Big Labor Money Behind Los Angeles Minimum Wage Hike

Last Tuesday, the Los Angeles City Council voted 14-1 in favor of raising the minimum wage to $15 by 2020.

It is no surprise that a city in California is on the cutting edge of implementing progressive policies that do more harm than good and are aggressively supported by labor unions and their allies, but how much influence did labor unions have in getting the minimum wage hike across the finish line?

A great deal, according to the Department of Labor’s union financial records and the Los Angeles City Ethics Commission that tracks campaign contributions to elected officials.

Two reports had an overwhelming influence on the decision to go forward with the $15 minimum wage ordinance. Both touted the positive impact a boost in the minimum wage would have and gave intellectual ammunition to city council members.

Los Angeles Mayor Eric Garcetti commissioned one that was be conducted by UC-Berkeley to analyze the impact of a minimum wage hike called, “The Mayor of Los Angeles’ Proposed City Minimum Wage Policy: A Prospective Impact Study.”

According to Department of Labor data, the UC Berkeley Labor Center and Institute for Research on Labor and Employment received a combined $184,651 from SEIU, UFCW, IBEW, and Operating Engineers union in 2014.

In addition, the Los Angeles City Council’s Economic Development Committee held hearings that discussed the UC-Berkeley study and another report, “Los Angeles Rising: A City that Works for Everyone,” developed by Economic Roundtable and UCLA Labor Center, which also supported a minimum wage increase.

In 2014, the Economic Roundtable collected $121,506 from SEIU and the Carpenters’ union, and the UCLA Labor Center was paid $5,000 by the SEIU. Even the graphic designer, Design Action, for the Los Angeles Rising report got union funds. SEIU paid Design Action $7,510 in 2014.

Los Angeles City Council members received substantial campaign contributions from unions, as well.

According to the Los Angeles City Ethics Commission, the 14 Los Angeles City Council members who voted in favor of the $15 minimum wage ordinance received a combined $187,250 from unions in their last elections.

But why are labor unions so interested in minimum wage increases when little to no union members earn the minimum wage?

The answer is twofold. One, as labor economist James Sherk explains:

A higher minimum wage increases the expense of hiring unskilled workers. This makes hiring skilled union members more attractive and could raise the earnings of union members who compete with minimum wage workers by 20-40 percent. Meanwhile, non-union, low-skilled workers’ earnings actually fall due to reduced working hours and fewer job opportunities.

Two, as I previously noted:

unions’ self-interest is the primary motivation for their support of wage hikes, not altruism or concern for the well-being of low-wage workers.

Minimum and living wage laws benefit union interests in one of two ways.

First, many state and local wage laws exempt union contracts from the new, higher wage standard. These exemptions strictly serve union self-interest by making non-union labor more expensive, thereby making union labor more competitive.

Second, exemptions are not the only way that wage hikes are advantageous to unions. Many collective bargaining agreements tie union member wages to increases in the minimum wage.

As more and more states and cities look to raise the minimum wage, it is important to realize that the labor unions behind such campaigns are the beneficiaries of wage hikes. Unions are not pouring their funds into the Fight for $15 campaigns, studies, and campaign contributions out of the goodness of their hearts. Unions act with their self-interest in mind and that is why they support increasing the minimum wage, even though many low-skilled workers will lose their jobs as a result of such laws.