able to absorb the higher costs.
“Smaller firms appeared to be slightly less successful in dealing with this living wage ordinance,” said study co-author David Fairris, professor of economics at University of California Riverside.
The city’s living wage ordinance, passed over bitter opposition from business and then-Mayor Richard Riordan in 1997, covers all companies receiving contracts or other forms of financial assistance from the city. Companies offering at least $1.25 per hour in health benefits to their workers must pay $8.78 per hour; those not offering benefits must pay $10.03 per hour. The wages are indexed to inflation.
Based on the study’s findings, living wage proponents said they would seek to boost health coverage for workers subject to the living wage ordinance. The most likely course: pushing city officials to increase the differential in wage scales for employees with insurance and those without coverage.
The study was conducted by the Los Angeles Alliance for a New Economy a proponent of the living wage ordinance and the Institute for Labor and Employment at the University of California, with additional funding from the Ford Foundation.
