On Saturday 10 California cities will boost their minimum wage, but a new study out of Seattle shows that those pay hikes could end up in layoffs, reduced hours, and a decline in income for the workers it's meant to help.
In April 2015 Seattle bumped up its minimum wage from $9.47 to $11 an hour, and in 2016 it went up to $13 an hour.
This dramatic change forced employers to reduce hours, hold off on new hiring, and even fire workers.
Robert Kleinhenz, executive director of research for Beacon Economics in Los Angeles, thinks the same thing will happen here:
"I think we’ll probably going to see something along the same lines. And we probably have a much bigger share of minimum-wage workers here. We know there are a lot of them working in the hospitality and restaurant industries. And some people in the apparel industry are concerned about how this may affect their ability to do business.”
David Houston, co-owner of Barney's Beanery, said:
“Our tipped employees make well beyond $15 an hour and that’s part of our irritation. California doesn’t offer tip credits. If someone is making $20 an hour with tips that would allow us to pay that person less. The government requires us to track and report tips and they tax us on tips — but they are not counting them.”
Houston joined us this afternoon to talk about how the change in minimum wage has affected his business:
Barney's Beanery has six locations:
- Pasadena
- West Hollywood
- Westwood
- Burbank
- Santa Monica
- Redondo Beach