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California and the West

Panel Backs Raise in State Minimum Wage

Labor: The $1 hike, spread over two years, would bring hourly pay to $6.75. Business lobby says restaurants especially will suffer.


SACRAMENTO — A labor panel appointed by Gov. Gray Davis wants to raise California's minimum wage from $5.75 to $6.75 an hour by 2002, making it one of the nation's highest.

The Industrial Welfare Commission on Thursday formally endorsed the proposal. The increase would consist of two 50-cent raises, one in January and another a year later, when Davis is running for reelection.

The proposal attempts to strike a balance between one of the Democratic governor's strongest allies, organized labor, which has been seeking a much higher raise, and business--particularly restaurants and agribusiness--which want no raise at all. Raising the state's minimum wage has been one of labor's top goals in Sacramento this year.

A $1 increase would coincide with a similar proposal being debated in Congress and pushed by Democratic presidential nominee Al Gore. The federal minimum wage is $5.15.

The hike would place California alongside Massachusetts, Oregon and Washington, the states with the highest minimum wages in the country. Washington has an inflation-adjusted minimum wage, which is set to go to $6.71 in January. Massachusetts' minimum wage is scheduled to rise to $6.75 next year.

Davis aides denied that he is seeking the increase. But business and labor leaders said such proposals do not come out of an administration without a governor's support--especially a notorious micro-manager such as Davis.

The five-member labor panel, which is almost always divided among labor and business lines, cast a rare unanimous vote to move forward.

"There has been no directive, no request," said Davis spokesman Steve Maviglio. "This is an independent board that is doing what it is designed to do: review the issue with public testimony."

The commission will hold a series of hearings to discuss an increase in coming weeks, and will also focus on workers such as shepherds and carnival employees who are exempt from minimum wage laws.

Both sides say the details of any wage increase will probably change before the commission makes a final decision and it becomes law. But all agreed that California's minimum wage will be going up soon.

"It just kind of sounded right to people as an opening proposal," Barry Broad, a pro-labor commissioner, said of the $6.75 plan. "It clearly signals that there will be an increase in the minimum wage."

The last California governor to raise the minimum wage was George Deukmejian, who boosted it from $3.85 to $4.25 in 1988. Frustrated by former Gov. Pete Wilson's refusal to raise it further, unions took their case to the people in 1996 and won passage of Proposition 210, which gradually raised it to the current $5.75.

"You've got to be able to do it so it doesn't shock the system," Lt. Gov. Cruz Bustamante said of the latest proposed increase. "For right now, it is reasonable. You have to stage it, so that it is not a shock."

Shock, some business leaders say, is exactly what they experienced after Proposition 210. All but conceding defeat in the battle against a wage increase, they are now focusing on how it will be implemented.

They hope to delay the start of the raises until next July at the earliest, and consideration of any raises at all until later this year, when the debate in Washington over a federal minimum wage increase comes to a close.

"You just don't make decisions in the business world where you do not know what your costs are," said California Chamber of Commerce lobbyist Julianne Broyles. "Let's slow down a minute and figure out what the consequences are going to be."

Leaders of the California Restaurant Assn., one of the strongest opponents of a raise, said they know the results will hurt their highly competitive industry. Restaurants have the highest failure rate of any business, and increases in labor costs will make survival even more difficult, they say.

"Any wage-hike dollars you are taking out of that slim profit margins restaurateurs enjoy," said Restaurant Assn. President John Dunlap. "If I were representing fat cats, maybe I would feel differently, but I am not. The restaurateurs are going to get hit a lot harder than others."

Labor leaders, who had advocated raising the minimum wage to $8 over three years, expressed disappointment over the commission's more modest proposal. They vowed to continue pushing for more.

"It's clearly not sufficient," said California AFL-CIO President Tom Rankin. "We're certainly not going to give up. We will pack minimum-wage workers at all the hearings."

To make their case Thursday, labor officials showered the panel with a variety of experts and college professors who said California's lauded technology boom has overshadowed the growing pool of low-wage workers.

Boosting the minimum wage to $8 would be the lowest possible increase that would still allow workers to keep up with California's increasingly high housing costs and standard of living, they said.

"We are in the wealthiest state in the country," said Jean Ross of the California Budget Project, a liberal, nonprofit think tank. "But we also have the largest low-wage work force in the nation."

One in eight California workers earns the minimum wage. Of those, 84% are adults, and 62% are employed full-time, Ross said.

In addition to the minimum wage increase, organized labor has been pushing this year to increase unemployment insurance and workers' compensation benefits. The apparent move on minimum wage, business leaders said, was the one concession the Davis administration is making to unions. As such, some sympathizers felt it was not enough.

Assemblywoman Sheila Kuehl (D-Santa Monica) said the raise should be greater than 50 cents a year, adding that such an increase would not lift any family out of poverty.

"Fifty cents helps," Kuehl said. "But working people deserve more. I'm happy to see any raise, but I wish they could do better."

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