The California business community's long-standing opposition to boosting the state's minimum wage is eroding -- at least for now -- amid a growing recognition that increases are inevitable and previous hikes haven't produced dire economic consequences.
But consumers should expect to help pick up the tab by paying a bit more to eat in restaurants, sleep in hotels or buy other products and services produced by the state's lowest-paid workers, experts said.
Several California business leaders and economists indicated this week that they would accept a higher minimum wage or at least wouldn't fight Gov. Arnold Schwarzenegger's proposal in his State of the State address Thursday to bump up basic hourly pay to $7.75 from $6.75 by the middle of next year.
Businesses, especially those that rely on low-wage workers, have consistently opposed such hikes for decades. They have contended that higher minimum wages would force them to lay off employees and raise prices, putting them at a competitive disadvantage with rivals in lower-wage states and countries.
Indeed, the influential California Restaurant Assn., which represents restaurant owners, is maintaining its longtime opposition to raising minimum wages while waiting to hear specifics of the governor's proposal.
But other employers and business economists aren't publicly objecting to Schwarzenegger's proposal, in part because it would not include future increases based on inflation. There is also widespread acknowledgment that raises are due after holding steady since 2002.
"This is probably something that is deserved," said Rusty Hammer, president and chief executive of the Los Angeles Area Chamber of Commerce. "As long as we know how much it's going to be, business is going to go along with this."
The support of business interests could make it more likely that Schwarzenegger's proposal will win legislative approval, although organized labor plans to lobby against it on grounds that inflation indexing is necessary.
"His proposal on the minimum wage is only half a step. We want indexing," said Art Pulaski, executive secretary-treasurer of the California Labor Federation. "Workers have lost 10% [to inflation] since Arnold came on board. It's not enough to just give them a dollar over 18 months. It doesn't catch them up, so we really have to index."
The governor is proposing a 50-cent increase in October, followed by another 50-cent boost in July 2007.
