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Sacramento Bee Columnist Daniel Weintraub

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July 11, 2003

Business v. workers, or business and workers?

Below I've pasted a copy of a letter the employees of a Northern California firm received with their paychecks today. It explains, from the owner's point of view, the impact of recent increases in workers compensation premiums and unemployment insurance taxes, and the effects those increases have on the wages and benefits of the workers. Obviously, it's not good news. I'm not going to identify the company, but I have interviewed the owner, and I'm convinced this is real. He doesn't want his name or firm name used because he doesn't want his competitors to know this kind of detail about his finances. The owner of the company is a registered Democrat who says he voted for Davis in 1998. But not in 2002. And he enthusiastically supports the recall.

July 10, 2003

To: The Crew

From: People Who Sign the Paychecks

Subject: Employment Costs & Salary increases

From October 1, 2001 to October 1, 2002, the Company paid approximately
$28,000 in Workman's Compensation premiums. On October 1, 2002 our premiums rose to $100,000 per year. On January 1, 2003 Workman's Compensation rose to $105,000 per year. Ten days ago, our Workman's Compensation was increased an additional 19.8% to $125,790 per year. In addition, last month we were informed that our premiums would increase at least 25%, effective October 1, 2003. This means that in one year's time our premiums will have gone from $28,000 to at least $157,000 per year, a 561% increase in one year! Through June 30th of this year, we have already paid $70,000 more in Workman's Comp premiums than at June 30th of 2002.

Last month (June) the cost of Workman's Compensation was equal to $3.69
per hour for every hour worked by every person here. The 20% increase that
occurred on July 1st will take that number to $4.43 per hour. In addition,
Unemployment Insurance (both Workman's Comp Insurance and Unemployment Insurance are paid solely by the Employer) is scheduled to dramatically increase again on January 1st. There was already a substantial increase this last January. Also, in its quest for more money, the State has announced that Vehicle License Fees will triple effective October 1st. I think most of you can see the impact a huge increase like this will have on an operation consisting of 15 trucks and two pickups.

The increases in taxes, both types of Employment insurance, fees and
increased costs from our suppliers due to these factors are coming higher and
faster than we can raise our prices to offset them. It is due to these factors
that you saw only a 1% pay raise this year and your portion of Health Insurance costs to rise dramatically, rather than the 3+% annual pay increases you are used to receiving. The Company's Profit-Sharing will be adversely impacted as well. We know you deserve more, the 1% increase was to demonstrate our appreciation of your hard work and dedication.

The only thing the Governor and Legislature understand is money and
votes. If you feel the above information has had an immediate impact on your life, I suggest you write a letter to the following people. Tell them how their
actions, or lack of action, are harming you, they think they are only hurting
businesses, not working people.

Governor Gray Davis John Garamendi, Insurance Commissioner
State Capitol, Governor's Office 300 Capitol Mall Suite 1700
Sacramento, Ca 95814 Sacramento, Ca 95814

Senator Sam Aanestad Assemblyman Doug LaMalfa
State Capitol, Room 3056 State Capitol, Room 4177
Sacramento, Ca 95814 Sacramento, Ca 95814