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October 11, 2006
Corona Businesses
Protected from Future Automatic Increases to the Minimum Wage
“The Corona Chamber applauds
Governor Schwarzenegger’s success in stopping the legislature
from tying future minimum wage increases to increases in
inflation,” stated Bobby Spiegel, President and CEO of the
Corona Chamber. “We oppose automatic increases to the minimum
wage because it does not take into consideration the state of
our local economy or the vitality of Corona’s businesses at the
time the automatic increase is initiated,” continued Spiegel.
The Governor signed the Corona
Chamber-opposed Senate Bill1835, making the California minimum
wage one of the highest in the country. The hourly minimum will
go to $7.50 effective January 1, 2007, and there will be
corresponding increases in the minimum salary that must be paid
to exempt employees. These changes will require new state
minimum wage posters and revisions to the wage orders that must
be posted by California employers. The second increase contained
in the bill will take the minimum to $8.00 per hour in 2008 and
again impact exempt minimum salaries.
“The Corona Chamber remains opposed
to minimum wage increases,” stated Tom Kenney, Chairman of the
Corona Chamber Legislative Action Committee. “Minimum wage
increases translate into substantial increases in employer
costs. Therefore, drastically impacting employers ability to
create new jobs. Not only would direct payroll costs be
increased, but workers' compensation, unemployment insurance,
pensions and a multitude of other costs also would go up
substantially,” Kenney continued.
The Corona Chamber believes that a
minimum wage increase increases the price of products and
services. Thin margins that are common in the food services
industry do not allow for sharp increases in labor costs. Price
increases are definitely on the list of corrective actions
restaurants have to combat this sort of arbitrary increases in
costs, but more potent is laying off workers.
The most damaging effects of
raising the minimum wage are side effects that have everything
to do about employment, not price increases. It has been well
documented that the minimum wage destroys jobs, particularly the
jobs of low-skilled, young workers. However, there are other
equally pernicious side effects of higher minimum wages. Higher
minimum wages make it more difficult for people to leave welfare
and induce high-school students to drop out.
Raising the minimum wage hurts
low-skilled workers in two ways. First, there are fewer jobs
available. Second, with a larger pool of applicants, competition
is stiffer. Low-skilled workers have a more difficult time
getting those job skills that are crucial to economic well
being.
Another side effect of raising the
minimum wage is that it increases the number of high-school
students who drop out. Some of these students do not find
employment. Another group of students are part of those
applicants that compete jobs away from welfare recipients.
Dropping out of school is very destructive. High school dropouts
have a very difficult time improving their well being.
The campaign to raise the minimum
wage has little positive impact on the lives of poor people.
Rather, it is a political measure that plays to a
misunderstanding of the impact of higher minimum wages. The
future of the American economy depends on a correct
understanding of the causes of prosperity.
For too long, attempts to relieve
poverty have been misguided. To lift people out of poverty, we
need a system that maximizes opportunities for economic
well-being of low-skilled workers.
August 23, 2006
Corona Chamber Releases Statement on Recent Minimum Wage
Increase
"The Corona Chamber
has learned that the Governor and the legislature have reached
an agreement on raising the minimum wage to $8.00 per hour. The
Corona Chamber remains opposed to minimum wage increases.
Minimum wage increases translate into substantial increases in
employer costs. Therefore, drastically impacting employers
ability to create new jobs. Not only would direct payroll costs
be increased, but workers' compensation, unemployment insurance,
pensions and a multitude of other costs also would go up
substantially.
We applaud the
Governor's success in stopping the legislature from tying future
minimum wage increases to increases in inflation. Automatic
increases to the minimum wage each year does not take into
consideration the current state of our local economy or the
vitality of our local businesses."
July 18, 2006
Corona Chamber Leads Effort to Oppose Minimum Wage Increases in
Sacramento
A USDA economic research study confirmed that eating and
drinking places have a larger share of minimum wage workers than
other sectors. Also confirmed is that the labor costs are high
in these businesses (34 cents of each dollar taken in).
"As we focus upon the restaurant industry this month, these
statistics should be in every business owners mind when we
consider the potentially damaging effect that can come from AB
1835 and SB 1162 that are currently under legislative
consideration,” stated Tom Kenney, Chair of the Legislative
Action Committee.
AB 1835 and SB 1162 are legislative proposals being considered
in the State Capitol that would increase the minimum wage. The
Corona Chamber is opposing both proposals and working hard to
ensure that they do not become law.
The Corona Chamber believes that a minimum wage increase
increases the price of products and services. Thin margins that
are common in the food services industry do not allow for sharp
increases in labor costs. Price increases are definitely on the
list of corrective actions restaurants have to combat this sort
of arbitrary increases in costs, but more potent is laying off
workers.
