Thursday, March 31, 2016

Governor Brown Ups the Ante on California Minimum Wage

California Governor Jerry Brown announced on Monday that he had reached a deal with lawmakers to raise the state minimum wage to $15 per hour by 2022, calling it a “matter of economic justice.” 
The proposal must win support among moderates in the California Assembly in order to become law. It has strong backing from labor leaders and influential legislators like the California Senate president pro tem, which makes it more likely that the California legislature will approve. 
California’s present minimum wage is $10 per hour. Under the terms of the proposal now being considered, the minimum wage will increase at a rate of $0.50 per year for two years, then by $1 per year for four years until it reaches $15 per hour.  Businesses with fewer than 25 employees will have an extra year to comply.  An “off ramp” provision lets the governor delay implementation for economic reasons such as a recession or budget shortfalls. 
California employers have already been affected by minimum wage provisions adopted by local governments. The minimum wage in the City of San Francisco is currently $12.25, but it will go up to $13 beginning July 2016 and will rise to $15 by 2018.  In Oakland, the current minimum wage is $12.55, and it will rise annually based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. The Los Angeles minimum wage will become $10.50 in July 2016 and will then increase incrementally to $15 by 2020.  In Berkeley, the current minimum wage is $11. It will rise to $12.53 in October 2016, and to $15 in 2018 for employers with more than 55 employees (2020 for smaller employers).  It can be challenging for organizations with workers in several cities to comply with this patchwork of minimum wage requirements.
Critics of the effort to increase the statewide minimum wage point to the differences between rural and urban markets and assert that increases should be tiered (and lower) in rural areas. Other critics claim that raising the statewide minimum wage to $15, even incrementally, will eliminate the narrow profit margin that allows small businesses to survive while competing with national corporations.  The California Chamber of Commerce and the California Restaurant Association have formed a coalition to combat the proposed initiatives. That coalition has called the $15 minimum wage proposal “overreaching” and said it would have negative, if not devastating, impact. We will watch with great interest as the measure is debated in the California legislature.
Posted by: Sarah Mott