Pasadena has hired a pair of consultants who will help the City Council determine whether to boost minimum wage in the city to $15 in 2020.
IN 2016, the council approved a series of wage hikes that topped out this year at $13.25 an hour for employers with more than 25 workers. Wages could be boosted to $14.25 an hour in 2019 and $15 an hour in 2020, but only if the council finds the earlier pay increases had a positive effect on unemployment, poverty, job creation and the city’s overall business climate.
Businesses with fewer than 25 employees must currently pay workers a $12 hourly minimum wage. The city has tapped economists Michael Reich, a UC Berkeley professor, and Edward Leamer of UCLA. They’ll independently sift through data to see the possible impacts the wage hikes have had on Pasadena before working together, according to a city release.
The analysis will require a nuanced look at data from the federal Quarterly Census of Employment and Wages, especially because California’s statewide minimum wage has also increased, Leamer said.
This year, the statewide minimum wage increased to $10.50 an hour for employers with fewer than 25 workers and $11 an hour for those with more than 25 employees. It will hit $15 an hour for all employers by 2023 — three years later than Pasadena’s plan.
“The ideal thing would be to answer what impact did the California minimum wage have on Pasadena and what impact did the incremental increase that Pasadena choose, what impact did that have,” Leamer said. “We’re going to give an honest assessment of what the data say.”
Among the things Leamer and his colleague will be looking at is whether employers moved out of Pasadena in search of places with lower minimum wages.
Coupled with the statewide minimum wage hikes, there’s even less opportunity for business owners to find that kind of savings because the city of Los Angeles and unincorporated areas in Los Angeles County, such as Altadena, also have higher wage plans in effect.
In L.A., the minimum wage will reach $15 per hour in 2020 for larger employers. Future increases will be pegged to the Consumer Price Index. Unlike in Pasadena, L.A. included no review period to determine whether to move ahead with planned hikes.
“I was very impressed by the fact that the (Pasadena) City Council, when they passed this, legislated a review period,” Leamer said. “You ought to be able to call a halt to it if there’s evidence the consequences are adverse.”
The city will also consider anecdotal information from residents and business owners. Online surveys about opinions on wage increases are available in English and Spanish.
Previous research on wage hikes has been mixed. A 2017 report from the right-leaning Heritage Foundation compiled studies and surveys dating back to 1979 and concluded that “$15 minimum wages will substantially increase prices.”
A University of Washington study from last year found that Seattle’s minimum wage increase did not have a significant impact on prices. But the study found the hike could have been a factor in reduced hours and hiring for low-wage workers.
