On Friday, workers in the City of Los Angeles saw the minimum wage rise to $10.50 (or $10.00 for smaller employers)--the first of several annual steps on the way to $15 an hour by 2020 or 2021.
This is great news--part of a dramatic transformation across the country over the past two years that has seen the $15 minimum wage become the benchmark for progressive action to reverse decades of falling wages and pay inequality. Fifteen dollars an hour may not be a lot in high cost-of-living cities like Los Angeles, but the extra income will make a real difference in low-wage workers' lives. Researchers at UC Berkeley found that a $15 minimum wage would raise pay for approximately 41 percent of the Los Angeles workforce, delivering an average raise of $4,800 per worker per year (in 2014 dollars) and boosting workers' spending by $1.36 billion by 2017 and $2.38 billion by 2019.
The challenge ahead of us now is making sure the new higher wage becomes a reality for low-wage Angelenos. The City Council took the important step of creating a new city office--the Office of Wage Standards--to enforce the new law. The office can hold employers accountable for following the new law, including issuing penalties and fines for violations.
History tells us there will be violations. A landmark 2009 study of nearly 4,500 low-wage workers in three cities--Los Angeles, Chicago, and New York--found that more than two in three workers experienced at least one pay-related violation during their previous work week. Of these workers, one in four was paid less than the minimum wage, and three in four were not paid their overtime wages. Wage theft was calculated to cost workers and their families in these three cities an estimated $56 million every week--that's $56 million stolen weekly from workers' pockets, and not going to supporting their families and communities.
Because wage theft is so common in industries that employ minimum wage workers, only an effective and strategic enforcement system will ensure that workers actually receive the new wage they are entitled to.
What does an effective and strategic enforcement system look like? Well, for one, we know that enforcement doesn't work if it relies solely on workers coming forward to file complaints. A study of the largely complaint-based federal system found that for every one complaint received, there are more than 100 other labor-standards violations that go undetected, allowing unscrupulous employers to fly under the radar. One reason workers don't complain is that nearly half of those who suffer wage theft also face retaliation for speaking up about it. Even though retaliation is illegal under the Los Angeles ordinance, the fear of being fired or punished for speaking up is very real, especially for workers living paycheck to paycheck. That's why a strong enforcement system also requires the active participation of community groups, who know their neighbors and the industries they work in, and in whom workers can trust.
Secondly, we expect that the Office of Wage Standards will not simply respond to complaints that come to them, but will undertake a targeted enforcement approach, using its knowledge of violation patterns to focus on industries and employers that are repeat offenders. These types of targeted investigations where we know violations are rampant have proven cost-effective and have the potential to return hundreds of millions of dollars to state coffers in unpaid unemployment insurance, workers' compensation, and other payroll tax assessments that violating employers are skipping out on.
The truth is that winning a higher minimum wage rate is only step one. After we have congratulated ourselves on a job well done, we must turn our attention to the work of ensuring that the promise of a higher minimum wage becomes a reality for the people who serve our food, clean our hotel rooms and offices, build our homes, and care for our families.