Labor Unions, Legislature, Governor Reach Deal to Raise Minimum Wage

Minimum wage1Labor unions, legislative leaders and the governor came together on a minimum wage deal to presumably keep a minimum wage initiative off the ballot – presumably because there is more than one way to get on the ballot. More on that later.

The governor got what he wanted from the reported deal. Labor got pretty much what it wanted, albeit, with a slight delay. Details of the deal as reported in the Los Angeles Times include a 50-cent minimum wage increase for the next two years, hitting $1 a year after that, reaching the $15 mark by 2022, a year after the initiative planned. Businesses with 25 employees and less will have an extra year to adjust.

The hit on the General Fund will not be as great if the minimum wage increase to state workers is half what is proposed in the initiative. To some extent, that satisfies the governor’s office, which warned that a larger, faster increase in the minimum wage would put a heavy burden on the General Fund. State minimum wage workers would cost the state an additional $4 billion at $15 an hour according to the governor’s office.

Significantly for the governor, the immediate effect of the increase on the state budget is lessened and the full force of the deal comes into play once Governor Brown and his administration will be well into the history books.

Apparently, the business community and small business were not a part of the final negotiation and they don’t like the result. The business community raised concerns that the speedy wage climb to $15 and additional increases would hurt employment and threaten small businesses that survive on the margins.

Two issues the business community sought in minimum wage negotiations were a pre-emption for local government seeking their own $15 or higher minimum wage and preventing an automatic cost-of-living provision that would increase future minimum wage amounts to inflation. Reportedly, neither of those provisions made it into the negotiated settlement. The only reported provision to deal with economic uncertainties is power given to the governor for freezing minimum wage increases in economic downturns. The details are unclear.

If the deal is passed by the legislature and signed by the governor and the union is satisfied with all aspects of the plan, the already qualified initiative can be pulled from the ballot by proponents.

However, the minimum wage question could still find its way to the ballot by referendum.

If the business community objects to the final deal, a referendum gathering the necessary signatures would freeze the law passed by the legislature until the next scheduled election. Depending when the bill passes and is signed and when a referendum qualifies that referendum vote could be in 2016 or possibly 2018.

Is a referendum possible? Cost of signatures brought in by professional signature gatherers is prohibitive right now with many initiatives circulating. However, while labor said that a pre-emption of local minimum wage laws was a non-starter for any negotiated settlements, business made the same argument about the automatic cost-of-living issue.

If the negotiated settlement becomes law with no adjustments for business concerns, the business community will have to decide if it will take its argument to the voters.

The piece was originally published by Fox and Hounds Daily