The Pasadena City Council voted 7–1 to approve an amendment to the Pasadena Minimum Wage Ordinance Feb. 11, 2019 setting a schedule to raise the minimum wage to $15 by July 1, 2020. Pasadena joins the city of LA and LA County in being ahead of the state of California’s schedule to raise the state minimum wage to $15 by 2023. The road to approving Pasadena’s 2020 minimum wage schedule began March 14, 2016, when the city council first approved the Pasadena Minimum Wage Ordinance. The ordinance established a city minimum wage implemented July 1, 2016 with a schedule set to raise the minimum wage to $13.25 on July 1, 2018. Following the raise in 2018, the council commissioned two economic reports studying the economic impact that raising the minimum wage had on unemployment, poverty levels and jobs in Pasadena. The reports were presented at the Feb. 11 meeting.
Steve Mermell, city manager of Pasadena, worked alongside the economic development division of the city to hire two economists — Edward Leamer and Michael Reich, who both hold doctorates in economics — to conduct separate studies. Leamer teaches at the University of California, Los Angeles, and Reich teaches at the University of California, Berkeley. Mermell described the rationale behind commissioning two different studies as an effort to present a range of perspectives on the complex issue of raising the minimum wage.
“Well, you know, if you have two economists you’ll have three opinions, and we knew that if we hired just one economist there may be people that would say, ‘Okay, that economist is sort of right-leaning.’ If we hired someone else, someone would say, ‘Well, that one’s kind of left-leaning,’ and we kind of went for — I guess you could characterize them as — one of each,” Mermell said.
Leamer’s data regarding the effects of a potential rise in the Pasadena minimum wage on earnings per worker projected an increase in limited-service restaurants. In contrast, Leamer also reported a potential decrease in employment of limited-service restaurants. Leamer concluded his presentation on an uncertain note, urging the city council to exercise caution when considering raising the minimum wage on the 2020 schedule.
“To sum this thing up, I did the best to get the data to speak. I listened very carefully, and I couldn’t tell you here what it had to say,” Leamer said. “But keep in mind that there is a minimum wage that is going to have an adverse effect in California. I would worry about pushing too far, too fast.”
Reich began his presentation with a critique of Leamer’s report, speaking to the difficulties of distinguishing the effects of raising Pasadena’s minimum wage from the surrounding cities.
“We do have some statistical techniques for overcoming [the difficulties]. And they’re standard, state-of-the-art, and I’ve used them. I don’t regard Dr. Leamer’s methods as anywhere inside of that kind of standard approach,” Reich said.
Ultimately, the conclusions of Reich’s study supported raising the minimum wage in Pasadena. Reich’s report concludes that an increased minimum wage in Pasadena would lead to a growing local economy, increased earnings per worker, increased employment in full-service restaurants and stable employment levels in limited-service restaurants.
When asked about his expectations for the vote, president of the Pasadena Chamber of Commerce Paul Little expressed his lack of surprise that members were not easily swayed by the meeting’s proceedings.
“They were going to vote the way they were going to vote. There were a couple that could have gone one way or another, but after hearing everything, they — well, the economists made it very easy for them to disregard the reports,” Little said.
Mermell also discounted the reports’ effect on the vote.
“I don’t think they affected the outcome at all. I think that to some degree they reinforced views that were already held. My expectation going into it was that the council would approve the measure. A lot of that has to do with the level of public interest and support for having the minimum wage in the city,” Mermell said.
Public support for raising the minimum wage on the 2020 schedule became apparent after Pasadenans Organized for Progress (POP) commissioned a poll. Conducted by David Binder Research, the poll found that 81 percent of registered voters in Pasadena supported the amendment. Within the specific districts of Pasadena, the indicated level of support for an increased minimum wage ranged from 75 to 89 percent.
Occidental professor Peter Dreier, a member of the board and the executive committee of POP, believes the poll was vital to the success of POP’s campaign supporting the amendment.
“Probably one of the most important things we did is that we commissioned a poll. [At the meeting,] we were basically saying to the council members, ‘This is what your voters want. You can listen to the business community if you want, but they aren’t representative of all these people,'” Dreier said.
Dreier characterized the campaign as a grassroots organizing effort. POP focused their campaign around workers in Pasadena, relying on in-person testimonies during the meeting.
“If we didn’t have workers talking last night, they wouldn’t have heard those stories,” Dreier said.
On the other end of the issue, Little, the Chamber of Commerce president,warns of a financial struggle for small businesses in Pasadena, saying that that situation is already manifesting itself.
“One of the economists said that there would be another 1,000 jobs lost over the next year and a half. And we’ve seen that. We did surveys of our members and they report dropping anywhere from 30–40 hours a week to 20 hours a week for employees as a result of the minimum wage,” Little said. “The real irony is that those thousand people who aren’t going to be employed are exactly the same people that they’re trying to help.”
Mermell believes that income inequality in Pasadena and other cities in California that face high costs of living requires federal action to implement a long-term solution.
“It would really be better if the federal government would address these issues, but they’re not,” Mermell said. “It’s left to the locals to do the best they can, and I congratulate our council because I think that they are doing the best they can.”
