BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2832|
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THIRD READING
Bill No: AB 2832
Author: Lieber (D), et al
Amended: 8/17/04 in Senate
Vote: 21
SEN. LABOR & INDUSTRIAL RELATIONS COMMITTEE : 5-2, 6/23/04
AYES: Alarcon, Dunn, Figueroa, Kuehl, Romero
NOES: Margett, McClintock
NO VOTE RECORDED: Oller
SENATE APPROPRIATIONS COMMITTEE : 8-5, 8/12/04
AYES: Alpert, Bowen, Burton, Escutia, Karnette, Machado,
Murray, Speier
NOES: Battin, Aanestad, Ashburn, Johnson, Poochigian
ASSEMBLY FLOOR : 46-30, 5/26/04 - See last page for vote
SUBJECT : Minimum wage
SOURCE : California Labor Federation, AFL-CIO
DIGEST : This bill sets the minimum wage at $7.25 per
hour as of July 1, 2005 and $7.75 per hour as of July 1,
2006.
ANALYSIS : Existing law authorizes the IWC to determine
minimum wages in accordance with a prescribed procedure
that includes the selection of wage boards to consider and
make recommendations regarding wage issues. California's
current minimum wage for all industries is $6.75 per hour.
CONTINUED
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All employers in California who are subject to both the
federal and state laws must pay the state minimum wage rate
unless their employees are exempt under California law.
Some employees are exempt from the minimum wage law, such
as outside salespersons, individuals who are the parent,
spouse, or child of the employer, and apprentices regularly
indentured under the State Division of Apprenticeship
Standards. There is an exception for learners, regardless
of age, who may be paid no less than 85 percent of the
minimum wage rounded to the nearest nickel during their
first 160 hours of employment in occupations in which they
have no previous similar or related experience. There are
also exceptions for employees who are mentally or
physically disabled, or both, and for nonprofit
organizations such as sheltered workshops or rehabilitation
facilities that employ disabled workers. Such individuals
and organizations may be issued a special license by the
Division of Labor Standards Enforcement authorizing
employment at a wage less than the legal minimum wage.
This bill sets the minimum wage at $7.25 per hour effective
January 1, 2005 and at $7.75 effective January 1, 2006.
Comments
The current minimum wage in California is $6.75 per hout.
A report by the State 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 this bill would exceed $750,000 per calendar year.
Costs to in-home supportive services programs will also
increase by approximately $9.3 million for every 50-cent
minimum wage increase. Given that an estimated 7.7 percent
of adult CalWORKS recipients are minimum wage earners,
there will be an estimated, offsetting savings to CalWORKS
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of approximately $5.3 million per fiscal year per 50-cent
increase in the minimum wage.
Prior Legislation
SB 57 (Burton) automatically adjusts the hourly minimum
wage on January 1, 2004, and each year thereafter based on
the California Consumer Price Index for all Urban
Consumers. This bill was held in the Senate Appropriations
Committee and is now dead.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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
SUPPORT : (Verified 8/13/04)
California Labor Federation, AFL-CIO (source)
American Federation of State, County and Municipal
Employees, AFL-CIO
American Federation of Television and Radio Artists
California Alliance for Retired Americans
California Catholic Conference
California Conference Board of the Amalgamated Transit
Union
California Conference of machinists
California Federation of Teachers
California National Organization for Women
California Partnership for Working Families
California Rural Legal Assistance Foundation
California School Employees Association, AFL-CIO
California State Employees Association
California Teamsters Public Affairs Council
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Engineers and Scientists of California, IFPTE Local 20,
AFL-CIO
Gray Panthers
Hotel Employees and Restaurant Employees International
Union
Housing California
JERICHO
Lt. Governor Cruz Bustamante
Mexican American Legal Defense and Education Fund
North Bay Labor Council, AFL-CIO
Older Women's League
Professional and Technical Engineers, IFPTE Local 21,
AFL-CIO
Region 8 States Council of the United Food & Commercial
Workers
San Francisco Living Wage Coalition
Service Employees International Union, AFL-CIO
UAW, Region 5
United Farm Workers of America, AFL-CIO
Western Center on Law and Poverty
OPPOSITION : (Verified 8/13/04)
Agricultural Council of California
Automotive Aftermarket Services
Automotive Repair Coalition
California Apartment Association
California Association of Health Facilities
California Attractions and Parks Association
California Business Properties Association
California Chamber of Commerce
California Farm Bureau Federation
California Grocers Association
California Healthcare Association
California Hotel and Lodging Association
California Independent Grocers Association
California Landscape Contractors Association
California Lodging Industry Association
California Manufacturers and Technology Association
California Restaurant Association
California Retailers Association
California Service Station & Automotive Repair Association
California Travel Industry Association
California Women for Agriculture
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Chico Chamber of Commerce
City of Costa Mesa
Consumer Alliance for A Strong Economy
Continental Airlines
Fresno County Farm Bureau
Mag Instrument, Inc.
