In the land of endless regulation, higher taxes and more fees, California seems to have declared all-out war on small businesses. The $15 per hour minimum wage increase is just one assault that will cause businesses to re-evaluate how they operate in unfriendly territory. Those workers the state intended to help may be the ones hit the hardest when businesses are forced to decide whether they can pass the increased labor costs along to the consumer our cut back their labor force.
It’s not just minimum wage employees who are affected. The increase also affects classification of employees as exempt versus nonexempt. To qualify for the “white collar” exemption from overtime (the commonly used administrative, executive or professional exemptions), an employee generally must earn a minimum monthly salary of no less than two times the state minimum wage for full-time employment, in addition to meeting all other legal requirements for the exemption. Currently, that annual amount is approximately $41,600. When the $15 per hour minimum wage is fully implemented, that amount will rise to approximately $62,400.
At $15 per hour, entry level positions will no longer be so. Employers, especially in the food, entertainment and hospitality industries, will begin requiring minimum standards to go along with the increased minimum wage. While California’s politicians claim the minimum wage fails to provide enough income for a family of three, they fail to recognize that minimum wage jobs were never designed to support a family. Minimum wage jobs are typically, “learning wage” positions, allowing the employee to gain the necessary training and skills development, which, over time, commands a higher rate of pay.
On top of the minimum wage increase, the California Chamber of Commerce identified 18 proposed measures that would have a negative impact on California’s job climate and economic recovery if they were to become law. More bills are expected to be added to the list.
These proposed bills range from eroding affordable housing barriers (AB 2162 and AB 2502) to increased labor costs (AB 1727, SB 878 and SB 1166). They include meritless litigation against employers (SB 899), increased taxes (ACA 8), burdensome environmental regulations (SB 32 and SB 654), increased labor costs (SCA 5) and California oil production barriers (AB 1759 and AB 1882).
Legislators who strap employers with greater regulatory burdens and labor costs care less about the eventual outcome for those employers, claiming instead to be a champion for the working class. However, when employers are left no other choice but to decrease their labor force or worse yet, leave California for friendlier territory, what will our elected officials do then?
The Gilroy Chamber of Commerce tracks bills, measures and propositions at the local, regional and state levels to ensure common sense legislation gets to see the light of day. The Gilroy Chamber partners with other organizations such as the Silicon Valley Coalition of Chambers, California Chamber of Commerce and others in order to fight the good fight.
Running their own business or working for an employer would help legislators know what it’s like to live under the laws they pass. This approach would help legislators think through legislation in a way that is more reasonable to the consumer and the entrepreneur. Legislation that promotes an environment where small businesses can get started, develop, and grow is what’s needed.
Cross-posted at the Gilroy Dispatch