Deal to Raise Wage to $8

SACRAMENTO —  More than 1 million Californians who earn the minimum wage will get a nearly 20% pay increase over the next year and a half, thanks to an agreement announced Monday between Gov. Arnold Schwarzenegger and Democratic leaders in the Legislature.

The hike, the first since early 2004, will lift the state minimum wage to $8 an hour from $6.75. Workers will get a 75-cent increase Jan. 1 and an additional 50 cents on Jan. 1, 2008.

Schwarzenegger praised the agreement as a boost for low-wage workers and the business climate. “I have always said that when the economy was ready, we should reward the efforts of California’s hardworking families by raising our minimum wage,” he said. “This is another sign California is coming back stronger than ever.”

The jump to $7.50 on New Year’s Day will make California’s minimum wage the nation’s fourth-highest, trailing those of Washington, Oregon and Connecticut, according to the California Federation of Labor. The federal minimum wage is $5.15 an hour.

“It’s a long time coming, and frankly the reason it’s coming is because this is a political year,” said Art Pulaski, secretary-treasurer of the labor federation.

He said Schwarzenegger, running for reelection in November, had twice before vetoed similar bills but changed his mind this year as part of an electionyear move toward the political center.

Despite expected opposition from Republican lawmakers, a minimum wage bill is expected to win easy passage from the Democratic-controlled Legislature and be on the governor’s desk shortly after lawmakers adjourn Aug. 31.

Getting a deal involved give-and-take from the Republican governor and the Legislature’s two top Democrats -- Assembly Speaker Fabian Nunez of Los Angeles and Senate President Pro Tem Don Perata of Oakland.

Schwarzenegger agreed to fatten the increase to $1.25 an hour from $1. The Democrats and their labor union allies accepted $1.25 instead of $1.50 and relinquished a call to add an automatic, annual cost-of-living increase to the minimum wage.

Schwarzenegger’s opponent in November, Democratic state Treasurer Phil Angelides, said that if elected he would sign any bill indexing minimum wage increases to inflation so that “working families are not held hostage to politics.”

To further sweeten the deal for workers, Democrats said they got a commitment from Schwarzenegger to sign both the minimum wage bill and unrelated legislation that would extend for two years the ability of some workers to pick their own doctors rather than go to their employers’ clinics to treat on-the-job injuries.

Nunez and Perata called the increase “long overdue.”

Nunez, the lead negotiator, said, “California’s most vulnerable workers will be getting a larger boost in their pay and quicker than we had hoped for.”

Senate Republican leader Dick Ackerman (R-Irvine) said the hike would hurt the state’s economy.

“Any time you raise the minimum wage, it’s going to be a drag on business,” he told the Associated Press. “It’s going to have a negative impact on hiring minorities and low-income workers because there will be less jobs.”

Some business groups backed the minimum wage hike, while all showed relief that Schwarzenegger’s compromise protected them from being locked in to giving annual raises to their employees.

“We are happy to see that there is no indexing or cost-of-living increases as part of this package,” said Gary Toebben, president of the Los Angeles Area Chamber of Commerce. “This means that any future increases have to be debated and sold on their merits.”

Other business organizations, including the California Chamber of Commerce, said they still opposed any minimum wage hike, contending that the requirement for higher pay could backfire for some workers.

“The effect on employers could be not to hire more people and to make full-time people part-time,” said Martyn Hopper, California state director of the National Federation of Independent Businesses.

Restaurateurs said they were particularly disappointed that the minimum wage jump would mainly help sometimes well-paid waiters rather than hourly kitchen workers, who generally earn wages that are above the minimum.

The California Restaurant Assn. had advocated that hourly wages be frozen at $6.75 for the 400,000 tipped employees, who earn on average $25 to $35 an hour in tips, said association President Jot Condie.

Condie predicted that a higher minimum wage was going “to result in inflation at the dinner table” for customers of the state’s 870,000 restaurants. “You’re not going to see mass closures of restaurants, but, ultimately, the cost will be passed on,” he said.

The hike, which when fully in place would add $2,600 a year to the $14,040 now earned by a full-time minimum-wage employee, should help both the state’s lowest-paid workers and their colleagues who make a little more, said Jean Ross, executive director of the California Budget Project, a Sacramento-based policy think tank specializing in issues that affect low- and middle-income families.

Ross dismissed some employers’ claims that the bulk of minimum-wage workers are teenagers and senior citizens who have other sources of income.

“Our research shows that more than 8 of 10 are adults, and 60% are full-time workers,” she said.

The planned increases, though significant, still don’t cover the basic needs of most workers, Ross said. A single worker with no dependents should earn $12.44 an hour to pay for basic needs and health insurance, she said.

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Wage comparison

Minimum hourly wages in the highest-paying states, actual or estimated as of Jan. 1, 2007.

Washington ...$7.80*

Oregon...$7.67*

Connecticut...$7.65

California...$7.50

Massachusetts...$7.50

* Rates are estimates in states with cost-of-living indexing.

Source: California Federation of Labor