Unions Pushing for Exemption from Minimum Wage Hike in Los Angeles

Liberals, with labor unions at the helm, have recently been pushing hard for increases to the minimum wage. Most of it is just politicking designed to portray Democratic candidates as populist champions and Republicans as stingy corporatists. But in some cases, the campaigns have actually worked, bringing $15 wages to workers in some cities.

The campaign has been particularly strong in Los Angeles where labor leaders have spearheaded a campaign to raise the minimum wage for all workers.

“We say, ‘Don’t leave anybody out, don’t cut anybody out, a wage raise for all workers!’” Mary Elena Durazo, the leaders of the local AFL-CIO, said at a recent council meeting”.

Rusty Hicks, the head of the Los Angeles County Federation of Labor, was equally as vociferous.

“Raising the minimum wage in LA County would help lift county workers, contractors and workers in unincorporated areas out of poverty and stimulate the economy,” he said recently.

When restaurants, nonprofits and small businesses asked the city council to phase in the new pay requirements, Hicks called it a “loophole,” and argued that “no Angelano, whether they’re workers or owners of small businesses and nonprofits, is left behind.”

The problem is that minimum wages make great politics, but absolutely terrible policy, leavings its proponents in quite the conundrum when legislation passes. That’s exactly what happened in Los Angeles, when unions, seeing that the City Council was set to move towards a $15 minimum wage, immediately began asking for a waiver for unionized companies. While they argued against time-limited exceptions for others, union bosses demanded a permanent loophole for themselves. Naturally, the move startled some.

“It was a real surprise that in the 11th hour that labor was saying, “Well, we basically support a sub-minimum wage if a company decides to enter into collective bargaining,” Los Angeles City Councilman Mitch O’Farrell said. “And that really is a complete contradiction to what they’ve been saying the last couple of months.”

The unions’ flimsy argument is that collective bargaining agreements would already take care of the wage conundrum in a way “that works for both of them” by giving “the parties the option, the freedom, to negotiate that agreement.”

But, as Matt Welch writes for Reason, this is a curious use of the word “freedom.”

“There’s another word available to describe forcing people under threat of government punishment to comply with terms you have dictated, and then turning around and exempting yourself from those rules: blatant, coercive corruption,” Welch writes.

The reality is that exemption push reveals two key things about unions’ drive for minimum wage. First, it shows that the rhetoric about wages is hollow – the real issue is political power. By pushing for an exemption of unionized businesses from the minimum wages, unions would create an incentive for employers to actually favor unionized workers. That, in turn, expands the rolls of the unions and increases the flow of dues into their coffers.

If that sounds familiar, that’s because it is. As Jeffrey Dorfman writes for Forbes,

“When the mob used to make store owners pay for protection in order to avoid damage to their business (like, say, a fire) we called it extortion. Now unions can legally offer to help a business over avoid devastating economic damage to his business. The cost to the business is a small raise for its workers; the cost to those workers is paying union dues. The business owner pays the protection money only indirectly so it looks all on the up and up.”

And the second issue is that unions are honestly worried about how high wages will impact their membership. No matter how you slice it, higher wages for workers creates incentives for employers to look at alternatives. If a worker cannot produce $15 worth of goods or service in an hour no legislative fiat is going to induce businesses to hire them at a $15 wage. It seems as though union leaders have begun brushing up on their economics, causing them to rethink this whole minimum wage hike, at least for the workers under their aegis.

The bottom line is simple: If a higher minimum wage is good for everyone, then it should be good for union members. But unions are quickly rethinking their calculus and liberals should too.