Los Angeles’ Garment Industry Frets Over Pay Hike

Los Angeles’ Garment Industry Frets Over Pay Hike

Some say a USD 15 minimum wage, slated by 2020, will force them to outsource or leaving, reports the WSJ the Wall Street Journal

Its numbers have slipped from earlier highs, but Los Angeles still boasts more jobs making jeans, jackets and other apparel than any other pocket of the country. Manufacturers and designers now fear “Made in L.A.” is under threat from a new law set to boost the city’s minimum wage to USD 15 an hour by 2020. The largest centre of manufacturing in the U.S. is about as far from the rust belt as you can get.

The Los Angeles metro area has the most manufacturing workers in the country. More people work in factories there than traditional blue-collar towns such as Chicago, Detroit or Philadelphia. While the number of manufacturing workers in Los Angeles and nationwide has plummeted from 25 years ago, the community has maintained its leadership position. There are about 524,000 manufacturing workers in the region, well above 409,000 in Chicago and 368,000 in New York, according to the Labour Department.

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The city’s wage law, which will raise the base pay by 50% over five years, serves as a test for urban minimum wages. Advocates say it will provide much needed help for working families but manufacturers warn it will undercut their competitiveness and drive them out of town.

Contract apparel manufacturer 5 Thread Factory, whose garments include shirts for men and women, mountain-bike gear and other products, has outgrown its two floors of space in a gritty downtown neighbourhood just three years after it opened. But with wages rising, CEO Brian Zuckerman said he won’t sign another lease in the city. “The simple answer to this whole conversation is we’re moving out of the city of L.A.,” he said.

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San Francisco and Seattle have already moved to establish an eventual $15-an-hour pay floor, but Los Angeles marks the first time a city with a large low-wage manufacturing base has decided to raise its wage floor so high. As a result, what happens in Los Angeles will be closely watched elsewhere. At least eight cities, including St. Louis, New York and Washington, D.C., are now evaluating their own proposals to raise the minimum to $15 an hour.

Los Angeles Mayor Eric Garcetti is among many proponents of the new law who argue it will help Los Angeles attract and retain more-productive workers, ultimately saving employers money in lower training and hiring costs. What’s more, workers will have more income to spend in the local economy. Speaking July 14, 2015 in Washington, Garcetti referenced a study from the Los Angeles Economic Development Corp. that found no respondents intended to relocate in response to a higher minimum wage, and only a small minority said they would reduce staff. He argued the law will be a benefit to businesses. “When a billion dollars is put in the pocket of low-income Angelenos, they don’t put that into savings,” he said. “You’ll see that money hit Main Street in a big way and you’ll see that help businesses.”

The Los Angeles metro area employs twice as many manufacturing workers as the Chicago or Detroit regions, with better than one in eight of them in Los Angeles County working in the apparel industry.

www.wsj.com


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