Lawmakers Pushing to Tie California Minimum Wage to Consumer Price Index

Print this Article | Send to Colleague

The Sacramento Bee recently reported on proposed legislation that would change the California's minimum wage, which hasn't been increased since early 2008. The legislation would ensure future increases for the state's lowest-wage workers. Assembly Bill 1439 by Assemblyman Luis Alejo would prohibit the minimum wage from being lowered as consumer prices fall but would mandate increases as prices rise. The indexing would be expected to hike the minimum wage about 14 cents next January, but more importantly, it would set the stage for what could be annual hikes in years to come.

Alejo, D-Watsonville, bills his measure as a way to boost the economy by putting more money in the pockets of workers struggling to provide food, clothes and housing for their families. "When minimum-wage workers have more money to spend, they spend it," he said. "They can't afford to save it. That is good for all businesses."

The state Chamber of Commerce has labeled AB 1439 a "job-killer" bill. Other opponents range from the California Restaurant Association to the California Farm Bureau Federation. "Now is not the time to increase the cost of doing business in California, when businesses are just now showing signs of recovery," said Jennifer Barrera, a chamber lobbyist.

AB 1439 puts the minimum wage on "autopilot," Barrera said, "which we don't think is appropriate." Lawmakers should not simply let statistics dictate rates without considering other factors, she said.

Only a tiny portion of California's work force receive the minimum wage, 4.4 percent, according to the state Employment Development Department.

But AB 1439 would have a domino effect, sparking demands for salary hikes from higher-paid employees and increasing the amount of temporary and permanent disability payments made through the workers' compensation system, opponents contend. Businesses would have no way of fighting minimum wage hikes or planning for a rate increase if inflation erupted suddenly, critics argue. "(AB 1439) puts it on a one-way escalator: In good times it goes up, and in bad times it goes up," said Daniel Conway, spokesman for the California Restaurant Association.

AB 1439 could serve as a disincentive for businesses to relocate to California or for existing businesses to stay, the state chamber contends. California's current $8 minimum wage is 75 cents higher than that of the federal government and ranks seventh highest among the 50 states.

Ten states tie minimum-wage increases to inflation in goods and services.

AB 1439 passed the Assembly's Labor and Employment Committee last week on a party-line vote, with Republicans opposed. It now goes to the Assembly Appropriations Committee. Gov. Jerry Brown has taken no position on the bill, aides said.