The City of Los Angeles last month voted to increase its minimum wage to $15 by 2020. Now the Los Angeles County Board of Supervisors is being asked to raise the minimum wage in the unincorporated areas of the County, the only area over which we have jurisdiction. After reading all the reports and digesting all of the constituent calls and letters, I want to share my thoughts on this issue.
Our starting point is the fact that poverty is alive and well amidst the abundance of our regional economy. Los Angeles County has a larger GDP than the countries of Belgium, Saudi Arabia, Norway and Taiwan. Yet, nearly 30 percent of Los Angeles County residents live in poverty, defined by the Stanford University/Public Policy Institute of California as $30,000 annual income for a family of four. That's a city the size of Chicago made up of only men and women living in poverty, right here in our County.
Nobody supports poverty. Whether one supports or opposes a minimum wage increase, I suspect that most people believe that anyone who works full-time should earn enough to provide for their family. At the same time, it is also clear to me that increasing the minimum wage poses a real and significant challenge to many businesses, especially the small mom-and-pop businesses that make up the majority of these enterprises.
Here's what made the difference for me. As you know, the County serves as the safety net of last resort for Los Angelenos. It may surprise you to learn that the County government provides many safety net services to people who hold a job. The more I thought about this, the more I realized that this means that the County is, in effect, subsidizing these businesses by providing the services that these workers need to survive. Taxpayers subsidize every dollar of profit earned by a business owner employing workers who rely on County services. In fact, a 2015 report by UCLA and the Economic Roundtable, estimated that raising the minimum wage could reduce public assistance expenditures by more than $300 million per year.
It may be the case that subsidizing businesses with taxpayer money is the best way to combat poverty. I don't think so. After reading so many reports on the issue, I have come to believe that raising the minimum wage not only fights poverty but also benefits our economy as a whole. I think that most low-wage workers will immediately spend their increased income by buying goods and services to meet their families' basic needs. They will purchase these goods and services from local businesses, stimulating our local economy.
Another issue that gave me pause is that an economy does not obey municipal boundaries. Your customers are the same whether your business is on the unincorporated or incorporated side of the street. I don't think it makes sense for business owners to decide where to locate based on anything other than where they think their customers live or shop. I wish that the federal and state governments were acting quickly or aggressively enough to raise wages. But they are not, and local governments throughout the Country have stepped up to the plate.
Since the City has taken action, so must we. Combined, the City and the unincorporated areas would cover more than 50 percent of the more than 10 million County residents. A move by the County will also encourage more and more of the County's other 87 cities to follow suit. Such collaboration would reduce the potential friction and competition between neighboring municipal jurisdictions. The result: a seamless, Countywide minimum wage resulting in a more stable and prosperous regional economy.
But we also need to make sure that raising the wage won't kill jobs and disproportionately impact small businesses. That's why the County must also act to support small businesses as they make this transition. I will introduce a motion for Tuesday that directs the County departments to move forward aggressively on a set of recommendations to support small businesses during this transition.
This is a hard issue and an important decision. But in the end, we have to acknowledge that something must be done to combat the rising inequality that is weakening our society. Ensuring that anyone who works full time can support their family is a solid step in that direction.