Napa Chamber of Commerce
National Association of Theatre Owners of California/Nevada
National Federation of Independent Business
Newport Beach Chamber of Commerce
Orange County Business Council
Redondo Beach Chamber of Commerce and Visitors Bureau
South Orange County Regional Chamber of Commerce
Victorville Chamber of Commerce
Western Growers Association
ARGUMENTS IN SUPPORT : Supporters of this bill argue that
California's current minimum wage has lost significant
value since it was last raised. A recent report by the
California Budget Project states that 58.1 percent of
minimum wage earners in California are 25 years of age and
older. The report also reveals that 50.7 percent of
minimum wage earners who are women work 35 hours of more
per week. Over 69 percent of male earners of the minimum
wage work 35 hours per week or more. The same report
states that despite increases in the minimum wage, the
purchasing power of California's minimum wage is down 28
percent since 1968.
IWC is obligated to conduct a full review of the adequacy
of the minimum wage at least once every two years. IWC is
authorized on its own, or when it receives a petition, to
adopt, amend, or rescind a wage order. Although the
minimum wage has not been increased since January 1, 2004,
IWC halted the process of discussing increases in the
minimum wage based on their determination that an increase
at this time was unsubstantiated. Partly due to concerns
regarding its commitment to fulfil its statutory
obligations, the IWC's budget was reduced by half last
year. Additionally, IWC has recently reported that, due to
fiscal constraints, it has not begun its review of the
minimum wage that should have begun in November of 2003.
California's minimum wage is the lowest on the West Coast.
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In 1998, by ballot initiative, the state of Washington
indexed its minimum wage, which is currently $7.16. In
2002, Oregon increased its minimum wage to $7.05 an hour,
with annual indexing beginning after January 1, 2004.
Alaska recently increased its minimum wage to $7.15 an
hour.
ARGUMENTS IN OPPOSITION : Those opposed to this bill,
state that it will make California home to the highest
minimum wage rate in the country, hurting businesses
already paying the highest energy costs and the highest
workers' compensation premiums. Workers' compensation and
health care premiums, as well as other employment related
taxes would also increase because they are affected by
increases in payroll costs.
Opponents contend that most of today's minimum wage earners
are teenagers, young adults and adult women who are
relatively unskilled, have limited work experience or work
part time. Once these entry-level employees get a foot on
the employment ladder, they'll find hard work and new
abilities are quickly rewarded. The minimum wage should
not be perceived or expected to provide a long-term wage
solution for any employee.
Opponents also contend that increasing the minimum wage
will dramatically increase employer costs. In order to
account for these unanticipated costs, employers will have
no choice but to make cuts, resulting in a loss of jobs
among the lowest paid workers.
ASSEMBLY FLOOR :
AYES: Berg, Calderon, Canciamilla, Chan, Chavez, Chu,
Cohn, Corbett, Correa, Diaz, Dutra, Dymally, Firebaugh,
Frommer, Goldberg, Hancock, Jerome Horton, Jackson,
Kehoe, Koretz, Laird, Leno, Levine, Lieber, Liu,
Longville, Lowenthal, Montanez, Mullin, Nakano, Nation,
Negrete McLeod, Oropeza, Parra, Pavley, Reyes,
Ridley-Thomas, Salinas, Simitian, Steinberg, Vargas,
Wesson, Wiggins, Wolk, Yee, Nunez
NOES: Aghazarian, Bates, Benoit, Bogh, Campbell, Cogdill,
Cox, Daucher, Dutton, Garcia, Harman, Haynes, Shirley
Horton, Houston, Keene, La Suer, Leslie, Maddox,
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Matthews, Maze, McCarthy, Mountjoy, Nakanishi, Pacheco,
Plescia, Richman, Samuelian, Spitzer, Strickland, Wyland
NO VOTE RECORDED: Bermudez, La Malfa, Maldonado, Runner
NC:cm 8/14/04 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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