Small Business

Los Angeles raises minimum wage to $15. Which city is next?

Workers demanding the Los Angeles City Council to vote to raise the minimum wage Tuesday, May 19, 2015, in Los Angeles.
Damian Dovarganes | AP

As Los Angeles moves to become the largest city to raise the minimum wage to $15 an hour from $9 an hour over the next five years, a key question is which other large cities might follow suit and hike pay.

Los Angeles joins other cities including Seattle, San Francisco and Chicago that have moved independently to raise wages beyond the current, federal minimum wage of $7.25 an hour.

The shift in Los Angeles will now put pressure on other big cities including New York and Washington, D.C., to take similar action, says Holly Sklar, chief executive of Business for a Fair Minimum Wage, which supports raising the federal minimum wage. "This ratchets up pressure in these cities," Sklar said. "And as we see more cities do this, it adds pressure on the federal government to take action."

The Los Angeles City Council agreed on Tuesday to draft a proposal to raise wages by 2020. The plan will go to a vote next month and Mayor Eric Garcetti has said he will sign it into law.

Los Angeles joins labor groups and other supporters of higher wages.

Last week, New York Gov. Andrew Cuomo said he would convene a wage board to examine fast food worker pay in the state.

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And Facebook has said it is implementing new standards on benefits for its contractors and vendors including wages that are $15 an hour or higher. Other requirements include offering at least 15 paid days off for vacation, sick pay and holidays.

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Incrementally, labor groups hope decisions by large corporations and cities will put pressure on Washington, D.C. to act. "As more states and cities do this, it only adds pressure on the federal government" to lift the national, federal minimum wage, said Sklar.

But other wage watchers argue the Los Angeles hikes will disproportionately hurt small-business owners, says Jack Mozloom, communications director at the National Federation of Independent Business. The impact in cities is predictable in that those that can't afford to raise wages will ultimately close down, Mozloom said. "Businesses can't spend what they don't have," he said.

Beyond individual cities, corporations that have moved to raise wages include Wal-Mart, Gap, McDonald's and T,J. Maxx.

But implementing higher wages is no slam dunk. Protesters marched in Oak Brook, Illinois, on Wednesday, where McDonald's is based. The demonstrators said boosting pay for only company-owned locations is not enough.

McDonald's wage change will not apply to the fast food chain's franchises that set their own local wages.

"This is an initial step for our U.S. business. I understand that some may believe it doesn't go far enough," McDonald's CEO Steve Easterbrook wrote in an op-ed in The Chicago Tribune in April. "These actions demonstrate meaningful progress, and it is what we can do right now in our company-owned stores."

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