Los Angeles roots for the underdog while riling businesses with proposals to hike the minimum wage.

Garcetti announced his plan for a new minimum wage on Labor Day at a South L.A. park. | LA Times

Mayor Eric Garcetti says his proposal to raise the minimum wage in Los Angeles by nearly 50 percent over three years will boost struggling families above the poverty line, making the city affordable even for busboys, cashiers, janitors and others living off $9 an hour. In turn, he says, these workers will pump dollars back into the economy.

But business owners say the pay boost – which would reach $13.25 by 2017 – could trigger side effects that would endanger businesses and cut jobs. Some companies have said they would consider skipping town altogether. Restaurants and stores that depend on their locations may need to slash labor hours or take a gamble on hiking prices. Entrepreneurs might jump ship into the underground economy. Even businesses outside of the city could wither if compelled to hire L.A.-based companies at steep rates.

At the root of this debate are 3.3 million people nationwide earning the federal minimum rate of $7.25 an hour or less. According to the Bureau of Labor Statistics, half of these people range from 16 to 24 years old, and 77 percent are white.

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With a growing number of cell phone repair stores in Los Angeles, how do they grasp their competencies, how do they survive, when new technology updates and brings new phones to the market every year?

In a 1500-square-foot store on South Figueroa Street in Los Angeles, Nathan Kim sat in front of his work station all alone, covering his eye with a head loupe magnifier and installing the last tiny round widget on the back of an IPhone screen. As soon as he finished up, he put the screen aside, away from the pile of different brass and gray widgets sprawled all over the desk.

Nathan Kim, owner of LA iPhone Repairs

Kim opened the iPhone repair store after he graduated from the University of Southern California with a bachelor’s degree in computer science. Seeing the fast updates and replacements in the cell phone market, many people like Kim were attracted by the potential profits and opened phone repair service stores.

In L.A., there are about 40 similar stores searchable on Google Maps. Some stores try to keep their locations concealed. Some of them run in apartment complexes; others provide door-to-door services by making appointments with repairers via phone or Craigslist (a classified advertisements website).

“They are doing home business without a proper license,” Kim said when he found an “iPhone screen repair” service on Craigslist. “This only costs $39 to fix a screen, while I charge $65.

Kim’s working station. Electronic Registration certificate hanged in front of this desk.

“If there is any problem, they won’t be responsible for that, and their customers will become the victims.” The license he referred to was an Electronic Registration certificate issued by DCA (Department of Consumer Affairs), which hung in front of his work station.

Cutting the cost and keeping the business small but efficient are the core strategies for most store owners. Running the store in an apartment would be less nerve-wracking and probably cost less money than subletting a commercial property. Having only one or three people running the store would also allow each person to take home a larger share of the pie. Also, finding good retailers to supply continuously with cheap phone parts would help a lot.

Regardless the labor cost during repairs, phone parts suppliers have the greatest power of controlling the prices. “When the iPhone 5 was first released, the part (screen) cost about 180 bucks. Now it’s 80 bucks,” Kim said.

Every time a new phone came out, large demand would promptly cause the suppliers to lower the prices of the old phones’ parts. Particularly, the value adjusted a lot when iPhone 5 was released.

“There was a mass production of them (iPhone 5 parts) – the screens, the back plates, the batteries. Everybody needed them. Everything was super cheap,” said Herbert Reyes, the owner of All Wireless World located at East Hollywood. “Repair, that’s the best thing (to earn profits).”

Screen replacement for phones of different brands @ Kim’s LA iPhone Repairs

China, the world’s factory floor, has become the biggest supplier behind these dispersed phone repair stores in L.A. “They (parts and accessories bought from Chinese retailers in L.A.) are pretty much the same quality you will get for $35 from somewhere else,” he said.

Purchasing large amounts of parts will give buyers cheaper prices than buying a single part. Thus, the cheaper prices the store owners could get from retailers, the cheaper prices they would sell to their customers. Kim offered the customers discounts depending how the prices vary. Reyes chose a new path by providing a customer discount once they did a check-in or a review on Yelp (an online service to provide consumers with information about local businesses). He would also evaluate the prices offered by the others on Yelp, and then lower his price $5 to $10 below than the average price.

