Minimum Wage Bill Destined for Governor’s Desk
By JENNIFER BELLANTONIO
California’s minimum wage could climb to $7.75 an hour under legislation that’s all but certain to make it to Gov. Arnold Schwarzenegger’s desk.
The bill, introduced by state Assemblywoman Sally Lieber, D-Mountain View, would raise the state’s minimum wage from $6.75 an hour to $7.25 by next July, and by another 50 cents in July 2006.
“It’s clipping along at a good pace,” said Frank Conin, partner at the Irvine office of Phoenix-based Snell & Wilmer LLP who focuses on labor issues. “The ayes seem to have it, as they like to say.”
Last week, the Democratic-controlled Senate signed off on the bill, which is backed by the Oakland-based California Labor Federation.
The legislation is set to go back to the Assembly for a final vote. Approval there is expected,the Assembly in May signed off on an earlier version.
The issue could be a key test for Schwarzenegger, who’s made it a priority to make the state more business-friendly.
Businesses, including many in Orange County, are against the wage hike, which would make California’s minimum wage tops in the nation.
The Sacramento-based California Chamber of Commerce has called the proposed wage legislation a “job killer.”
A Schwarzenegger spokesman said the governor “hasn’t taken a position” on the bill. Bill sponsor Lieber told the Los Angeles Times she hoped Schwarzenegger would sign the bill as a way of polishing his populist image.
California and Illinois are the only big states with a minimum wage that beats the federal rate of $5.15 an hour. Twelve states overall count a minimum wage above the federal rate.
Orange County restaurant operators and apparel makers are among those most impacted by changes in the minimum wage. They, like other businesses here, already are reeling from high workers’ compensation premiums and other costs.
“We’d be very much against that type of law passing,” said Alex Bhathal, vice president of strategic planning at Tustin swimsuit maker Raj Manufacturing Inc., which employs about 400 people in OC.
“Any time the government interferes with the labor market it makes things more difficult,” Bhathal said. “It’s already a difficult climate.”
Raj competes with companies that “manufacture goods all over the world with much less regulation and cheaper cost structures,” he said.
OC restaurant chains have their own challenges.
Doug Cavanaugh, chief executive at Newport Beach-based Ruby’s Diner Inc., said the industry has seen dramatic jumps in prices for dairy, beef and produce.
“It squeezed everyone’s margins,” he said.
If the governor signs the minimum wage hike into law, it would “force” Ruby’s to increase its food prices again, Cavanaugh said.
In June, the chain edged up prices 2% to 3% to offset higher costs, he said.
“We love doing business here,” Cavanaugh said. “We’d hate to have to curtail our activities in California.”
California’s $6.75 minimum wage trails other West Coast states, such as Oregon and Washington, which have set their minimum wages at $7.06 and $7.17, respectively. Washington and Alaska, which is at $7.15, have the highest minimum wages in the U.S.
A wage hike hit could give rival states more ammunition in their bids to lure California jobs, Cronin said.
“It could be used by other states to market their states as a more business-friendly location,” he said.
That’s certainly being done in some cases, such as with Nevada and Idaho, two of the most aggressive at trying to lure California businesses.
Nevada’s $600,000 campaign to woo California companies has gained media attention from the Orange County Register to USA Today and the CBS Evening News with Dan Rather.
San Clemente-based Pick Up Stix Inc., part of Dallas-based Carlson Restuarants Worldwide Inc., always is exploring its options, Chief Operating Officer Tim Pulido said.
“As businesses are confronted with much higher costs, they’ll slow growth (in California) and grow elsewhere,” Pulido said.
Pick Up Stix runs the “core” of its business in California and wants to continue to do so, Pulido said.
“But what folks have to realize is business in the state of California is not a bottomless pit of money,” Pulido said. “We’re adding costs to the overall system time and time again.”
Last year, Raj’s Bhathal said the company was “investigating” its options, with a move out of state a possibility.
But the company decided to see how effectively Schwarzenegger would change the business climate here.
“We’ve been somewhat optimistic about the future compared to how it was,” Bhathal said. “But there’s still a definite attitude against businesses coming out of Sacramento.”
Proponents of the proposed minimum wage increase, such as the California Labor Federation, say the hike would give low-wage workers more money to spend and bring such workers closer to the federal poverty line.
“Moderate increases in the minimum wage create a win-win-win scenario for the state,public assistance costs are decreased, businesses are unscathed and retain workers, and, most importantly, California’s workers are able to raise their families with dignity,” said Art Pulaski, executive secretary-treasurer of the California Labor Federation, in a statement.
A minimum-wage employee who works full time in California earns about $14,000 annually, less than the federal poverty level of $15,670 for a family of three.
“The increase would do all the things that proponents say it does,” Ruby’s Cavanaugh said. “But now isn’t the time to raise it. People are just getting back on their feet.”
