While the legislature is in session, the National
Federation of Independent Business/California will be profiling anti-small
business bills and the adverse effect they would have on California’s job
creators. This is the third column of
the 2011 series.
Anyone even remotely tuned in knows that the cost of doing
business in California is high, much higher than the rest of the nation.
California consistently ranks as one of the least business-friendly states in
America, and consequently is losing businesses, big and small, to states that
boast relocation incentives and pro-business regulations.
In order to make up for high taxes and a burdensome
regulatory process, California legislators have decided to… increase the cost
of labor. Huh?
It’s almost inconceivable, after so many small businesses
have been forced to shut their doors, that the state would be mandating another
cost increase at this time. AB 10, by Assemblyman Alejo, will increase
the minimum wage to $8.50 an hour beginning January 1, 2012, and will
automatically increase the minimum wage each year according to the annual rate
of inflation as determined by the California Consumer Price Index.
Proponents claim that increasing the minimum wage will help
the low-income, entry-level workers in the economy. But, small businesses
already work with tightly set budgets and razor thin profit margins. Resetting
the minimum wage, even by fifty cents, will put new pressure on businesses that
could result in job loss as businesses are forced to find savings. That’s what
we call the Law of Unintended Consequences; something that aims to help the
"little guy" (entry-level working Californian), but instead sends him or her straight
to the unemployment line. Do not pass "GO"!
Even more puzzling is that the proposed wage increase comes
at time when electricity, water and other utility rates are increasing, energy
costs are driving up personal and business expenses, and local governments are
increasing fees and licensing costs.
And, the political leadership is pushing very hard for the public to
support billions of dollars in tax increases.
Here’s a novel idea for our Capitol denizens: let’s have a
year when the legislature actually reduces
costs on businesses or even stops adding new costs. Maybe then small
businesses, California’s leading employment sector, will be able to help by
creating jobs and adding to the state recovery.