(April 5, 2004) A proposal for a two-tier government-mandated increase in the state minimum wage passed the Assembly Labor and Employment Committee last Wednesday over the opposition of the California Chamber of Commerce and other employer representatives.
AB 2832 (Lieber; D-Mountain View), increases the state minimum wage from the current $6.75 per hour to $7.25 an hour in 2005 and $7.75 an hour in 2006. California has the fourth highest minimum wage in the nation and outstrips the federal minimum wage of $5.15 per hour by 31 percent.
”California currently has the nation’s highest energy costs, workers’ compensation premiums and unemployment insurance tax rates,” said Julianne Broyles, Chamber legislative advocate. “This bill would make California home to the nation’s highest minimum wage as well.”
For a small business with 20 workers, the 50-cent an hour initial minimum wage increase in AB 2832 would boost base payroll costs by at least $20,800 per year. The second increase would add at least $41,600 annually to that same small company’s base payroll costs.
Other business costs, such as workers’ compensation and health care premiums and other employment-related taxes, rise with any mandated wage increase because they are linked to payroll costs. It is estimated that workers’ comp premium costs would rise at least $120 million if AB 2832 becomes law.
The Chamber believes that rather than working to make California less competitive by mandating the minimum wage increase, the Legislature should focus on removing barriers to productivity and wage growth that government has imposed on the private sector.
Positive actions can include reducing costs associated with providing benefits such as health, workers’ compensation and unemployment insurance; increasing opportunities for small business formation; increasing the skills of the current and future workforce; enacting significant regulatory reform; and doing no more harm and resisting new efforts to increase either employment costs or business liability in California.
Assembly Labor and Employment AB 2832 passed on a 6-2 party line vote. Voting Aye: Koretz (D- West Hollywood ), Mullin (D- South San Francisco), Chan (D- Oakland), Chu (D- Monterey Park) Laird (D- Santa Cruz) and Leno (D- San Francisco). Voting NO: S. Horton (R- Chula Vista) and Huston (R- Livermore).
The Chamber strongly urges all employers to send letter in opposition to AB 2832 as soon as possible to Assembly Member Judy Chu, Chair, Assembly Appropriations Committee, State Capitol, Room 2114, Sacramento, CA 95814, where the bill will be heard later this month. Letters should also be sent to Assembly Member Sharon Runner, Vice Chair, Assembly Appropriations Committee, State Capitol, Room 6031, Sacramento CA 95814, as well as to their own state Assembly and Senate representatives.
For more information about this bill please visit the Government Relations page of our website at www.calchamber.com. Find your Legislator.
Staff Contact: Julianne Broyles