LOS ANGELES (CBSLA.com) — After Mayor Eric Garcetti announced his hopes of increasing LA's minimum wage over the next three years, the plan was met with large amounts of both support and opposition.
Garcetti, along with billionaire businessman and philanthropist Eli Broad, sat down with CBS2's Randy Paige on Tuesday to defend the proposal and discuss its expected effect on the economy.
Among the critics of the mayor's plan to increase the minimum wage to $13.25 per hour over the next three years are a large number of local small businesses. They believe the increased wage costs will ultimately lead to the floundering of a lot of small-business owners.
"Six hundred economists, seven Nobel Prize winners who have looked at this closely say that is not the effect (the plan will have)," Garcetti said. "In fact, many more jobs will be generated. Those small businesses that today are suffering because nobody is going out to eat, because people aren't shopping on Main Street at the retails stores, will see the net benefit of this."
The current minimum wage in Los Angeles is $9 per hour. Under the mayor's plan, the minimum wage would increase to $10.25 in 2015, $11.75 in 2016, and $13.25 in 2017, with future increases being tied to the Consumer Price Index.
Critics of the plan maintain it will hit small businesses and nonprofits groups hard, as many employees will be laid off, while others take in the increased wage.
"This is not a silver bullet," Los Angeles Area Chamber of Commerce's Gary Toebben said. "Because they don't have very big margins, nor do they have much flexibility when it comes to raising prices. And, there will be some hard business decisions that will have to be made."
Garcetti, meanwhile, responds that layoffs will not be an issue under the proposed plan.
"I'm not (concerned about layoffs)," Garcetti said. "The evidence shows that we don't get layoffs when this happens."
Broad added that the plan to increase the minimum wage will actually help businesses.
"It makes great business sense," Broad said. "I think it's going to put billions of dollars into the economy. It's going to be a job-creator, not a job-loser."
Garcetti ultimately says he feels it is his responsibility to address a poverty issue that has simply grown out of control.
"I am entrusted as mayor to do the right things for the economy, a barbell economy, with a million people in poverty. Twenty-seven percent of residents simply can't sustain (themselves), and this is the way forward."
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