The phone repair business is extremely competitive in L.A., which forces many business owners to compete with the lowest price that they can offer. Most business owners are confident and positive about their competencies.

Since cell phones have become an essential needs for most people, customers who come into the stores mostly need to get their phones fixed as quickly as possible. Having a background in Computer Science and engineering, Kim said he knew the basic structure of the phone, which made him an experienced, fast phone-fixer.

“My customers tried to fix their phone in other places but they didn’t know how to fix it; they didn’t know how to fix water damages,” he said. “I’m pretty sure they will have some problems whenever there is a new phone coming out.”

When the iPhone 5, 5C or 5S first came out, Apple did not only upgrade their iOS systems and cover them with better-looking cases, it also changed their interior design, which made the phones easier to fix.

“The first time I opened an iPhone (4), it took me 4 hours to open it and 2 hours to close it,” Reyes said. “Now I can do it within 20 minutes. (The screen of) iPhone 5 is actually much easier to fix, because you don’t have to take everything apart.”

As iPhone 6 and 6 Plus have been released on Sept. 9, most of the business owners are unsure about what will they do if someone bring a broken 6 or 6 Plus to their stores. Reyes said he would contact his suppliers to make sure they had the parts, so that he could get prepared for any upcoming damages to these new phones.

Harbert Reyes’ All Wireless World and his employee.

“I will get myself an iPhone 6. And I will open it to see which part goes with which,” Kim said.

Regardless of dealing with technological difficulties, Reyes values customer services more than anything else. “As long as you do really good customer service, people will come to you,” he said. “There is a well-established strong connection between me and people.”

To make extra profits, many owners like Kim and Reyes expand their businesses by selling accessories, such as phone cases. “People will get a phone, and they will need accessories,” Reyes said. “There is always something to sell.”

Gary Russell stood behind his counter in the Grand Central Market in downtown Los Angeles. Surrounded by those old-fashioned, bold-colored vendor signs, Russell in a casual red shirt and his clean-designed counter felt like an invader to the atmosphere of nostalgia.

Photo credit: Peiwen Jing

Nevertheless, the crowd walking inside of the market in their sportswear  brought the sense of modern to this over-100-year-old marketplace, just like what Russell did with his kombucha tea bar in the past eight months.

It was Saturday noon, one of the market’s busiest hours throughout the week. Two customers grabbed several traditional pork carnitas tacos, stopped by Russell’s counter, tasted different flavors of the kombucha teas they produced, and got two bottles of “midnight rose” as their drinks.

“The market has been there since 1917 and I don’t know some other place in LA quite like this,” said Russell. “The dynamic, the atmosphere, and also for the new organic and healthy choices coming in.”

Photo Credit: Peiwen Jing

Russell works for the Better Booch, a small business manufacturing kombucha tea in downtown Los Angeles. They get the organic tea leaf supply from the Art of Tea in Beverly Hills, brew the teas, and then add bacteria and yeast to let the mixture to ferment for a couple of weeks.

Better Booch has been in the business for more than two years. The small crafted kombucha tea brewery now has five employees, including their husband and wife duo co-founders Trey and Ashleigh Lockerbie. All of the five people working with Better Booch began their career in the show biz as touring musicians, mainly backing up popular international artists. “After years of exhausting travel and inconsistent schedules, we decided to make a change,” said the founder Trey Lockerbie.

The tiredness of inconsistent traveling around the world was one of the personal stimulators for the Lockerbie couple to switch their gears into the small business of cottage product. Meanwhile, the policy makers also sent their encouragement, by passing the bill to support the movement.

California passed the Homemade Food Act, which went into effect in January of 2013. Since then, the cottage food industry has been booming, bringing more and more food artisans to farmer’s markets and craft shows. Food artisans crafting everything from bread, candy and cupcakes to dried pasta and nut butters were legally allowed to sell their wares to the public.

The policy benefited to the Lockerbie couple. They started to sell their products in the famers’ markets across LA, and had no idea that the Booch is selling through 40 different locations. The spot in the Grand Central Market is their only retail revenue so far.

“Through our experiences with Better Booch, we’ve seen our highest highs and our lowest lows,” Ashleigh Lockerbie described their experience of running this handcrafted small business in this way. “You don’t get very far if you don’t work as a team and whether it’s music, a tea business or navigating life’s domestic challenges.”

