(August 17, 2004) California Chamber-opposed legislation that would increase the state’s minimum wage passed the Senate Appropriations Committee on August 12 and awaits action the Senate floor.

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, which would give California the highest minimum wage in the nation.

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.

“California currently has the nation's highest energy costs and unemployment insurance tax rates for businesses,” said Julianne Broyles, director of employee relations and small business. “An increase to the minimum wage would be yet another cost driver forcing more employers out of the state or causing them to simply close their doors. Further, giving California the highest minimum wage in the nation will provide a disincentive for employers to locate or expand here just as our economy is starting on the road to 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.

Key Vote
AB 2832 passed the Senate Appropriations Committee on a party-line vote, 8-5.  It awaits action by the Senate.

Ayes: Alpert (D-San Diego); Bowen (D-Marina del Rey); Burton (D-San Francisco); Escutia (D-Whittier); Karnette (D-Long Beach); Machado (D-Linden); Murray (D-Los Angeles); Speier (D-Hillsborough).

Noes: Battin (R-La Quinta); Aanestad (R-Grass Valley); Ashburn (R-Bakersfield); Johnson (R-Irvine); Poochigian (R-Fresno).

Action Needed:
The Chamber is urging all employers to contact their senators and urge a “no vote” on AB 2832. Use our easy-to-edit position letter.

For more information or to view the entire “job killer” list, please visit our website at www.calchamber.com.