Governor Should Veto Minimum Wage Increase

John Kabateck
NFIB State Director in California

Late yesterday, the Governor and legislative leaders announced that a $2.00 increase to the minimum wage in California is in order and needs to happen.

Really?

A 25% minimum wage hike when nearly two million Californians are out of work – and small businesses in every community are dying on the vine?

When huge uncertainties and new costs of the Affordable Care Act are already hitting Main Street?

Really?

It appears that the same new supermajority that vowed to exercise restraint in the wake of $60 billion in new sales and income taxes stemming from Prop 30 has proven that they’d prefer to turn a deaf ear to their own devastated constituents and listen to Sacramento special interests instead.

Funny – this is the same host of state leaders who rejected markedly higher wage increases proposed by public employee unions in recent state negotiations. They settled on a 4.5% increase, saying that’s the most our already-strapped state could handle at this time.

Why, then, is it acceptable for our self-proclaimed penny-pinching politicians to proclaim that higher wages for public employees will be a burden for the state, but not apply that rule to our #1 job creators, small businesses. And in addition recklessly agree to over five times that amount as a wage hike on those who are struggling the most in our communities.  Let’s not forget: 99.2% of all businesses in California are small businesses, and small businesses create 2/3 of all net new jobs.

It is obvious many of our leaders don’t understand how a small business is run or the sheer economic fallout these new costs will have. Those who claim “It’s long overdue for employees to make more money” simply don’t get it. A minimum wage is a starting wage – never intended to be a long-term wage. When new and unanticipated costs go up for a business that already has nothing in the till, how do you think that money comes about? It doesn’t – an employer must now face the grim crossroad of raising prices (further driving away customers) or, more likely, paring back shifts and hours, or handing out pink slips.

A member of ours with a fledgling restaurant and catering company in Northern California told me just yesterday, “I love my employees – they are my family. It will devastate me if I have to cut their hours or, worse, let them go.”

And even small businesses that pay above minimum wage will feel a huge impact if AB 10 passes, for they will now be forced to pay higher wages among their staff. It may sound like “the right thing for them to do”, but again – where does that money come from? If it’s not there it will have to come from somewhere. That “somewhere” will most likely be from the very individuals wage hike proponents aim to help: entry-level employees.

Let’s not forget – both Republicans and Democrats alike have previously approved minimum wage hikes and felt quite the hangover shortly thereafter.  We should recall that both Presidents Bush, 41 and 43, went along with increases and so did the Newt Gingrich Congress in 1996 only to regrettably witness severe job loss thereafter. After the July 2009 increase in the federal minimum wage, 600,000 teen jobs disappeared in the following six months even as the Gross Domestic Product expanded.

A minimum wage increase has a nice ring to it – – it’s warm and fuzzy verbiage with politicians who think they’re scoring points with voters by promising jobs, a step up in the workplace, and a chance for small businesses to grow and thrive.

If AB 10 passes, watch the house of cards fall on every Main Street in every California community:

If you have a job – especially an entry level job – good luck keeping it, let alone finding a chance to grow in the company;

If you’re looking for a job, the best of luck to you: your elected officials just made finding a position as a line cook, retail clerk, or server that much further out of reach;

And if you have or are thinking of running a small business, we can only pray for you in a state with the highest sales, income and gas taxes, the most sweeping and devastating regulations and frivolous lawsuits continuing to abound on almost every Main Street block.

Governor and Legislature: Job CERTAINTY is what Californians need right now, not a 25% wage hike on the backs of our devastated small employers.

We hope that every Californian will contact their legislators and the Governor to tell them  that AB 10 is the wrong way out of the deep hole Californians are in, the wrong way to create jobs, the wrong way to give us the hope and future the people of our state so desperately deserve right now.

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