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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.

鈥淚 am in favor of a minimum wage hike,鈥� he says. 鈥淚 love my workers. Without them I wouldn鈥檛 be here.鈥�

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 鈥� where the march to $15 an hour than California鈥檚 鈥� Rahbar wonders if he鈥檒l have to cut workers, or manage to stay in business.

鈥淲hen it hits $15 an hour, I don鈥檛 know what my actual costs will be,鈥� he says. A little more than half his workers make minimum wage. 鈥淚 want to stay in California, my life is here. But is it still sensible to be in this business?鈥�

While there hasn鈥檛 been the mass exodus that some critics predicted in states that have embraced minimum wage hikes, the rising cost of labor has presented difficulties for business owners like Rahbar. Industries like apparel, which rely heavily on minimum wage workers, have seen some businesses cut or outsource labor or relocate to cheaper areas, some economists say.

But just as true, others note, is that workers at the bottom of the income ladder are struggling more than ever to make ends meet, .

19 states raise minimum wage

Raising wages is a key part of improving those workers鈥� lives, they say. The 19 states kicking off 2017 with minimum wage increases demonstrate the growing support behind the effort 鈥� even among conservative states like Arizona, where politicians are traditionally less convinced of its benefits.

These contrasting realities together suggest a need for a more nuanced approach to minimum wage, observers say. Depicting the issue as binary 鈥� the worker versus the business owner 鈥� hinders rather than helps the creation of 鈥渁pplicable, manageable, and meaningful鈥� solutions for all stakeholders involved, says Nick Vyas, an assistant professor at the University of Southern California Marshall School of Business.

鈥淭he equation of looking at [minimum] wage and cost of doing business as opposing factors needs to be changed,鈥� he says.聽鈥淚 would argue there is a healthy balance 鈥� where companies are able to sustain and support their workers and still be profitable and gain the market share.鈥�

When the first wave of wage hikes came to California, Rahbar responded by tightening operations, cutting overtime, and speeding up production. That year, he says, he kept all his workers on payroll.

When the minimum wage went up to $10 two years later, Rahbar says the company lost some customers and profit, and raised the price of its products. He did, however, manage to dodge layoffs again.

He鈥檚 less confident he can avoid letting people go when the next wave of raises go into effect. But efforts like his suggest that there are ways to compromise, Professor Vyas says.

Cutting聽unnecessary costs along the supply chain, as Rahbar did, is one way. Leveraging product quality is another: Many farmers across the country, for instance, have succeeded in marketing their produce as local and organic, Vyas says.

The same goes for companies like General Electric, which in the past year has brought back into the US. The reshoring of light manufacturing jobs is largely due to market forces such as rising labor and shipping costs abroad. But it has also been a boon to the brand. Manufacturing its products in the US means the company can deliver them to American consumers more quickly while benefiting from the draw of the聽鈥渕ade in America鈥� label.

鈥淭here is a tremendous demand, for instance, in emerging markets where people would pay additional price to consume quality products [that are] made in the USA,鈥� Vyas says.聽鈥淲e have to聽look at old models of business in a different way than we have done for the last 20, 30 years.鈥�

To be sure, that's easier said than done聽in an era of deeply partisan politics and a shrinking middle class, and on the eve of a presidency that has already divided the nation.

鈥淪ome things get too polarized, and it鈥檚 hard to come to any kind of solution,鈥澛爏ays Christine Cooper, vice president of the Institute of Applied Economics at the nonprofit Los Angeles Economic Development Corporation (LAEDC).聽鈥淲e have to find a way to make our residents and neighbors have livable lives,鈥� but 鈥渁t the same time, businesses really have to face the reality of their cost structure and profit margins.鈥�

L.A.'s garment industry

As wages have risen and trade agreements opened foreign labor to the US, the city鈥檚 garment industry 鈥� once a center for 鈥渕ade in America鈥� apparel 鈥� has changed dramatically.聽Between 2005 and 2015,聽聽(adjusting for inflation) in the county, the Los Angeles Times reports. During the same period, the average number of apparel manufacturing workers in the area dropped from 61,800 to 42,000, according to Bureau of Labor Statistics data.

American Apparel, which for years fought to keep production in the region by marketing its garments as 鈥渟weatshop-free,鈥� declared bankruptcy for the second time in November. Other major companies, among them staples of California cool like Guess Jeans, True Religion, and 7 For All Mankind, now source most of their products overseas. The majority of聽the companies that produce garments in Los Angeles today are those that rely on getting high-end products as quickly as possible to clients or consumers 鈥� like Rahbar鈥檚 9B Apparel.

鈥淚t鈥檚 Econ 101: If the cost of labor in any industry becomes out of line with where the rest of the market is at, then it鈥檚 going to have a hard time being sustained,鈥� says Craig Johnson, president of Customer Growth Partners, a market research group in Connecticut.

At the same time, advocates of increasing the minimum wage say that the cost of living in the Los Angeles metro area 鈥� where one-bedroom rentals average 聽鈥� means that anything less than $15 an hour is unacceptable.聽鈥淚f anything, it鈥檚 ,鈥� notes the LA Fight For $15 website.

Ren茅 Godoy, who makes just above the state minimum wage at $11 an hour, says he makes ends meet by splitting a $1,200, one-bedroom apartment with a roommate who sleeps on the couch.

鈥淚t's livable; the bills get paid,鈥� says Mr. Godoy, who聽ships and receives fabrics and garments for 9B Apparel and has worked for the company for two years.聽鈥淏ut I'd like to be a little more comfortable.鈥澛燞e's聽not totally convinced that a $15 minimum wage is the answer to rising food, rent, and gas prices. If his expenses rise along with his wages, he's not sure he'll be better off in the long run. That said, he adds, 鈥淢ore money is always a good idea.鈥�

Such realities make it easy to see minimum wage as part of a simple, two-sided debate.聽

鈥淏oth sides I think take the position that if you subscribe to one idea, you reject the other,鈥� Vyas says.聽鈥淲e need to have this debate in a little bit more holistic way, not just in terms of, 鈥楾he only way I can become profitable is by not paying people.鈥櫬犫�澛