Restaurant Worker

Restaurant workers, cashiers, parking lot attendants and other low-paid workers will benefit when California’s wage begins rising. But many business owners will be grappling with increased costs, leading to price hikes, reduced hours, increased automation or layoffs. (File)

By Kevin Smith, San Gabriel Valley Tribune
Posted: 05/07/16 – 5:55 PM PDT |

California’s new minimum wage requirements are being hailed by supporters who say workers must earn a “living wage,” but others fear the pay hikes will fuel layoffs, higher prices and more automation as businesses scramble to offset increased costs.

One thing is certain: No matter what side of the fence you’re on, there will be winners and losers. Here are a few of the biggest from both sides:

Fast-food workers, cashiers, parking lot attendants, security guards and others who are earning the state’s current minimum wage of $10 an hour are all getting raises.

Come 2017, their pay will rise to $10.50 and hour. The following year it will jump to $11 an hour, and it will keep on rising until it hits $15 an hour in 2022. All told, that’s a 50 percent increase.

But this comes with a caveat.

Economist Christopher Thornberg, a founding partner with Beacon Economics in Los Angeles, said minimum-wage workers with little experience will actually be at risk when the tiered pay hikes begin kicking in.

“The real effect will be felt by low-income workers,” he said. “Employers will start hiring more seniors and get rid of entry-level people. They’re going to say, ‘If I have to pay more money, I want experienced people.’ They just won’t hire someone without experience.”

Still, experts say low-paid workers who prove themselves and add value to a company could likely remain on board.

California’s biggest employers of minimum-wage workers will soon be facing increased costs. And those costs will have to be absorbed through higher prices, reduced employee hours, layoffs or automation.

Bob Machuca, a senior regional manager with the Los Angeles County Economic Development Corp., said the apparel industry will definitely take a hit.

“A lot of small apparel shops that do manufacturing — the cut-and-sew companies that might employ five workers on the low side or about 20 on the high side — may cut back on hiring,” he said. “They may also lay off some workers.”

Economist Robert Kleinhenz, executive director of research for Beacon Economics, said some apparel businesses that employ minimum-wage employees will likely look to move out of state where worker costs aren’t as high. And that could damage the unique synergy of Southern California’s apparel industry.
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