Deal struck to increase minimum wage rate
SACRAMENTO (AP) – California’s minimum wage will increase by $1.25 an hour over the next two years under a deal struck Monday between Gov. Arnold Schwarzenegger and legislative leaders.
The agreement ends, at least temporarily, a stalemate between the governor and Democratic lawmakers and clears a political hurdle for Schwarzenegger as he seeks re-election. Both sides agreed a raise for the lowest-income workers was necessary but differed over whether it should be accompanied by automatic annual increases.
The governor has vetoed two previous attempts to raise California’s minimum wage, which is far higher than the federal rate of $5.15 an hour but lags the rates in several other states.
Schwarzenegger described the compromise as a “common sense” solution that would lead to a higher wage for working Californians without hurting the economy.
“I have always said that when the economy was ready, we should reward the efforts of California’s hard-working families by raising our minimum wage,” Schwarzenegger said in a statement. “This is another sign California is coming back stronger than ever.”
Schwarzenegger had sought a $1-an-hour raise over two years, but agreed during negotiations to boost the wage from $6.75 to $8 an hour after Democrats dropped their demand for annual increases to keep up with inflation.
“We asked ourselves the practical question that anyone of sound mind would ask: Would poor people prefer a $1.25 raise, or a bill that has everything they want but it never materializes?” Assembly Speaker Fabian Nunez, D-Los Angeles, told The Associated Press in a telephone interview late Monday.
If the agreement is approved by the Legislature and signed into law, the minimum wage would increase by 75 cents in January and 50 cents in January 2008.
The California Chamber of Commerce, which has opposed both the governor’s and the Legislature’s proposals to increase the minimum wage, credited Schwarzenegger for “standing firm” against tying the minimum wage to inflation.
“Raising the minimum wage is one thing, but locking in automatic increases year-after-year, regardless of the condition of the economy or the health of a business, is another entirely,” said Vince Sollitto, spokesman for the California Chamber of Commerce.
Sollitto said the chamber remained opposed to any wage increase.
Senate Republican leader Dick Ackerman said Republicans would not support the wage hike.
“We think any time you raise the minimum wage, it’s going to be a drag on business,” said Ackerman, R-Fullerton. “It’s going to have a negative impact on hiring minorities and low-income workers because there will be less jobs.”
George Patel, who employs eight workers at a Subway sandwich franchise three blocks from the state Capitol, said the boost in the minimum wage could force him to lay off some workers.
“As the owner, I’m not very happy about it,” he said. “Right now, I could not afford an extra $1.25; I would have to do layoffs. Over two years, maybe I could afford it. But I would be looking to increase productivity.”
In 2004, Schwarzenegger vetoed a bill that would have increased the minimum wage by $1 over two years. He also vetoed a bill last year increasing the minimum wage to $1 and tying future increases to inflation.
Art Pulaski, chief executive officer of the California Labor Federation, described the latest deal as a modest increase and pledged to push for indexing next year.
“Clearly, the governor waited until three months before his election,” Pulaski said. “He’s using minimum wage as a political football.”
Pulaski said mandatory, annual increases would remove the politics from the minimum wage debate and provide businesses and workers with predictability.
Six states – Alaska, Connecticut, Oregon, Rhode Island, Vermont and Washington – and the District of Columbia currently have minimum wages that are higher than California’s. They range from $7 an hour in the District of Columbia to $7.63 in Washington State.
A seventh state, New Jersey, plans to raise its minimum wage from $6.15 to $7.15 an hour on Oct. 1, according to U.S. Labor Department statistics.
Oregon, Vermont and Washington increase their minimum wages annually to keep up with inflation.
“The overriding goal is to get a meaningful increase for our state’s neediest working families this year,” said Assemblywoman Sally Lieber, D-San Jose, who had authored a bill requiring inflation indexing.
That bill will be amended to reflect Monday’s agreement and will be considered Thursday in the Senate.
— Associated Press Writers Aaron Davis and Steve Lawrence in Sacramento contributed to this story.