Los Angeles City Living Wage Ordinance

Authors: Partnership for Prevention, UCLA School of Public Health

Location: Los Angeles, California, United States

Completion Date: March 2006

Summary of the HIA

Proposed Policy or Project

The Los Angeles City Living Wage Ordinance, approved by the Los Angeles City Council in 1997, set an annually adjusted minimum wage that city contractors must pay employees who are engaged in work on city service contracts or economic development grants.

Background and Policy Context

This HIA was conducted as part of a project funded by the Robert Wood Johnson Foundation and the Partnership for Prevention, with the goal to assess the feasibility and usefulness of health impact assessments (HIAs) in policy-making. Measurable goals included assessing the feasibility, usefulness, and limitations of HIAs for policy decision-making, developing an approach for health impact statements; and completing illustrative HIAs. Using estimates of the effects of health insurance and income on mortality from the published literature, a statistical model was constructed to estimate and compare potential reductions in mortality due to the increases in wage and changes in health insurance status among workers covered by the Los Angeles City Living Wage Ordinance. The Ordinance mandated employers to:

  1. Pay workers covered by the Ordinance at least $7.99/hour;
  2. Contribute at least $1.25 per hour worked toward covered employees’ health insurance premiums or pay an additional $1.25/hour if health insurance is not provided;
  3. To provide covered workers with at least 12 paid days off each year.

Scope and Methods

The pathways assessed in this HIA included health impacts stemming from changes in income and health insurance status. Impacts of income and health insurance on the determinants of health were described qualitatively; these include effects on education, childcare and housing. A quantitative analysis of the effects of the Living Wage Ordinance on health used all-cause mortality as the outcome of interest. The quantitative impacts in mortality stemming from the Ordinance’s changes in wage and health insurance benefits, were estimated by generating a series of scenarios of different combinations of wage and health insurance benefits, for which effect estimates from the literature were used to estimate mortality changes in the hypothetical cohort of 10,000 targeted workers.

Summary of Findings

The quantitative model predicted that the ordinance reduces mortality by 1.4 deaths per year per 10,000 workers at a cost of $27.5 million per death prevented. If the ordinance were modified so that all uninsured workers received health insurance, mortality would be reduced by eight deaths per year per 10 000 workers at a cost of $3.4 million per death prevented. Qualitative review of the literature showed that by raising household income, the Ordinance has the potential to help workers’ families obtain better quality, stable, and/or adequate housing. However, since the net increase in income will probably relatively small for most families and given competing household spending priorities, it is unlikely that the increase will lead to dramatically improved housing for workers. Income has also been shown to be a key determinant of educational attainment, which in turn is an important determinant of health. Similarly, there are potential health benefits stemming from increased income on childcare by making quality childcare more accessible. Findings demonstrate the potential of health insurance to benefit the health of Living Wage workers, and that health benefits are more cost-effective than equivalent wage increments. Study results strongly suggest that raising health insurance coverage rates through the Living Wage Ordinance can be a crucial step towards promoting health.

Background Reports

Contact

Brian Cole, Dr.PH

UCLA, Box 651772, Rm 61-253 CHS
Los Angeles
,
California
90095-1778

(310) 206-4253