Business lobby suffers rare loss as Jerry Brown signs legislation raising California’s minimum wage

Published: Thursday, Sep. 26, 2013 - 12:00 am
Last Modified: Tuesday, Oct. 1, 2013 - 10:11 am

In signing a bill to raise California’s minimum wage to $10 an hour by 2016, Gov. Jerry Brown on Wednesday not only moved to increase the state’s hourly minimum for the first time since 2008, but also handed influential business interests a rare defeat.

The bill, celebrated by the Democratic governor and his labor union allies at ceremonies in Los Angeles and Oakland, was the only one of 38 bills designated “job killers” by the California Chamber of Commerce to make it out of the Legislature this year.

Its singularity suggested the limitations of more liberal elements of the Democratic Party, even in a heavily Democratic state and even after Democrats seized two-thirds majorities of both houses of the Legislature.

Among bills that failed to go forward this year were proposals to impose a moratorium on hydraulic fracturing, to impose a severance tax on the extraction of oil and natural gas, and to modify California’s property-tax limiting Proposition 13.

The Legislature’s restraint reflects the Democratic Party’s gains in moderate districts in recent years and lawmakers’ increasing familiarity with a governor willing to veto legislation business groups oppose. The chamber’s influential political action committee, JobsPAC, has poured millions of dollars into races throughout the state to help elect Republican candidates along with Democrats the chamber considers sympathetic to business.

“You’ve got a whole bunch of (moderate Democrats), and I just don’t think California Democrats wanted to declare war on California businesses,” said Tony Quinn, a political analyst and former Republican legislative aide. “I think the business community feels they did reasonably well.”

Steve Smith, a spokesman for the California Labor Federation, discounted the chamber’s victories as those of a group “playing defense all the time,” and he said “at the end of the day we feel very good about what the Legislature did.”

Still, it is the third year in a row in which business groups have defended themselves relatively effectively from the bills they fear most. In 2011, Brown’s first year in office, five bills identified by the state chamber as “job killers” made their way to the governor’s desk. He vetoed four. Following the end-of-session rush in 2012, six of of 32 bills designated as “job killers” reached Brown. He signed four of those measures and vetoed two.

“We are pleased with our success,” Denise Davis, a chamber spokeswoman, said in an email. “We fought hard and made sure legislators understood how bad these proposed job killers would have been for California jobs and our economy.”

Of the minimum wage bill, she said, “We all need to work together to improve the economy to offset the increased labor costs that will occur.”

Brown has courted business groups since taking office, and his relationship with monied interests including oil, telecommunications and health care companies is one of many reasons any Republican who cannot self-finance his or her campaign is expected to have difficulty competing with Brown in his likely re-election bid next year.

The minimum wage bill authorizes the first increase in the state’s hourly minimum since 2008, when it was increased 50 cents to $8. Assembly Bill 10, by Assemblyman Luis Alejo, D-Watsonville, will raise the minimum hourly wage from $8 to $9 on July1, 2014, and to $10 on Jan.1, 2016.

The bill originally would not have raised the minimum wage to $10 until 2018, but Brown sought an accelerated schedule in his negotiations with lawmakers. Alejo said Wednesday that he removed an automatic cost-of-living escalator included in a prior version of the bill after talking with business groups earlier this year. The provision’s removal was a move Brown endorsed.

“I think what we did was a reasonable accommodation,” Brown said at a job training center in Oakland. “That fits my philosophy of pushing, pushing everybody, but not trying to push anybody too far.”

Brown cited growing inequality between upper and lower classes and cast as a moral imperative raising the wages “of those who labor at the bottom.”

“I was brought up to believe in the doctrine of a living family wage,” he said.

Business groups, including chambers of commerce, restaurant owners, retailers and farm groups, said the bill would unfairly increase costs on employers and jeopardize California’s economic recovery. Jot Condie, president and chief executive officer of the California Restaurant Association, called “disappointing” a minimum wage increase of “this amount, in one of the worst economies in the history of California.”

California is one of 18 states and the District of Columbia that have minimum wages above the federal minimum of $7.25 an hour, according to the National Conference of State Legislatures, and $10 is likely to be among the highest in the nation in 2016.

Washington state currently has the highest minimum wage, at $9.19 an hour. It is one of 10 states that provide for automatic adjustments to the minimum wage based on cost of living measures.

The bill is expected to affect about 1.5million full-time, year-round workers in California, about 14percent of the state’s full-time workforce, according to a Sacramento Bee review of U.S. census data.

The broader effects of a minimum wage increase are the subject of long-standing debate. The California Budget Project, which advocates for low-income residents, said in a brief this month that the minimum wage has not kept pace with the rising cost of living and that raising the hourly minimum “would help reverse the decline in the purchasing power of workers’ wages.” Proponents of raising the minimum wage say workers who earn more will spend more, stimulating the economy, and will require less government assistance.

Opponents of raising the minimum wage say requiring employers to pay higher wages will force them to offset costs by raising prices, hiring fewer workers or reducing workers’ hours. The National Federation of Independent Business, an advocacy group, released a study in March warning that a minimum wage increase under an earlier version of the California bill could result in the loss of more than 68,000 jobs in California over 10 years.

If Brown and the Legislature have been cautious to anger business interests, they have been more willing to anger conservatives on social issues. Earlier this year Brown signed legislation letting California students use the bathrooms and join the teams that best match their gender identity. He is expected to sign a bill to provide driver’s licenses for undocumented immigrants, and the Legislature has sent him a raft of gun control bills.

But business groups are far less interested in social legislation than economic policy.

“On the jobs front,” said Dan Schnur, director of the Jesse Unruh Institute of Politics at the University of Southern California, “the chamber built themselves a pretty effective firewall.”

 


Call David Siders, Bee Capitol Bureau, (916)321-1215. Follow him on Twitter @davidsiders. The Bee’s Phillip Reese contributed to this report.

Read more articles by David Siders




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