The most damaging effects of raising the minimum wage are side
effects that have everything to do about employment, not price
increases. It has been well documented that the minimum wage
destroys jobs, particularly the jobs of low-skilled, young
workers. However, there are other equally pernicious side
effects of higher minimum wages. Higher minimum wages make it
more difficult for people to leave welfare and induce
high-school students to drop out.
Another argument is that minimum wage increases help the family
wage earners. A Joint Economic Committee Report out of the US
Congress cited that only 1.2 percent of all minimum wage workers
were adult heads of households with incomes less than $10,000.
Conversely, fifty-seven percent of minimum wage workers are
single individuals, many living with their parents. Minimum wage
workers are not parents struggling to feed their children.
Rather they are high school or college students living at home.
Also, the level of the minimum wage is irrelevant for most
people in poverty. Only 9.2 percent of poor people of working
age have full-time jobs.
Raising the minimum wage hurts low-skilled workers in two ways.
First, there are fewer jobs available. Second, with a larger
pool of applicants, competition is stiffer. Low-skilled workers
have a more difficult time getting those job skills that are
crucial to economic well being.
Another side effect of raising the minimum wage is that it
increases the number of high-school students who drop out. Some
of these students do not find employment. Another group of
students are part of those applicants that compete jobs away
from welfare recipients. Dropping out of school is very
destructive. High school dropouts have a very difficult time
improving their well being.
The campaign to raise the minimum wage has little positive
impact on the lives of poor people. Rather, it is a political
measure that plays to a misunderstanding of the impact of higher
minimum wages. The future of the American economy depends on a
correct understanding of the causes of prosperity.
For too long, attempts to relieve poverty have been misguided.
To lift people out of poverty, we need a system that maximizes
opportunities for economic well-being of low-skilled workers.
“Increasing the minimum wage is a wrong-headed solution that
will deprive young, poor Americans of an opportunity to improve
their economic situation. That’s why we oppose AB 1835 and SB
1162,” concluded Kenney.
May
2006
Corona Chamber
Fights Minimum Wage Increases
The Corona Chamber feels that removing barriers to
productivity and wage growth is a better avenue to improving
California’s economy. Instead of working to make California less
competitive by mandating that the state minimum wage rate be the
highest in the nation, the Chamber believes the focus should be
on removing the barriers to productivity and wage growth that
government has imposed on the private sector.
Background
There are two minimum wage bills active in the Legislature SB
1162 (Cedillo) and AB 1835 (Lieber). Both are multi-billion
dollar government mandated wage increases that will raise costs
to consumers and drive employers who cannot afford to pay for
the increases to other states that are more pro-business.
California would have the highest minimum wage rate in the
nation assuring that our state will be at the bottom of the list
of states that encourage small business prosperity and growth.
“Government mandated wage increases have real world impacts,”
stated Tom Kenney, Chairman of the Corona Chamber’s Legislative
Action Committee. “While a fifty cent increase may not sound
like a lot of money, consider it in these small business terms:
the first fifty cent per hour rise in 2006 would increase a
small business with 20 workers base payroll costs by at least
$20,800 per year. If the second tier of the mandated wage
increase occurs in 2007, that same small company’s base payroll
costs would increase by at least $41,600 annually. By the time
provisions are fully implemented, affected employer wage costs
will increase by at least $2.08 billion annually,” continued
Kenney.
These bills put government mandated wage increases on autopilot.
Provisions within the bills will force payroll costs to
substantially rise each and every year. As introduced, the bill
mandates automatic increases of using an unidentified mechanism,
at a future date, which also is unidentified. At the Chamber we
believe that tying increases in the state minimum wages to
inflation and ignoring other factors such as the strength of the
state’s economy will inevitably result in increases in the
minimum wage at times when the economy is ill suited to absorb
higher employer costs.
Legislature permanently linked exempt worker status to level of
minimum wage in 1999. Along with the direct wage cost increase
of $2.08 billion that would follow a mandated wage increase,
other employment related costs also would rise. Employer
payments for employee benefits, premiums, pensions and taxes all
rise following wage increases, because all of these costs are
directly linked to the size of payroll. The act also affects
managerial and other exempt worker salaries due to the enactment
of AB 60 (Chapter 134, Statutes of 1999).
Other business costs are significantly affected by government
mandated wage increases. Business costs such as workers’
compensation, health care premiums and other employment related
taxes all go up whenever government or other actions increase
payroll costs. Should these bills be enacted, workers’
compensation costs for employers of minimum wage workers would
rise by at least $120 million ($120,000,000) annually, according
to estimates by the Workers’ Compensation Rating Bureau.
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