Capitol Alert

California minimum wage measure seeks to tap into income inequality worries

San Francisco Mayor Ed Lee, speaking Tuesday at Rickshaw Bagworks, joins proponents of a statewide ballot measure to raise California’s minimum wage to $15 an hour from $10 an hour.
San Francisco Mayor Ed Lee, speaking Tuesday at Rickshaw Bagworks, joins proponents of a statewide ballot measure to raise California’s minimum wage to $15 an hour from $10 an hour. ccadelago@sacbee.com

Proponents of a statewide ballot measure to raise California’s minimum wage signaled Tuesday that their effort will seize on unrest over income distribution and frame the wage debate as one of fairness.

In the first major event in support of the proposed initiative, San Francisco Mayor Ed Lee and Oakland Mayor Libby Schaaf said they would lead the union-funded endeavor to hike the state’s base wage to $11 an hour in 2017, and then increase it by $1 a year until it hits $15 in 2021. After that, the wage would automatically rise with the cost of living.

The minimum wage is scheduled to reach $10 per hour next year, an insufficient floor amid rising prices for housing and everyday expenses like milk and eggs, Lee told reporters at Rickshaw Bagworks, a manufacturer of customizable bike messenger bags.

Lee, a Democrat who has focused his re-election effort on tackling inequality, said with the state economy rebounding, we have “got to do a lot more in sharing our prosperity” with the likes of schoolteachers, custodians and in-home health care workers.

“There is a sense of fairness to this,” Lee said, adding that families earn less than $20,000 a year on today’s minimum wage. “In a state that is now surging in prosperity, one of the most innovative states not only in the United States, but perhaps all over the world ... to allow people to struggle with that kind of wage, I think is totally unfair.”

The proposed measure would hike the state’s base wage to $11 an hour in 2017, and then increase it by $1 a year until it hits $15 in 2021.

Underpinning the latest statewide proposal is the steady upward march in wages in cities such as San Francisco, Oakland and Los Angeles, along with growing consensus from the state’s electorate that more must be done to diminish the widening income gap.

Consultants for the measure say the argument is already resonating. Steve Trossman, a spokesman for the sponsoring Service Employees International Union-United Healthcare Workers West, said the campaign has collected most of the 366,000 signatures needed to qualify for the November 2016 ballot.

A Public Policy Institute of California survey last week found that 92 percent of Californians believe poverty is a large problem, and nearly seven in 10 residents think the government should step up its involvement to reduce the gulf between the rich and the poor. While the economic picture has improved, stubborn levels of poverty remain in pockets of the state.

“I think that there’s angst out there,” said Mark Baldassare, president and survey director at PPIC. “There is very broad awareness in California today that poverty and inequality are big problems facing our state, and it’s an issue both Democrats and Republicans are thinking about.”

Other ballot measures are angling to capitalize on voter frustration over income inequality. Advised by the same consulting firm guiding the minimum-wage measure, SCN Strategies, a group of hospitals, unionized heath care workers and youth advocates is proposing to expand – and make permanent – income tax increases voters agreed to raise temporarily through Proposition 30 in 2012.

Their plan would allow a sales tax hike included in that measure to expire, reasoning that it has a greater effect on the poor. The effort would impose new income tax rates for “super-earner” couples making more than $2 million a year.

“The idea of taxing high-income earners is a popular idea, especially among Democrats,” Baldassare said.

Throw in something about the ‘evil rich’ and use the right buzzwords and who knows how voters will react?

Jon Coupal, president of the Howard Jarvis Taxpayers Association

Jon Coupal, an anti-tax crusader and president of the Howard Jarvis Taxpayers Association, acknowledged the potential persuasiveness of campaigns focused on income inequality, noting the “superficial attractiveness that some people might find enticing.”

“Throw in something about the ‘evil rich’ and use the right buzzwords and who knows how voters will react?” Coupal said.

Still, he said, it’s crucial to examine the disastrous consequences such wage- and tax-hike policies would have on a state still finding its financial footing following the recession. A higher minimum wage, he said, would knock out the lower rung of the economic ladder because companies would be unwilling to hire young employees for $15 an hour. It also would encourage under-the-table wages, Coupal said.

He said the permanent tax increase on higher earners, as well as a competing measure prolonging the income taxes of Proposition 30 to 2030, would reactivate the “substantial anger” many felt when their taxes were increased.

“I think it would be horrible,” Coupal said, adding about the proponents’ campaign, “I’m hoping people won’t fall for that.”

Progressive efforts yoking poverty and the swelling income gap to the need for higher minimum wages have rippled across the state and nation. On the presidential campaign trail, Democratic hopeful Bernie Sanders has made boosting federal base pay the centerpiece of his spirited bid.

While labor unions push their national “Fight for $15” campaign, including references to Pope Francis decrying the “social evil” of inequality, California has factored prominently in the debate. Gov. Jerry Brown in 2013 signed a bill hiking the wage from $8 at the time to $10 next year.

Despite strong support in public polls, two consecutive efforts to raise the wage by Sen. Mark Leno, D-San Francisco, have faltered in the Democratic-controlled Legislature. Branded a “job killer” by the California Chamber of Commerce, Senate Bill 3 sought to raise minimum pay to $11 an hour next year, $13 in 2017 and then index it to inflation beginning in 2019.

Supporters, including the Service Employees International Union-California State Council and the United Food and Commercial Workers union, argued the state’s pending $10 minimum wage would begin trailing the federal poverty level in 2017 because it lacks a cost-of-living adjustment.

But Brown’s Department of Finance said in an analysis the increases would cost state agencies $394 million this year, $959 next year, and $3.4 billion in 2017-18. Finance officials said the net impact on the budget and economy “is likely to be negative,” including slower employment growth.

Cities and other institutions have forged ahead. In July, the University of California announced plans to boost its minimum wage to $15 an hour over the next three years for all of its workers. A Sacramento city task force has pitched a plan to raise the minimum wage to $12.50 an hour by 2020 for certain workers.

San Francisco’s wage, now $12.25, will grow to $15 in 2018, with later increases tied to inflation, based on overwhelming support by voters. Oakland’s voter-approved base wage sent it to $12.25 from $9, while also giving workers there five to nine paid sick days each year. Schaaf called the move “morally correct” and “fiscally responsible” given that nearly two-thirds of base wage workers in the state are women struggling to support their families. She noted the proposed initiative would not prevent cities from hiking their floor above $15.

“We recognize that the cost of living in our cities is higher than in other parts of California,” she said.

Los Angeles, with nearly 4 million residents, became the biggest city in America to gradually boost its lowest wage to $15 per hour (the county followed suit with a $15 rate of its own in unincorporated areas). Citing the need to alleviate “back-breaking poverty,” Los Angeles Mayor Eric Garcetti earlier this year signed the measure to increase base wages by $6 by 2020.

The only initiative more popular than a minimum-wage hike would also make it rain.

Political consultant Dan Newman

Statewide, pollsters and consultants say they continue to see evidence that an inequality-focused campaign could resonate with voters.

In a survey of state residents last year, 54 percent said they are weren’t satisfied with the way income and wealth were distributed in California. The Field Poll also found 58 percent believe the income gap between the rich and everyone else is larger than it had been in the past.

Dan Newman, a consultant with SCN, which also advises Lee and Schaaf, said two responses to a standard poll question about what voters view as the most important issues facing the state have consistently rocketed ahead of the others: drought and income inequality.

Quipped Newman: “The only initiative more popular than a minimum-wage hike would also make it rain.”

Christopher Cadelago: 916-326-5538, @ccadelago

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