BILL ANALYSIS
AB 2832
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Date of Hearing: April 21, 2004
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Judy Chu, Chair
AB 2832 (Lieber) - As Introduced: February 20, 2004
Policy Committee: Labor and
Employment Vote: 6-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill increases the state minimum wage from its current rate
of $6.75 per hour to $7.25 per hour as of January 1, 2005, and
to $7.75 as of January 1, 2006.
FISCAL EFFECT
Data from the State Controller's Office indicate that the State
of California each year employs between 1,000 and 2,000 minimum
wage workers, mostly seasonal employees of the California
Conservation Corp. If the state pays an average of 1,500
employees the minimum wage for three months each year, the cost
to the state of paying the higher minimum wage rates specified
in this bill would be $390,000 in 2004-05 and $780,000 each
fiscal year thereafter.
COMMENTS
1)Purpose . The sponsor, the California Labor Federation,
AFL-CIO, points out that the IWC has not yet begun its review
of the minimum wage that should have begun in November of 2003
due to due to budget constraints. The sponsor is concerned
that California's minimum wage is failing to retain purchasing
power, stating in its letter of support that for the minimum
wage to match the purchasing power it had in 1968, today's
minimum wage would have to be $8.92 per hour.
2)IWC Funding Cut . Last year, the Legislature reduced the IWC's
budget by half due to concerns over the IWC's commitment to
fulfil its statutory obligations. Due to fiscal constraints,
the IWC was not able to commence the biennial review of the
AB 2832
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adequacy of the minimum wage that should have begun in
November of 2003. Both the Assembly and Senate budget
subcommittees have voted to eliminate IWC funding for 2004-05.
3)Background . Article XIV, Section 1 of the California
Constitution empowers the Legislature to provide for minimum
wages and the general welfare of employees, and for those
purposes may confer on a commission legislative, executive and
judicial powers. The Legislature has delegated these powers to
the Industrial Welfare Commission (IWC) but retains the
authority to enact minimum wage and other labor standards.
Current law requires the (IWC) to assess the adequacy of the
state minimum wage every two years, and to adjust minimum
wage at its discretion. The IWC most recently acted on the
minimum wage in 2000, increasing the hourly wage from $5.75 to
$6.25, effective January 1, 2001, and to $6.75 effective
January 1, 2002.
The voters also may increase the minimum wage by initiative,
as occurred in 1996, when Proposition 210 increased the hourly
minimum wage from $4.25 to $5.00, effective January 1, 1997,
and to $5.75, effective January 1, 1998.
Analysis Prepared by : Stephen Shea / APPR. / (916) 319-2081