CFA News Flash
 
 
June 2015
 
 
Minimum Wage: Collateral Effects
DIRECT EFFECTS of the minimum wage increase for the CITY of Los Angeles.
 
 
 
INDIRECT EFFECTS INCLUDE:

  • Proportionate rise in the cost of Workers Compensation, based on the company’s total wage outlay. Estimates for an increase in Workers Comp rates are for an additional 15% by 2020.
  • Added FICA, SUI, FUI, and Medicare fees are also calculated as a percentage of total wages paid and would add to the total employee costs.
  • ​Increased salary levels for those currently at $15.00 per hour, raising the entire company’s over-all payroll....the company’s options would be to reduce its in-house staff, or convert some present employees to part-time employment.
  • Under California law ‘Exempt’ employees are required to be paid twice minimum wage. Therefore, an ‘assistant manager’ in a specialty retail store (for example), would be required to have a minimum salary of $64,400 or else be converted to ‘Non-Exempt’ status with an overtime pay of $22.50 per hour for any ‘extra’ administrative work. Employee advancement becomes problematic.
 
 
 
 
 
Suggestions for Mayor Garcetti and the LA City Council:
  1. Raise the small-business tax exemption to $100,000 from $500,000.
  2. Eliminate the gross receipts tax
  3. Include a three month ‘training wage’ level to encourage businesses to hire inexperienced workers.
  4. Create tax incentives for job creation of ‘new hires’.
 
 
 
 
California Fashion Association
444 South Flower Street, 37th Floor, Los Angeles, CA 90071
 
 
                  
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