(September 9, 2004) California Chamber-opposed “job killer” legislation to give California the highest minimum wage in the nation awaits action by Governor Arnold Schwarzenegger.

AB 2832 (Lieber; D-Mountain View) increases the cost of doing business by increasing the state minimum wage to $7.25 in 2005 and to $7.75 in 2006.

The Chamber considers AB 2832 a 'job killer' because it will give California the highest minimum wage in the nation and increase employer costs by at least $2.08 billion annually, raising costs for consumers and driving employers to other states.

”This proposal to make California home to the highest minimum wage in the country will be a burden on all California employers, which are already shouldering the heavy burdens of paying the nation’s highest energy costs as well as the nation’s highest unemployment insurance tax rates,” said Julianne Broyles, Chamber director of employee relations and small business. “ We encourage Governor Schwarzenegger to veto this 'job killer.' We believe this is the wrong direction for California to take just as it is starting down the road to economic recovery.”

For a business with 20 workers, the 50-cent-an hour increase would boost payroll costs at least $20,800 per year. The second increase would add at least $41,600 annually to that same small firm's base payroll costs.

Other business costs, such as workers' compensation, health care premiums and other employment-related taxes, also increase whenever payroll costs increase. If AB 2832 becomes law, the Workers' Compensation Insurance Rating Bureau has estimated that workers' compensation costs would rise by an additional $120 million annually by 2006.

AB 2832 was passed by both houses of the Legislature on party-line votes in the last days of sessions. Governor Schwarzenegger has until September 30 to act on the minimum wage increase.

Action Needed
The Chamber is urging all employers to write Governor Schwarzenegger and ask for a “veto” of AB 2832.

For more information on AB 2832 or to view a sample letter, please visit our website at www.calchamber.com.