The rate will first take effect Jan. 1 for hospitality workers and will “create a phased approach for minimum wage increases for large businesses and small businesses with adjustments every six months to create consistency in the minimum wage citywide by July 1, 2023,” the city council said in a statement.
It will then be extended to all city workers on July 1, 2023, who will see incremental raises in their paychecks every six months until their hourly wage reaches the new minimum in July 2023.
This minimum wage rate will be $17.64 per hour, plus two Consumer Price Index (CPI-W) adjustments: one on July 1, 2022, and one on July 1, 2023, although exactly what the adjustments will be in both of those years is not yet known as the Consumer Price Index has not yet been determined for these dates.
However, it is likely that the citywide minimum wage rate on July 1, 2023, will be more than $18.00 per hour, the council said, noting that the wage rate will increase annually thereafter based on the annual CPI-W adjustment.
California’s current minimum wage is $13 an hour if an employer has 25 workers or less. The minimum wage is $14 an hour for employees of companies with 26 or more employees, as per the California Department of Industrial Relations. The wages for both of those groups will increase by $1 at the start of 2022.
However, the average hourly rate that an individual living without children needs in Los Angeles, California, to support his or herself is $19.35 an hour, according to a living wage calculator developed by Dr. Amy Glasmeir at the Massachusetts Institute of Technology.
For an adult with a child, that rate increases to $42.41 an hour while for two adults with one child, it sits at $39.06.
“As we recover from the pandemic, it is important to ensure recovery includes everyone. There is undeniable income inequality in this nation and wages have remained stagnant compared to the growing cost of living,” said Mayor Pro Tempore Sepi Shyne in Wednesday’s statement.
“This has caused workers to remain in poverty no matter how hard they work. I am proud of our unanimous decision last night to raise the minimum wage for workers to one of the highest levels in the country and include sick leave and personal time off provisions for all. West Hollywood has now proclaimed that we want our workers to be as successful as our businesses. We took into account the needs of working people as well as the requests from businesses to phase in the higher wage. West Hollywood has always been a creative leader on many fronts and now we are a leader in creating equity for workers and helping to close the gap in income inequality.”
California’s wage increase comes just said after the ADP Research Institute Workforce Vitality Report, released Oct. 27, showed that third-quarter wages in the United States increased 3.3 percent, in line with growth in the months before the COVID-19 pandemic.
Meanwhile, job switchers’ pay is up 6.6 percent since September 2020, as employers seek to attract new workers with competitive compensation.
The most significant wage growth was seen in employees 24 years old or less and workers over the age of 55, which ADP notes could be due in part to those age groups rejoining the workforce post-pandemic.
Multiple companies, particularly those in the dining and hospitality sector, as well as small-business owners, are increasing pay for employees in an effort to counteract shortages and attract workers amid hiring difficulties because of the COVID-19 pandemic.
However, there is growing fear among economists that the sharp rise in wages along with a declining employment rate could contribute to increased levels of inflation, adding extra pressure on central bankers trying to steer their countries out of economic turmoil.