News

Minimum wage has maximum support

Taking a page out of Gov. Schwarzenegger’s playbook, Democrats are using the
threat of a ballot initiative to pressure Gov. Schwarzenegger into approving
a legislative proposal to increase the state’s minimum wage.

California voters support a minimum wage increase with built-in cost of
living indexing, according to unreleased poll numbers commissioned by the
author of two potential ballot initiatives that may be on the ballot next
year.

In September, Schwarzenegger vetoed a bill by Assemblywoman Sally Lieber,
D-Mountain View, that would have raised California’s minimum wage from $6.75
to $7.25 an hour as of July 1, 2006 and $7.75 an hour a year later. After
the veto, Schwarzenegger cited the fact that the bill called for the minimum
wage to automatically increased based on increases in the cost of living.
That linkage is known is Capitol jargon as “indexing,” and was the main
point of contention between Democrats and the governor. The governor’s
communications director, Rob Stutzman, said that Schwarzenegger wanted to
raise the minimum wage but that the legislature did not send him a
“workable” bill.

However, minimum wage proponents in the Legislature say that that indexing
is not negotiable–and that the public is on their side. According to a poll
of 800 California voters conducted Nov. 15-20th by David Binder Research, 73
percent support an increase to $7.75 with indexing, while only 22 percent
were opposed.

This is exactly what AB 48, the bill that the governor vetoed, would have
provided. It’s also what is called for in one of the two initiatives that
have been sent to the Secretary of State’s office by the man who financed
the poll, San Francisco Green Party politician Barry Hermanson.
“Indexing makes sense to people,” said pollster David Binder. “They
understand that the cost of living rises on a year to year basis.”

The polls showed lesser support for two other ideas that Hermanson has
explored putting on the ballot. Only 63 percent were in favor of $8.75 with
indexing, while opposition was 28 percent. A third idea–$7.75 with a rise of
1.5 times inflation–polled only 46 percent, with 42 percent opposed.

The 1.5 times indexing plan was a way to catch the minimum wage up to where
it used to be, Hermanson said. In 1968, the national minimum wage was $1.60,
or $9 in today’s money. By indexing at above the rate of inflation, he said,
over time the law would make up for this gap.

A past chairman of the San Francisco Living Wage coalition, Hermanson was
the major donor behind San Francisco’s Proposition L. This ballot initiative
passed in 2003 with 60 percent of the vote. It increased the citywide
minimum wage to $8.50 an hour. It included and indexing provision that drove
the wage up to $8.62 as of the beginning on this year.

The $7.75 idea not only had support from Democrats (80 percent), but from
Independents (76 percent) and Republicans (62 percent). Republican women
favored the idea over Republican men, 72 percent to 50 percent. Republicans
making less than $50,000 a year gave the idea 72 percent support; even 53
percent of Republicans making more than that amount supported the idea.

The governor may have a harder time vetoing minimum wage legislation again,
Lieber said, if he knows a successful initiative campaign is on the way.
“If you start that high, there really isn’t a way to lose an initiative,”
Lieber said.

Hermanson sounded even more aggressive, saying that if the labor community
wasn’t so tapped out from the special election, he would try to raise $10
million and pursue the $8.75 initiative. He was so confident that $7.75
would pass that he invited business groups to “bring it on. Spend your
money.”

The California Chamber of Commerce is likely to do just that. Group
spokeswoman Sara Lee labeled the idea a “job killer” and said her
organization would fight it.

Any campaign against a minimum wage increase would likely focus on two
ideas: that the indexing to the consumer price index is an imperfect
measurement and that most minimum wage workers aren’t supporting families.
Tony Malandra, a researcher for the National Federation of Independent
Businesses, quoted U.S. Department of Labor statistics showing that over
half of people earning the federal minimum wage were under 25.

“It’s mainly earned by kids working their first jobs,” said
Malandra.”Attempts to describe it as a ‘living wage’ or a ‘family sustaining
wage’ miss the mark widely.”

The prime example of a state passing a higher minimum wage with indexing is
Washington in 1998, Malandra said. He cited an Ohio University study he said
showed that Washington’s experience was a disaster. Since the law passed in
1998, the study claims, Washington has had the highest increase in poverty
in the country; it also shows the new wage caused the directly loss of
20,000 to 48,000 jobs. The law hit restaurants and farmers particularly
hard, the study asserted, with a sharp rise in farmers leaving the industry.
Closer to home, a 2000 Public Policy Institute of California study found
that families in the bottom 40 percent only received 43 percent of benefits
from an increased minimum wage. Some of these gains, they also found, were
offset by higher prices for good and services that hit low income earners
harder.

Such figures miss a key point, Hermanson countered: that the state spends
billions each year subsidizing the health care and living costs of low wage
workers. According to a September study from the University of California at
Berkeley, raising the minimum wage to $7.75 would save the state $2 billion
a year in reduced costs for Medi-Cal, food stamps and other programs
benefiting low-income workers.

“The real question is how much taxpayers should subsidize employers who pay
poverty wages,” Hermanson said. “$7.75 isn’t a living wage, but it’s a step
forward.”


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