Automatic Minimum Wage Increase Even Worse

(September 12, 2013) A California Chamber of Commerce-opposed “job killer” to automatically raise the minimum wage has been amended in the last few days of the legislative session, making the bill even worse  by increasing the minimum wage 25% over the next three years.

Before the September 11 amendments, AB 10 (Alejo; D-Salinas) would have increased the minimum wage by $2 over the next five years.

In its current form, AB 10 will drive up costs for all businesses in California, far worse than any predicted rate of inflation increase.  The newly proposed amendments provide for a $1 increase in the minimum wage in July 2014 and another $1 increase in January 2016, driving the minimum wage up to $10 in a very short period.

In opposing the latest version of AB 10, the CalChamber is stressing the following:

  • Even at a 3.5% rate of inflation, minimum wage would reach only $8.87 by 2016.
  • A minimum wage increase affects more than just the hourly rates of employees. The increase also drives up exempt employee salaries, workers’ compensation costs, uniform/tool reimbursements, overtime, and consumer prices.
  • California businesses are already struggling with significant cost increases over the next three years, including tax increases from Proposition 30, higher energy costs, higher employment assessments from the Department of Industrial Relations, and costs related to the implementation of the federal Patient Protection and Affordable Care Act. These are only the costs the CalChamber knows about now — there will undoubtedly be more costs facing employers over the next three years.
  • Unemployment rates in various California counties are still as high as 26%. Such a significant increase in the minimum wage may jeopardize any economic recovery California is enjoying.

Action Needed

The bill is next up for a vote on the Senate Floor. CalChamber is urging members to call your Senator’s office immediately and urge a “no” vote on AB 10.