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Wage hike finding quiet acceptance

California's increase to $7.50 an hour is not expected to hurt the economy or, some workers say, change employees' daily lives.

January 01, 2007|Marc Lifsher and Alana Semuels | Times Staff Writers

SACRAMENTO — California's lowest-paid workers are about to get a raise.

The state minimum wage jumps today by 75 cents to $7.50 an hour, affecting about 1.4 million people. The increase -- California's first since a 50-cent boost in January 2002 -- will give the state the fourth-highest minimum wage in the nation. An additional 50-cent raise, planned for a year from now, will catapult the state into first place.

The initial $1,560 in higher annual pay for a 40-hour week should bring modest relief to workers who must get by on the current $14,040 a year.

Passage of the new wage capped a three-year effort by Democratic lawmakers, labor unions and advocates for lowincome workers to convince Republican Gov. Arnold Schwarzenegger that boosting the minimum wage would not slow California's economy.

The governor, who vetoed two previous minimum-wage bills, agreed to sign the election-year legislation only after Democrats dropped attempts to automatically peg future increases to jumps in the cost of living.

But now that the political dust has settled, many workers and their employers wonder what all the fuss was about. They say they expect changes in the workplace to be less dramatic than an initial 11% wage increase might otherwise suggest.

Some of those who work in the sectors that typically pay minimum wage -- the janitorial, fashion, hotel and restaurant industries -- say their bigger paychecks, though welcome, are unlikely to make enough of a difference at home.

"The price of everything is going up. This should have happened earlier," said Annalee Herrera, 35, a minimum-wage garment worker who lives in downtown Los Angeles with her 9-year-old son.

Fellow seamstress Veronica Garcia, 39, also is skeptical.

"Just because I have more money doesn't mean I can buy more things," she said, noting that the raise would help her meet the growing cost of feeding her four children, ages 5 to 18.

Many business owners, though they opposed the wage hike before it was approved in August, acknowledge that increased labor costs probably wouldn't hurt the state's economy.

"For the most part, it's a nonissue because most of small business is paying more than the minimum wage anyhow," said Scott Hauge, president of Small Business California, a nonpartisan advocacy group based in San Francisco.

Results of a survey released last week by credit card issuer Discover showed that 70% of small-business owners expected no effect on their employee costs if the new Democrat-controlled Congress and President Bush agreed to raise the federal minimum wage to $7.25.

Still, the fashion and restaurant industries remain two vocal, notable exceptions to the relatively calm implementation of the higher minimum wage.

Employers in the hyper-competitive garment business gripe that the new wage will slash already thin profit margins. They fear losing business to illegal operators, which might pay only $5 or $6 an hour, or to overseas sewing shops that pay far less.

"We're stuck. We have to pay workers more, but buyers want prices down," said Samuel Hong, owner of Holy Camp Clothing in the downtown Los Angeles garment district. "There's so much competition. I don't believe my competitors can possibly be paying the minimum wage."

Restaurateurs complain that, with the two increases, they will be forced to raise the base pay of waiters nearly 20% in the next 12 months, even though food servers often earn more than $25 an hour when tips are factored in.

Last summer, restaurant lobbyists unsuccessfully argued in the Legislature that the minimum wage should be frozen at $6.75 an hour for tipped waiters. Food servers represent about 30% of all California workers earning the minimum wage, state labor statistics show.

Many restaurant owners say that giving a legally mandated raise to servers will force them, out of fairness, to provide a similar increase to their "back-of-the-house" workers: dishwashers, chefs and prep cooks, who already earn more than the minimum wage but make far less than tipped staff.

The upshot, they predict, will be heftier bills for customers at the state's 87,000 eateries.

"We're going to have to raise prices," said Tony Palermo, a partner at Tony P's Dockside Grill, a casual dining restaurant in Marina del Rey.

Michael Osborn, owner of Pie 'n Burger, a 43-year-old Pasadena diner with four generations of loyal customers, said he planned to spend an additional $3,000 a month on pay raises for his 25 tipped and non-tipped workers.

"I've already evaluated my menu, and I've tried to raise prices as painlessly as possible," he said.

The prospect of price increases spurred by a minimum wage hike doesn't seem to worry customers. The Discover card survey found that nearly 60% of consumers polled said they would be willing to pay more for goods and services from small businesses that boosted employees' checks.

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