Minimum Wage Raise Moves Forward, Wage Theft is Kept on Close Watch

Months passed and Hilda Lopez and her coworkers still hadn’t received all of their back pay. As a garment worker, Lopez was paid the minimum wage to sew jeans and t-shirts for pricey name brands her company contracted with, but after two months of not receiving any pay and promises of being paid “next week”, Lopez and her coworkers filed a complaint with the California Labor Commissioner's Office.

“One day we showed up to work and everything was gone. They had locked the doors and we looked inside and they took the all equipment too. We never got paid,” said Lopez. During the months-long wage-theft investigation, the owner of the company filed for bankruptcy and Lopez and her coworkers lost all chance of receiving their pay.

After her experience, Lopez started organizing around wage-theft and workers’ rights, eventually leading her to get involved in the movement to raise the minimum wage. She was one of hundreds of workers that packed into city hall last June, the day the Los Angeles city council voted to raise the minimum wage to $15. Lopez and other advocates saw it as a victory for workers, but one hurdle remained: making sure it would be enforced.

”We’ve gotten the increase, but we need to make sure it’s enforced because what’s the point of raising the minimum wage if the people aren't even get the wages they’re already working for?” said Scarlett De Leon, a political organizer with the Koreatown Immigrant Workers Alliance.

The City’s move to raise the minimum wage is part of a larger trend in cities and counties to take the issue of poverty into their own hands. Seattle, San Francisco and Pittsburgh have all passed similar ordinances. Following the City’s move, Los Angeles County, Long Beach and Santa Monica have also voted to raise their minimum wage to $15.

On January 1, the state’s minimum wage increased from $9 to $10, as part of legislation signed by Gov. Jerry Brown in 2013. The City and county will see an additional increase of 50 cents July 1, the first step in a gradual increase to get the city and county minimum wage to $15 by 2020 and 2021 for businesses with fewer than 25 employees.

To ensure the higher wages get paid, the county is forming a Wage Enforcement Program, a unit of the Department of Consumer and Business Affairs. The program will serve the unincorporated areas of Los Angeles county and will deal with investigations, education, outreach, negotiations and settlement.

“We want to make sure that minimum wage workers know their rights under the ordinance and that employers know what their responsibilities are,” said Brian Stiger, director of the Department of Consumer and Business Affairs.

The program will begin June 1, but representatives of the Wage Enforcement Program have already begun contacting local businesses to notify them of the increase.

“We are expecting complaints to come in shortly after the program begins, but come July 1st, we will be ready to investigate complaints of violations,” said Stiger.

The Wage Enforcement Program is estimated to cost $800,000, but Stiger said that number may go up as the program is rolled out. The program currently has five employees, four of which are field investigators and they have already requested an additional six employees.

According to a report by the UCLA Institute for Research on Labor and Employment, low-wage workers in Los Angeles lose more than $26.2 million in wage-theft violations each week. Some of the common violations include violating minimum wage laws, not paying workers overtime and forcing workers to work off the clock.

Advocates say wage-theft complaints previously filed with the California Labor Commissioner's Office took too long to be investigated and left workers waiting months to receive their back pay, if they were ever received at all. Stiger said that is a problem they aim to address with the county Wage Enforcement Program.

“We want to make sure that if we have information of a violation of the ordinance, we can move as quickly as we can. We have been investigating consumer complaints and we realize that these investigations have to be concluded very quickly,” said Stiger.

Some incorporated cities have requested to contract with the county’s Wage Enforcement Program. Stiger said they are in the very early stages of discussion.

Los Angeles County Supervisor Sheila Kuehl,  who proposed the county increase, said she hopes that increasing the minimum wage in unincorporated areas of Los Angeles - which makes up for 10 percent of the county’s workforce - will push the other 87 incorporated cities towards an increase.

”Various unincorporated areas border different cities and it’s possible that workers would opt to work in the unincorporated areas rather than the cities. We hope that would encourage cities to raise their minimum wage as well,” said Kuehl.

Lopez said that although the state’s recent increase to $10 is small, it has managed to make her life easier.

“I feel more free to buy my basic needs without as many worries. It helps relieve some stress because making $9 an hour is hard. Every cent you make you have to think hard and make hard decisions before you spend one dollar because you live a life really restricted,” said Lopez.

Lopez has been affected, like many others in Los Angeles, by the rising housing costs which is causing many to leave the city in search for more affordable housing. According to a recent report published by the nonprofit Next 10, between 2007 and 2014 more than 625,000 Californians earning less than $30,000 annually left for other states.

“With the minimum wage at $10 or even $15, it isn’t enough because the rent is really expensive and every year the property owners raise the rent, even though minimum wage doesn't increase,” said Lopez. “I and many people I know have struggled to pay rent. Sometimes you go to people’s houses and they have 14 people in one apartment or immigrant families with nothing in their refrigerator because all their money goes to rent,” said Lopez.

Sheila Kuehl said a “living wage” is  the term used to describe the amount needed to pay rent, buy food and make a car payment, but that often is a higher amount than minimum wage.

“For now, having a higher minimum wage for workers often means the difference between being below the poverty line or just above it,” said Kuehl.

Supervisor Don Knabe, one of two county supervisors to oppose the higher wage plan, said the increase would hurt rather than help workers.

“The minimum wage was never meant to be a living wage,” said Knabe. “Minimum wage jobs are intended to be entry level, allowing workers to gain experience and enable them to earn raises, and ultimately move on to better-paying jobs.”

He echoed many critics’ claims that the hike would pass increased costs to business owners who would absorb the increase by raising their prices, reducing employees’ hours and looking to replace workers with automation.

“If the ordinance is going to force businesses to reduce hours and possibly lay off employees, how are we helping reduce unemployment and move people out of poverty?” said Knabe.

According to a study by the Los Angeles Economic Development Corporation, of the 1,000 businesses surveyed throughout the county, the majority said it was not likely that they would reduce the number of their employees or cut their hours.

Businesses’ operating costs are estimated to increase by about 0.9% when the minimum wage reaches $15, said Ken Jacobs, chair of the UC Berkeley Labor Center.

The increase in the minimum wage brings a decline in worker turnover, saving money in terms of the hiring and training process. It improves productivity which absorbs part of the costs, said Jacobs.

But he said the main way for costs to be absorbed is to pass on the increases to consumers.

“We expect overall a very small increase in prices in L.A. as a result of the increase. When you increase prices, it has an effect on consumer demand, but on the other side of the equation, when the workers have more money in their pockets they spend that money. We found that those two effects balance each other out and the overall effects on the L.A. economy in terms of employment and GDP would be very small,” said Jacobs.

Lopez is still struggling with bad credit after her previous employer issued her checks that bounced, but she said she’s happy her situation lead her to join a movement that improved the pay for many workers.  

“We’re happy the city and county announced that they would raise our wages, but we know that it’s only one step to improve conditions for workers. We have to make sure it’s enforced,” said Lopez.