Eric Garcetti / Flickr / CC / Cropped
by Joel B. Pollak5 Jan 2017
Houman Salem, founder and CEO of Argyle Haus garment factory, has penned an op-ed in the Los Angeles Times explaining that the city’s new $15 minimum hourly wage, which was followed by a similar statewide rule, is forcing him to leave California.
Read the full op-ed here.Los Angeles County used to have more than 5,000 apparel factories; today, my company is one of roughly 2,000 — and many (e.g. American Apparel) are looking for a way out.
The biggest reason is the minimum wage, which will rise to $15 by 2021 in the county and by 2022 statewide. I write with some hesitancy, because I’m in no way an opponent of higher pay. When you have a company with fewer than 50 employees, you get to know them pretty well and have a genuine concern for them as individuals. But that has to be balanced with concern for keeping your clients, who can always take their business to other countries or states.
When the $15 minimum wage is fully phased in, my company would be losing in excess of $200,000 a year (and far more if my workforce grows as anticipated). That may be a drop in the bucket for large corporations, but a small business cannot absorb such losses. I could try to charge more to offset that cost, but my customers —the companies that are looking for someone to produce their clothing line — wouldn’t pay it. The result would be layoffs.
Today, it’s cool to be a tech startup in Silicon Valley, but not to be an apparel industry startup in the San Fernando Valley. That needs to change. Not everyone has the inclination or aptitude to write code for Google or Facebook. Moreover, the lifespan of tech startups is shockingly short: 30% to 40% collapse and another 40% get bought, putting people continuously on the hunt for the next job. That is no way to live or to raise a family.