BILL ANALYSIS
AB 2832
Page 1
GOVERNOR'S VETO
AB 2832 (Lieber)
As Amended August 17, 2004
2/3 vote
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|ASSEMBLY: |46-30|(May 26, 2004) |SENATE: |22-14|(August 19, |
| | | | | |2004) |
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|ASSEMBLY: |46-33|(August 23, | | | |
| | |2004) | | | |
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Original Committee Reference: L. & E.
SUMMARY : Sets the minimum wage at $7.25 as of July 1, 2005, and
$7.75 as of July 1, 2006.
The Senate amendments delete provisions directing the Industrial
Welfare Commission (IWC) to adopt minimum wage orders without
convening wage boards.
EXISTING LAW authorizes 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. The current minimum wage for all
industries is $6.75 per hour.
AS PASSED BY THE ASSEMBLY , this bill set the minimum wage at
$7.25 as of January 1, 2005, and $7.75 as of January 1, 2006,
and required IWC to adopt consistent minimum wage orders without
convening wage boards.
FISCAL EFFECT : According to the Senate Appropriations
Committee, state wage costs for each of the $0.50 per-hour
increases prescribed by this bill would exceed $750,000 per
calendar year. Costs to in-home supportive services programs
would also increase by approximately $9.3 million for every
AB 2832
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$0.50 minimum wage increase. Given that an estimated 7.7% of
adult California Work Opportunity and Responsibility to Kids
(CalWORKS) recipients are minimum wage earners, there would be
an estimated, offsetting savings to CalWORKS of approximately
$5.3 million per fiscal year per $0.50 increase in the minimum
wage.
COMMENTS : A recent report by the California Budget Project
states that 58.1% of minimum wage earners in California are 25
years of age and older. The report also reveals that 50.7% of
minimum wage earners who are women work 35 hours of more per
week. Over 69% 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% since 1968.
California's minimum wage is the lowest on the West Coast. In
1998, Washington indexed its minimum wage, which is currently
$7.16, by ballot initiative. In 2002 Oregon increased its
minimum wage to $7.05 an hour, with annual indexing beginning
after January 1, 2004, and Alaska recently increased its minimum
wage to $7.15 an hour.
Previous 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 Senate Appropriations
Committee and is now dead.
SB 996 (Alarcon) requires IWC to establish minimum living wage
requirements, indexed to inflation, that would apply to
specified employers that enter into specified contracts with the
state or receive certain types of state assistance. This bill
passed the Senate, 25 to 14, on June 4, 2003, but was
subsequently held at the Assembly Desk.
GOVERNOR'S VETO MESSAGE :
This bill would raise California's minimum wage to a
level that would be the highest in the nation.
According to the Employment Development Department,
this will increase the cost to California employers by
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at least $3 billion, and as much as $4 billion.
In recent years, the high cost of doing business in
California has driven away jobs, businesses, and
opportunity. We have launched California's recovery
by making our state more attractive place to do
business, so that employers will stay in our state,
expand in our state, and create more jobs here.
Now is not the time to create barriers to our economic
recovery or reverse the momentum we have generated. I
want to create more jobs and make every California job
more secure.
Analysis Prepared by : Nick Louizos / L. & E. / (916) 319-2091
FN: 0009157