How L.A. garment district shows promise and peril of higher minimum wage

While there hasn’t been the anticipated mass exodus in states that have embraced minimum wage hikes, the rising cost of labor has presented difficulties for business owners in industries like apparel.

Published Jan. 7, 2017

— When California raised its minimum wage to $9 an hour in 2014, Art Rahbar was happy to comply. With 75 employees in his garment manufacturing company, Mr. Rahbar says he knows many of his workers personally and understands how a higher wage would benefit their families.

“I am in favor of a minimum wage hike,” he says. “I love my workers. Without them I wouldn’t be here.”

Still, Rahbar worries.

Over the past three years, as the state minimum wage rose to $10 and then $10.50, his company, 9B Apparel, saw profit margins shrink by 10 percent. With another wage hike coming in July to Los Angeles – where the march to $15 an hour is even faster than California’s – Rahbar wonders if he’ll have to cut workers, or manage to stay in business.

“When it hits $15 an hour, I don’t know what my actual costs will be,” he says. A little more than half his workers make minimum wage. “I want to stay in California, my life is here. But is it still sensible to be in this business?”