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Study on Los Angeles' Living Wage


UC Riverside Economist David Fairris is Lead Author on Living Wage Study to Get Hearing by LA City Council June 3

Most affected workers are based at Los Angeles or Ontario airports

(June 2, 2005)

David Fairris

David Fairris

RIVERSIDE, Calif. (www.ucr.edu) -- On Friday, June 3, UC Riverside Economics Professor David Fairris will tell the Los Angeles City Council about the impacts of a 1997 living wage ordinance.

He is the first of four authors of a research study called "Examining the Evidence: The Impact of the Los Angeles Living Wage Ordinance on Workers and Businesses."

The study, funded by the Ford Foundation and others, provides new insights on the effects of living wage policies, which have been adopted by more than 120 local governments around the country.

"The most important finding is that the Los Angeles Living Wage Ordinance increased wages for low-income workers without serious employment loss or negative consequences for the firms that employ them," said Fairris, who works with UC Riverside’s Public Policy Initiative.

L.A.’s living wage ordinance requires certain firms that do business with the city to pay either $10.03 per hour, or $8.78 with a $1.25 per hour contribution to health benefits. It also requires these businesses to provide 12 paid days and 10 unpaid days off per year.

Jobs affected by the living wage ordinance include airline service workers, janitors, parking attendants, food service workers and retail clerks. Sixty-four percent of jobs affected by the living wage are at Los Angeles International or Ontario airports.

Results are based on three random-sample surveys of workers and firms:
• A survey of 320 workers affected by the Los Angeles Living Wage Ordinance, conducted after the pay increase had taken place. This is the first such survey ever completed.
• A survey of 82 firms affected by the Los Angeles Living Wage Ordinance.
• A control group survey of non-living wage firms in similar industries, which provides a baseline for comparison in order to isolate the impacts of the living wage.

The study was funded by the Ford Foundation, Los Angeles World Airports, the University of California Institute for industrial Relations, the McKay Foundation, the French American Charitable Trust, VEATCH Unitarian Universalist Program and the Solidago Foundation.

KEY FINDINGS

• The Los Angeles living wage has increased pay for an estimated 10,000 jobs.
However, 31 percent of affected workers still lack health benefits, and 44 percent rely on either government assistance programs or the Earned Income Tax Credit.
• Most workers affected by the living wage are from poor or low-income families. Seventy-one percent of affected workers have a high school education or less, and only four percent are teenagers.
• The living wage has not prompted firms to set up health benefits plans. However, some firms have improved their existing plans or extended them to more workers, affecting 2,200 jobs.
• Employment reductions were minimal, amounting to one percent of all jobs affected by the living wage. Eighty-one percent of affected firms did not eliminate jobs due to the living wage.
• Employers have recovered some of the increased costs of the living wage through
reductions in employee turnover and absenteeism. On average, firms recovered 16 percent of the increased cost of the mandatory wage increase through turnover reductions.
• Employers have adapted to the costs of the living wage in a variety of ways, including reducing fringe benefits and overtime, hiring more highly trained workers,
cutting profits and passing on the costs to the city or to the public.

ABOUT THE AUTHORS

David Fairris, Ph.D., is a Professor of Economics at the University of California at Riverside. He received his B.A. at Washington University and his Ph.D. at Duke University. He is the co-editor of a special issue of Industrial Relations, which is devoted to research on the impacts of living wage policies, and he has coordinated several academic conferences on living wage research. His research focuses on labor economics, microeconomics, and political economy and his work has been widely published in these fields. He is the author of Shopfloor Matters: Labor-Management Relations in Twentieth-Century American Manufacturing.

David Runsten is the Associate Director of the North American Integration and
Development Center at UCLA, where he conducts research and administers the center. He studied economics at Stanford University and agricultural and resource economics at the University of California at Berkeley. He spent many years studying migration from rural Mexico to the United States as Research Director of the California Institute for Rural Studies in Davis, where he conducted a series of surveys in California and Mexico. He has worked with Mexican smallholder cooperatives engaged in exporting, and he is
currently studying the impact of migration on coffee cooperatives in southern Mexico, as well as the viability of loan programs for micro banks set up in migrant-sending regions of Mexico. He has co-authored several studies on economic development and working poverty.

Carolina Briones is the Co-Director of Research at the Los Angeles Alliance for a New Economy (LAANE), a non-profit research and policy organization. She received a B.A. at Pomona College in Claremont and an M.A. in Urban Planning from UCLA. Before working at LAANE, she spent several years doing research on the health care industry.

Jessica Goodheart is the Co-Director of Research at LAANE. She received a B.A. from Columbia University and an M.A. in Urban Planning from UCLA. She has co-authored several studies on economic development and working poverty.

The University of California, Riverside (www.ucr.edu) is a doctoral research university, a living laboratory for groundbreaking exploration of issues critical to Inland Southern California, the state and communities around the world. Reflecting California's diverse culture, UCR's enrollment has exceeded 21,000 students. The campus opened a medical school in 2013 and has reached the heart of the Coachella Valley by way of the UCR Palm Desert Center. The campus has an annual statewide economic impact of more than $1 billion.

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