Los Angeles Business Journal

Businesses See Little Gain in Minimum Wage Hike

GOVERNMENT: Proposed state bill seen as ‘job killer’ by some employers. By Howard Fine Monday, April 15, 2013

The economy might finally be growing again, but Mike Horner fears he will have to make job cuts. That’s because state lawmakers are debating whether to raise the minimum wage to $9.25 an hour and then index it annually to inflation.

Horner and his children own and operate two kids’ camps in Los Angeles County – the Tom Sawyer Camps in Pasadena and Catalina Island Camps – where 130 teenage counselors oversee nearly 2,000 children ages 3 to 15. If the minimum wage legislation by Assemblyman Luis Alejo, D-Salinas, passes, Horner said his family will have to cut staff, raise charges or do a combination of the two.

“In the past, when the minimum wage has increased, that’s what we’ve done: hire fewer people and raise our prices,” Horner said. “No doubt that’s exactly what we would have to do this time.”

Alejo’s bill is one of 32 the California Chamber of Commerce tagged last week as “job killers” that would raise costs and impose other burdens on business.

While that’s a similar tally to previous years, the big difference now is the expanded Democrat majorities in the Legislature are seen as more likely to pass measures such as the minimum-wage increase.

“With the Democrat supermajorities, we regard this now as likely to happen,” Horner said.

Alejo’s bill, AB 10, would increase the minimum wage from the current $8 an hour to $9.25 in three stages over the next three years. But it wouldn’t stop there: Starting Jan. 1, 2017, it also would peg the minimum wage annually to increases in California’s Consumer Price Index.

Alejo said he introduced the bill because the working poor are having greater difficulty affording rent, gasoline, food and other necessities.

“With gasoline now at $4 a gallon, a farmworker, a Wal-Mart worker, a restaurant worker, a domestic worker – people earning the minimum wage – can buy two gallons of gasoline for every hour they work,” he said. “After working a full eight-hour day, they can buy a tank of gas … just to get back and forth to work for a week.”

Alejo added that his bill would also help put more money into the economy.

“When minimum wage workers have more money to spend, they spend it. They can’t afford to save it,” he said. “That is good for all businesses.”

But business groups say employers will hire fewer people and reduce the hours they work as a result of being forced to pay higher wages. Employers will also raise the prices for their goods and services if they can. That would make it harder for the working poor to pay for them.

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