- - Tuesday, June 2, 2015

“Without a doubt, it was a very big victory,” Maria Elena Durazo, a vice president at the hotel and restaurant union Unite Here, said last week of the Los Angeles City Council’s decision to raise the minimum wage to $15 by 2020.

Was it a victory for the workers of Los Angeles, or was it a victory for the labor unions?

Shortly after the city council agreed to draft an ordinance raising the city’s minimum wage from $9 an hour to $15 an hour over the next five years, the unions started lobbying for an amendment to exempt companies that employ unionized workers.

So just days after the proposal they fought so hard for passed its initial hurdle, the unions wanted to make sure they could get a few more dollars in their pockets. Workers who thought the unions had their back must have been shocked because if the unions got their way, the biggest losers would be the workers.

Businesses could continue to pay wages similar to what they do now – meaning very little impact on their bottom line (just the additional hassle of dealing with the union). Unions would suddenly get an influx of new members – each of them paying required monthly dues. And the workers would likely get the same wage they make now but would have to fork over a chunk of each paycheck to the union.

I honestly don’t know how the union bosses explained that one to the workers with a straight face. Come to think of it, I doubt they actually explained any of it to the workers. They just reached into the workers’ wallets and said, “Trust us.”

If the workers of Los Angeles were given all the facts, they would know that either way this is a sour deal.

A 66 percent increase in the minimum wage would have detrimental impacts on the economy, especially the individuals who earn wages below $15. In Los Angeles and across the country, the food service industry would be one of the hardest hit.

According to James Sherk, a research fellow at The Heritage Foundation, prices would spike and many workers would be out of a job under a $15 minimum wage.

“The higher labor costs would initially force fast-food restaurants to raise their prices by 15 percent, which would drive down sales by 14 percent,” Mr. Sherk detailed in a report on the issue. “This would force restaurants to raise prices again, pushing sales down further. In equilibrium the average fast-food restaurant would have to raise prices 38 percent. Prices would rise roughly twice as much as the initial increase in labor costs. Total sales and hours worked would both fall by 36 percent.”

He continues to tell readers that such a high artificial minimum wage would hurt the exact people labor unions claim it is aimed at helping.

“These changes would hurt consumers,” Mr. Sherk wrote. “Americans would face higher fast-food prices, putting a dent into the budgets of everyone who frequently eats fast food — primarily moderate-income consumers, not the wealthy, who do not regularly eat fast food.”

The final vote on the Los Angeles ordinance is expected Wednesday, but who knows what special favors will be added to the final plan. At this point, the controversial idea to exempt union shops is off the table, but that does not mean it won’t be added back in.

Any special favors like that do not belong in the proposal. It would simply add another loophole allowing Big Labor to force businesses into hiring union workers – only padding the union bosses’ pockets with those sweet monthly dues.

If the Los Angeles City Council were truly concerned with growing the local economy and creating more opportunity for all residents, lawmakers would scrap the $15 proposal all together. In the end, a higher minimum wage may be nice for the few who would get it, but all the workers out of a job and the consumers paying more for a hamburger would likely beg to differ.

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