The Booch promises only use organic loose-leaf teas from a local supplier, with no added sugar in the way of juices, purees, syrups or powders. According to Russell, The cost for Booch’s manufacturing is generally higher than the similar kind of product, even higher than a national standard.

“You earn a little bit less but you are making a better product,” Russell thought the higher cost was hard to afford, but worth it. “We want the quality of the product.”

The business keeps going up, in Russell’s word, “each week is getting busier and busier.” Nevertheless, in Russell’s opinion, the larger the sales didn’t mean the larger the profit from running the small business. Some things have made the small business running a major challenge: the cost to produce, the high rent in downtown’s commercial zone, and now the possibility of a minimum wage hike in the following years.

“I think these guys who are governing have studied economy are just making a rough guess that you are making enough to pay people,” said Russell. “If we get more small business going, they can hire more people; that is better than a lot of people don’t have work, I think that is what they need to know.”

Nevertheless, as a employee, Russell’s income has been effected by the minimum wage level. “It could be a good thing but nobody can afford to pay that. They make the small business owners pay more, but somebody will get fired,” he said.

Speaking of the great depression in 2008, Craven Ji was a little bit upset: “The sales of homes dropped by 50% that year, and house prices also decreased by 30% on average.” “However,” she then added, “As the economy is recovering recent years, the market is seeing a brighter future. Home prices have recovered by approximately 25%, which almost reach that of the peak time in 2006.”

Craven Ji, a real estate agent in Real Estate eBroker Inc. in Los Angeles, has been in the business of real estate for almost 9 years. Different from her colleagues, most of Ji’s customers are Chinese. According to Ji: 67% of all her customers are Chinese immigrants while another 33% of them are overseas investors from China, either looking for investment opportunities or trying to find a new house in America. Ji does most of her business in Pasadena, Arcadia, San Marino, USC and UCLA neighborhoods where Chinese people aggregate.

“The year 2008 was a hard time for me,” she said, “There were little overseas Chinese investors that time, and the local market was also frustrated by economic recession.” Ji only sold 7 properties in 2008, which was much less comparing to her average record of 20 houses sold per year. In fact, although the U.S. interest rate was pretty low during the economic downturn, most homebuyers were frightened by the poor economic performance and were thus resistant to borrow money from the bank. “When people earned money, they’d rather pay off their debt to the bank than spend them on other consumptions. They were simply not confident with the market,” said Ji. Because most of her customers rely on bank loan to buy house, the unwillingness to borrow money would definitely impact her business. Also, as bank owned foreclosures set home prices extremely low, home sellers had to cut down their price to the same level to be competitive in the market. The two sides kept going back and forth, which resulted in a huge decline in the market volume.

Now, several years after the real estate nightmare, the situation seems to get better. “Not only does the local market start to recover, but also does overseas capital continue to pour into the U.S. market,” said Ji. According to property consultant firm CoreLogic, home prices rose by 7.4% year over year in July 2014, and are expected to rise by 5.7% from July 2014 to July 2015. Moreover, according to LA Times, overseas homebuyers and new immigrants spent $92 billion on U.S. homes in the last year. The $92 billion amounts to 7% of all money spent on U.S. homes within a year, which is 35% higher than the year before. Among those purchases, 25% of them were made by Chinese buyers. Statistic shows that they are extremely interested in the Real Estate market in southland, including the city of Los Angeles, San Francisco and Irvine, which also helps drive up home prices in these areas.

Percentage Change in Home Price Index Year After Year

When asking about the future of real estate market in the U.S., Ji expressed her concern over the median-price house market: “One challenge we are facing now is that there are less and less affordable houses in the market.” While the demand for median price house is going up, the supply is actually going down. In July, the median transaction price was $457,000, which is 7.6% higher than that of last year. Also, the market volume, which is 7012 this year, is 12.5% less than that of last year, according to CoreLogic’s recent report. Ji is worried that if the interest rate starts going up next year, there will be more competitions in the median-price house market.

With home prices showing an upward trend and overseas cash flowing to U.S. market, some people may ask: will there be another cyclical real estate economic downturn in the future? Also, what about the housing bubble that once led U.S. economy to collapse? Well, the questions may be hard to answer now, but one thing we are pretty sure is that the housing market won’t crash, since buying house is an American dream that will never die.