The Effects of Living Wages on Workers and Firms: Evidence from the Los Angeles Ordinance

Executive Summary Living wage laws set wage and benefit standards for companies that do business with local governments as a means of improving the quality of contracted jobs and increasing the standard of living for low-wage workers. This study represents one of the most definitive analyses of a living wage law’s impact on workers and employers. We find that: • The Los Angeles Living Wage Ordinance has increased pay for an estimated 10,000 jobs, with limited negative impacts on business. • Most workers affected by the living wage are poor or low-income. • Workers experienced an immediate pay increase of roughly 20% as a result of the ordinance. This increase slowly eroded as higherpaid workers joined city contract firms as a result of the wage impact of the ordinance. • While workers and their families have experienced measurable gains from the living wage, a significant minority still lacks health benefits and relies on government assistance. • Most firms affected by the law have adapted to the living wage without eliminating jobs. • Employers have recovered some of the increased costs of the living wage through reductions in labor turnover and absenteeism.