BILL ANALYSIS Ó
AB 10
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ASSEMBLY THIRD READING
AB 10 (Alejo)
As Introduced December 3, 2012
Majority vote
LABOR & EMPLOYMENT 5-2 APPROPRIATIONS 12-5
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|Ayes:|Roger Hernández, Alejo, |Ayes:|Gatto, Bocanegra, |
| |Chau, Gomez, Holden | |Bradford, |
| | | |Ian Calderon, Campos, |
| | | |Eggman, Gomez, Hall, |
| | | |Ammiano, Pan, Quirk, |
| | | |Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Morrell, Gorell |Nays:|Harkey, Bigelow, |
| | | |Donnelly, Linder, Wagner |
| | | | |
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SUMMARY : Increases the state's minimum wage in three separate
increments over the next three years. Thereafter, this bill
requires the minimum wage to adjust annually for inflation based
on the California Consumer Price Index. Specifically, this
bill :
1)Increases California's minimum wage from $8.00 per hour to not
less than $8.25 per hour on January 1, 2014.
2)Increases California's minimum wage from $8.25 per hour to not
less than $8.75 per hour on January 1, 2015.
3)Increases California's minimum wage from $8.75 per hour to not
less than $9.25 per hour on January 1, 2016.
4)Requires the minimum wage, commencing on January 1, 2017, and
annually thereafter, to be adjusted by the rate of inflation
that occurred during the previous year to maintain employee
purchasing power:
a) Requires the minimum wage to be calculated annually by
multiplying the minimum wage in effect on December 31of the
previous year by the percentage of inflation that occurred
during that year and adding that product to the minimum
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wage in effect during that year.
b) Requires the resulting total to be rounded off to the
nearest $0.05.
5)Requires the Industrial Welfare Commission (IWC) to publicize
the adjusted minimum wage.
6)Defines "Percentage of inflation" as the percentage of
inflation specified in the California Consumer Price Index for
All Urban Consumers, as published by the Department of
Industrial Relations (DIR), Division of Labor Statistics and
Research, or its successor index.
7)Permits the IWC to increase the minimum wage in an amount that
is greater than the rate calculated pursuant to this measure.
8)Prohibits the IWC from adjusting the minimum wage if the
average percentage of inflation for the previous year was
negative.
9)Prohibits the IWC from reducing the minimum wage prescribed by
the measure.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, this bill would result in costs at full
implementation in 2016 of $2.6 million for minimum wage workers
employed by the state. In addition, this bill would result in
General Fund costs of approximately $400,000 to the Department
of Industrial Relations to issue new minimum wage orders to
employers each time the minimum wage is increased.
COMMENTS : According to the author, minimum wages have not kept
pace with the cost of living and has equated to a decrease in
purchasing power. The author states that while the cost of
goods and services increase every year, the purchasing power of
minimum wage workers declines on an annual basis. According to
the author, "we have created a system where we pay workers less
but need them to spend more. That causes middle class families
to fall down the economic ladder. It's the reason our middle
class is shrinking and our income gap is now wider than ever."
Writing in support, California Labor Federation (CLF) states
this bill will strengthen and depoliticize California's minimum
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wage. According to CLF, "not only are those at the bottom of
the wage scale mired in poverty, over recent decades the real
value of their earnings has collapsed," leaving workers worse
off today. In support of this, CLF cites that the California
Budget Project has calculated that between 1968 and 2008, the
purchasing power of California's minimum wage fell 24.8%. CLF
supports indexing the minimum wage, starting that inflation is
in large part to blame for this crisis and why 10 states have
already indexed their minimum wage. According to the CLF,
"rather than abandon low wage workers to the whims of
legislators, these states recognized the wisdom in allowing the
market to dictate what the minimum wage should be."
The California Chamber of Commerce (Chamber) along with a
coalition of organizations writes in opposition, labeling this
bill as a job killer. The Chamber states that California's
economic recovery is still in the infancy stage and that an
increase in the minimum wage in 2014 will negatively impact any
economic recovery by either limiting available jobs, or worse,
creating further job loss. The Chamber states that although the
initial $0.25 increase may seem minimal, combined with the
unknown increased costs associated with the implementation of
the Affordable Care Act, the tax increases approved under
Proposition 30, and the partial reduction in federal tax credit
in 2014, it will impose a significant burden on California
employers. These cumulative increases, according to the
Chamber, will either force a struggling employer to reduce their
costs in other areas, such as labor, or pass such increased
costs onto the consumers through higher prices, undermining this
bill's stated purpose.
Writing in opposition, the National Federation of Independent
Business (NFIB) conducted a study on this bill's potential
negative results. The study states that depending upon the rate
of inflation in future years, enacting this bill could result in
46,000 to 68,000 lost jobs in California by 2023, and a
reduction in real output somewhere between $4.7-$5.7 billion.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0000759
AB 10
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