BILL ANALYSIS                                                                                                                                                                                                    




                    Appropriations Committee Fiscal Summary
          
                                           2832 (Lieber)
          
          Hearing Date:  8/12/2004        Amended: 6/29/2004
          Consultant:  Nora Lynn          Policy Vote: Labor & IR 5-2
          ____________________________________________________________ 
          ___
          BILL SUMMARY: 
          AB 2832 increases the state minimum wage to $7.25 per hour  
          effective Jan. 1, 2005, and to $7.75 effective Jan. 1,  
          2006; requires that lodging and meal credits for all  
          industries be increased; and requires the Industrial  
          Welfare Commission (IWC) to adopt wage orders consistent  
          with these changes.
          ____________________________________________________________ 
          ___
                          Fiscal Impact (in thousands)

           Major Provisions             2004-05            2005-06          
               2006-07            Fund
           Wage increase     $375        $1,125     $1,500     GF/SF
          IHSS              $4,625      $13,875    $18,500       
          GF/Fed/local
          CalWORKS          ($2,650)    ($7,950)   ($10,600)     
          GF/Fed/local
          Wage orders       $365                              General
          Lodging & meal credits        Unknown costs          
          GF/local
          ____________________________________________________________ 
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          STAFF COMMENTS: SUSPENSE FILE
           
          The current minimum wage in California is $6.75 per hour. A  
          report by the Controller's Office indicates that as of July 2,  
          2004, there were 1,061 state employees earning the minimum wage,  
          833 of whom were part-time seasonal employees of the California  
          Conservation Corps (CCC). There were also 309 state employees  
          who earned less than the minimum wage. Assuming the number of  
          employees remains static, that the CCC employees work for three  
          months per year and that the employees earning less than minimum  
          wage would also receive a 50-cent-per-hour increase in their  
          wages with each scheduled minimum wage increase, state wage  
          costs for each of the 50-cent-per-hour increases prescribed by  
          AB 2832 would exceed $750,000 per calendar year. Costs to  










          in-home supportive services (IHSS) programs would also increase  
          by approximately $9.3 million for every 50-cent minimum wage  
          increase. Given that an estimated 7.7% of adult CalWORKS  
          recipients are minimum wage earners, there would be an  
          estimated, offsetting savings to CalWORKS of approximately $5.3  
          million per fiscal year per 50-cent increase in the minimum  
          wage.

          In order for a wage order to be changed, even as a result of  
          changes in the Labor Code, the members of the IWC must take up  
          the issue through the public hearing process. That process costs  
          the IWC approximately $65,000. Once the IWC has approved the  
          wage order change, the new order must be printed and distributed  
          "so far as practicable" to each employer in the impacted  
          occupation or industry; as a minimum wage increase impacts a  
          large number of businesses and employees in the state, Labor  
          Agency staff estimates costs for printing and distribution of at  
          least $365,000.

          AMENDMENTS: The amendments delete lodging and meal credit  
          provisions.