California Governor Signs Bill to Increase Minimum Wage

California Gov. Arnold Schwarzenegger signed AB 1835 by Assemblymember Sally Lieber, D-Mountain View, that will raise the minimum wage to $8 an hour by Jan. 1, 2008, which is greater than any other state.

“Raising the minimum wage is something I have wanted to do for a long time and I am happy that this year, we have the right bill and the powerhouse economy we need to get this done,” said Gov. Schwarzenegger. “Since I came into office, we have added nearly 600,000 new jobs, unemployment is less than 5 percent, and the state’s revenues are up by almost $20 billion. The California economy is a raging, roaring success and now is the time to make sure that everyone is getting to share in this prosperity.”

Currently, the minimum wage is $6.75 an hour. The $1.25 increase in the minimum wage will be phased in, with an increase of 75 cents on January 1, 2007 and an increase of 50 cents on January 1, 2008. The last time the minimum wage was raised was more than 4 years ago in January 2002.

In 2004, Gov. Schwarzenegger vetoed a bill that would have hiked the minimum wage by $1 because it was “not the time to create barriers to our economic recovery or reverse the momentum we have generated.” In 2005, he said he would have been willing to sign a $1 minimum wage increase, but was forced to veto a measure that contained indexing, saying the “autopilot mechanism fails to account for changes in the economy which could have deleterious effects on the economic health of the state.”

According to 2004 U.S. Census Bureau data (the most current information available):

*More than 1 million Californians earned the minimum wage in 2004.
*Minimum wage workers made up 7.0 percent of the 14.8 million wage and salary workers.
*Nearly 2.1 million California workers earned $7.75 or less per hour.
*Young workers were more likely to earn minimum wage than other age groups. One out of every six (17 percent) California workers age 16 to 24 earned $6.75 per hour or less, compared to just 5 percent of all workers aged 25 to 54.
*Minimum wage workers were more likely to be women (54 percent) than men (46 percent).
*More than half (53 percent) of California minimum wage workers were Hispanic, compared to 31 percent of all wage and salary workers. In fact, one out of every eight (12 percent) Hispanic workers in California earned the minimum wage or less in 2004.

Gov. Schwarzenegger has taken numerous steps to ensure the state’s economy was strong enough to allow for an increase in the minimum wage without negatively impacting the business climate, including:

*Cutting Taxes: Within the first hour of taking his oath of office, the Governor reversed the car tax increase and returned $4 billion to the people of California. Since then, he has fought every effort to raise taxes including efforts to gut California’s landmark Prop. 13 which protects homeowners from losing their homes to skyrocketing property taxes and opposed efforts to make it easier for the legislature to raise taxes.

*Trimming the State’s Structural Budget Deficit: The Governor’s policies grew revenues without raising taxes while keeping spending increases in check to dramatically reduce the state’s operating deficit this year – from a projected $16.5 billion when he took office down to $3.5 billion today. In addition, each of Wall Street’s rating agencies has upgraded California’s credit rating this year, which reduces the state’s interest costs. At the same time, he has increased our investment in education by more than $8 billion over the past two years.

*Workers Compensation Reform: Declaring its runaway rate increases the “poison of our economy,” Gov. Schwarzenegger fought to reform the state’s workers compensation system, lowering premiums by more than 40 percent and saving billions of dollars this year alone that employers can use to create more jobs. The reforms also used objective medical standards to ensure that workers would be compensated based on the extent of their injuries.

*Reducing Frivolous Lawsuits: The Governor campaigned to curb the most egregious abuses of the legal system while preserving the ability of those with actual damages to use the courts to receive fair compensation. This effort removed the ability for those without damages to harass small businesses with lawsuits.

*Promoting California: Gov. Schwarzenegger has traveled to China, Japan and Israel to invite tourists to visit and spend money in California, businesses to invest and create jobs in the state and for our global neighbors to savor California grown agricultural products. He has also personally starred in a billboard reminding companies from across the country that California is open for business.

Source: Office of the Governor