Proposed Increases to Calif. Minimum Wage Too Steep, Chambers of Commerce Say

Proposed legislation backed by California Gov. Jerry Brown that would increase the state’s hourly minimum wage to $9 in 2014 and $10 in 2016 is not receiving good reviews from the California Chamber of Commerce, and in turn local chambers of commerce.

In a news release forwarded Thursday by the Murrieta Chamber of Commerce to its members, CalChamber calls Assembly Bill 10, authored by Assemblyman Luis Alejo, D-Salinas, a “job killer” because if passed, it would increase the minimum wage by 25 percent over the next two years.

The hourly minimum wage in California has been $8 since 2008. The federal minimum wage is $7.25.

As first proposed, AB 10 called for an increase of 25 cents to California’s minimum wage in 2014, a 50-cent increase to $8.75 in 2015 and another 50-cent increase to $9.25 in 2016.

The governor on Wednesday announced his support of the recent amendments that propose a $1 jump to $9 in 2014, then $10 in 2016, according to a news release from his office.

“The minimum wage has not kept pace with rising costs,” Brown said. “This legislation is overdue and will help families that are struggling in this harsh economy.”

More than 90 percent of minimum wage workers in California are over the age of 20, and 25 percent of California children – nearly 2.4 million – live in a household with one minimum wage-earning parent, according to the governor’s office.

“AB 10 is about equity. It puts more money directly into the pockets of workers struggling to provide food, clothes, and housing for their families. I’m proud to author this measure on behalf of hard working families in California,” said Alejo, the bill's author.

In a phone interview Thursday, Patrick Ellis, CEO and president of the Murrieta Chamber of Commerce, told Patch he supports CalChamber’s opinion that the increases would be “too sharp” if implemented within the proposed time frames.

CalChamber states:

“Before the September 11 amendments, AB 10 (Alejo; D-Salinas) would have increased the minimum wage by $2 over the next five years.

“In its current form, AB 10 will drive up costs for all businesses in California, far worse than any predicted rate of inflation increase. The newly proposed amendments provide for a $1 increase in the minimum wage in July 2014 and another $1 increase in January 2016, driving the minimum wage up to $10 in a very short period.”

CalChamber gave the following points as to why it opposes AB 10 as it is currently drafted:

• Even at a 3.5% rate of inflation, minimum wage would reach only $8.87 by 2016.

• A minimum wage increase affects more than just the hourly rates of employees. The increase also drives up exempt employee salaries, workers' compensation costs, uniform/tool reimbursements, overtime, and consumer prices.

• California businesses are already struggling with significant cost increases over the next three years, including tax increases from Proposition 30, higher energy costs, higher employment assessments from the Department of Industrial Relations, and costs related to the implementation of the federal Patient Protection and Affordable Care Act. These are only the costs the CalChamber knows about now - there will undoubtedly be more costs facing employers over the next three years.

• Unemployment rates in various California counties are still as high as 26%. Such a significant increase in the minimum wage may jeopardize any economic recovery California is enjoying.