By Staff Reports
(Victor Valley)– The Victor Valley Chamber with recommendations from its legislative committee have added their name to the growing list of California businesses opposing SB 935 as amended on March 18, 2014. They will be adding their name to letter below:
The California Chamber of Commerce and the organizations listed below respectfully OPPOSE your SB 935 (Leno), as amended on March 18, 2014. Despite Governor Brown just signing AB 10 last year which will increase the minimum wage to $10 an hour by 2015, SB 935 seeks to increase it even higher to $13 an hour by 2017, and thereafter increase it according to inflation. This mandate will simply overwhelm many businesses that are already struggling with the current minimum wage increase and other cumulative costs imposed in California, and will create job loss.
Automatically indexing the minimum wage to inflation, as SB 935 proposes, has always been troubling to the business community because it fails to take into consideration other economic factors or cumulative costs to which employers may be subjected. Employers are already facing significant cost increases over the next several years, including higher taxes under Proposition 30, increased worker’s compensation rates, loss of federal unemployment insurance credit, increased energy costs, and increased costs associated with the implementation of the Affordable Healthcare Act. There will undoubtedly be other costs employers are struggling with in 2018 when SB 935 seeks to tie the minimum wage increase to inflation. These unknown costs coupled with an unknown economy at that time or thereafter, create concern and uncertainty for businesses.
Moreover, placing the increase in minimum wage on auto-pilot is inappropriate when California has a full-time Legislature available and responsible for reviewing whether any adjustment in wages is proper given the state of the economy at that point. In fact, when enacting Labor Code section 1178.5, the Legislature determined that the Industrial Welfare Commission should not be allowed to annually index the minimum wage, but rather should review any increase in minimum wage by composing a board of employer and employee representatives to determine whether an increase was appropriate.
Additionally, although California employers cannot absorb all of the costs and mandates and be forced to pay such a significant minimum wage, as proposed by SB 935. Businesses will have to adjust costs in other areas, such as labor. Notably, in February 2014, the Congressional Budget Office (CBO) issued a report regarding the impact of the proposal to raise the federal minimum wage to $10.10 an hour. The conclusion was that although some low-wage workers would receive a higher income through the increase, workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed, would probably fall slightly.SB 935 seeks to impose a minimum wage of $13 an hour, almost three dollars higher than the federal proposal. This increase will undoubtedly create job loss and wage reduction, even more dramatically than anticipated by the CBO.
An increase in minimum wage would not only increase hourly employee’s salaried employees as well. In order for employees to qualify as SB 935 is implemented as proposed, that amount in January 2017 will rise from the current annual salary of $33,280 to at least $49,920, which is an increased cost to employers of over $15,000 per exempt employee. An increase in minimum wage also drives up workers. These additional costs will significantly burden those companies that may not ordinarily pay minimum wage, yet will suffer a negative impact as a result of the proposed increase.
While we appreciate that some cities and counties may be able to afford an increased minimum wage as proposed by SB 935, other cities and counties are still struggling with an unemployment rate over 20%. Employers in these areas simply cannot sustain such a dramatic increase in costs.
For these reasons, we respectfully OPPOSE your SB 935.
California Chamber of Commerce Other organizations listed to be listed
cc: District Office, The Honorable Mark Leno