Saturday, December 27, 2014

Los Angeles' Minimum Wage Hike Risks Driving Businesses to Nearby Cities

Well, you think?

At LAT, "Would an L.A. minimum wage hike push businesses to nearby cities?":
In less than four years, Tony Yanow has boosted Golden Road Brewing's production nearly sixfold, making beers from the Atwater Village brewery a mainstay in supermarkets across California.

He employs 300 workers in Los Angeles at the brewery and his Mohawk Bend restaurant in Echo Park. As part of a planned expansion, he expects to hire at least 100 more — but most of them may not be in the city.

As lawmakers consider potential minimum wage increases to as high as $15.25 an hour by 2019, Yanow is planning to expand into Orange County and is considering a new project in Glendale.

"I love L.A., but that doesn't mean it's my best bet," he said. "Do you want to go somewhere where you can make money, or do you want to go somewhere where they're stacking the cards against you?"

Los Angeles' minimum wage would apply only within city limits. So the city's unique geography — stretching from the northern reaches of the San Fernando Valley down to the port in San Pedro — provides plenty of options for business owners looking to avoid higher labor costs.

Dozens of municipalities directly border the city, but only two — Santa Monica and West Hollywood — are pondering raising their minimum wages.

Business owners also worry about losing customers if they raise prices to cover higher costs. Why not just buy that cheaper car wash, hamburger or piece of clothing in a neighboring city? While minimum wage advocates argue that higher pay for workers would translate into more spending, opponents worry the economic boost would migrate across the L.A. border.

Neighboring cities such as Burbank have a history of making aggressive plays to attract new businesses.

"There's at least 40 jurisdictions that'll be happy to pick our pocket," said Ruben Gonzalez, senior vice president at the Los Angeles Area Chamber of Commerce. "Everywhere in the city, you can point to people who can move down the road and serve the same clientele."

Los Angeles' geography differs widely from that of other cities that have passed minimum wage increases, such as Seattle and San Francisco, which have more uniform borders and compact city centers. That means there has been little if any research that would apply to the wage hike being considered in Los Angeles.

"We really don't know what we're dealing with," said Christopher Thornberg, an expert on the California economy who is the founding partner of Beacon Economics. "This is a very aggressive hike they're talking about, in the context of a very convoluted geographic area."
The economics Einsteins of Los Angeles. Driving businesses and jobs outside the city limits.

You gotta hand it to the progs. They're really committed to their ideas, no matter how disastrous.

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