SACRAMENTO — After two years of rejecting increases in the minimum wage at the behest of California businesses, Gov. Arnold Schwarzenegger next week will propose raising the basic hourly pay $1 over 18 months, administration officials said Friday.
In his State of the State address Thursday, the governor will ask the Legislature to boost the current $6.75-an-hour wage in two phases: 50 cents in September and 50 cents in July 2007. At $7.75 an hour, California would have one of the highest minimum wages in the country if other states' remained unchanged.
Democrats who control the Legislature quickly greeted the plan with skepticism and viewed it as an election-year attempt by Schwarzenegger to appear more moderate to voters.
Union leaders were outright dismissive because the governor's proposal does not include automatic cost-of-living increases, as do wage laws in Washington state and Oregon.
Assembly Speaker Fabian Nunez (D-Los Angeles) said he was happy Schwarzenegger wanted to raise wages. But without a regular cost-of-living increase, he said, the plan "doesn't make up for the ground that some of the state's hardest workers lost when the governor vetoed two previous attempts to raise the minimum wage."
"It's not enough," said Art Pulaski, executive secretary-treasurer of the California Labor Federation, which represents 2.1 million workers. "He knows it's very popular among voters, and he's trying to improve his record for reelection."
The business community has only lately begun calling for an increase in the minimum wage.
Restaurants and retail businesses that rely on unskilled, low-wage workers have maintained that a higher mandatory wage slows economic growth by driving up costs and discouraging them from hiring more employees.
But in California, business owners are facing a ballot initiative that would increase the minimum wage to $8.75 an hour and require cost-of-living increases after that. With internal polling showing widespread public support for an increase, some business groups said Friday that they were inclined to support the governor's plan.
"I think a minimum wage increase is inevitable," said Bill Dombrowski, president of the California Retailers Assn. "The governor has come up with the best compromise the business community can get."
In general, business groups have argued that mandatory increases force employers to hire fewer people -- leading to bad service, slower production and longer lines -- or to outsource jobs to countries and states where labor is cheaper.
