News Column

Calif. Minimum Wage Hike: Job Killer or Boost to Economy?

April 29, 2013

Marc Lifsher

Calif. Assemblyman Luis A. Alejo. (Photo: Alejo for Assembly 2012)

California's $8-an-hour minimum wage needs to go up, says Watsonville Democratic Assemblyman Luis Alejo. And he may be getting the votes he needs to make it happen.

But don't count on it; Alejo has tried this before.

Alejo is the author of AB 10, which would give the Golden State its first minimum wage increase since 2008. The bill would raise it 25 cents an hour next year, 50 cents in 2015 and an additional 50 cents to $9.25 an hour in 2016. In 2017 and annually thereafter, hourly pay would be adjusted upward automatically, based on the state's inflation rate.

Raising the minimum wage "is about equity," he told the Assembly Labor and Employment Committee last week. "It provides modest increases over time and implements a cost-of-living adjustment ... to help ensure equity for minimum wage workers."

Supported by labor unions and advocates for the working poor, the bill was approved by the Democrat-dominated committee on a party-line vote. But business lobbyists such as the California Chamber of Commerce, the California Restaurant Assn. and the Western Growers Assn. plan to fight the bill every step of the way through the Legislature.

They oppose it and are part of a business coalition that says "an increase in the minimum wage starting in 2014 will negatively impact our economic recovery by either limiting available jobs, or worse, creating further job loss." The chamber dubs the bill a "job killer." Similar bills by Alejo died in the state Assembly in 2011 and 2012.

California has one of the highest minimum wages in the nation, behind Washington state at $9.19 an hour, Oregon at $8.95, Vermont at $8.60, and Connecticut, the District of Columbia and Illinois at $8.25. Ten states peg their minimum wages to inflation.

Sales tax cut

California's manufacturers are persistent.

For a decade, they've been trying without success to persuade lawmakers to give them back a tax cut they enjoyed from 1994 to 2003. Now, with statewide unemployment still high at 9.4%, they're trying again.

In the 1990s, "California attracted on average almost 6% of the country's manufacturing investment dollars," blogged Gino DiCaro, vice president of the California Manufacturers & Technology Assn. But, now, he said, it has slowed to an average of 1.9%.

Projecting that a tax credit could create about 50,000 jobs directly and indirectly, the industrialists want to all but eliminate the sales tax when they buy new equipment. They want to slash it on such purchases from the state's basic 7.5% statewide tax rate to as little as 1%. A bill that would do so has been approved by a Senate committee and another is pending in the Assembly.

But there is substantial opposition. Public employee unions and advocates for low-income workers oppose the tax credit, arguing it would lower state revenue by as much as $2 billion a year -- when many social and health programs have been cut.

"It's a huge amount of money and will not create any jobs commensurate with its cost," said Lenny Goldberg of the California Tax Reform Assn.

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(c)2013 the Los Angeles Times

Distributed by MCT Information Services




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Source: Copyright Los Angeles Times 2013


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