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Panel Headed by McCarthy Urges $5.01 Minimum Wage

Times Staff Writer

Lt. Gov. Leo McCarthy announced Thursday that the state Economic Development Commission, which he heads, recommends increasing the state minimum wage from $3.35 an hour to $5.01.

If adopted, a $5.01 minimum wage would be the highest in the nation, with Alaska’s $3.85 the second highest. McCarthy said the state commission believes a $5.01 minimum wage would not hurt California businesses and would stimulate consumer spending.

However, the recommendation may have little chance of adoption. The California Industrial Welfare Commission, which is empowered by state law to set any new minimum wage, is only considering an increase to $4 an hour. The commission is expected to vote on the change to $4 an hour Dec. 18.

Gov. George Deukmejian this year vetoed a bill that would have established a $4.25 minimum wage.

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Under California law, either the Legislature or the Industrial Welfare Commission can increase the state minimum wage. In his veto message in September, Deukmejian said he favors allowing the commission to set any higher level. The commission has held two of three required public hearings on a proposed $4-an-hour minimum wage.

McCarthy, a Democrat, said he hopes the Industrial Welfare Commission will reconsider and hike the new minimum wage to $5.01. He said anything less than that amount would only encourage more people to go on welfare.

“The workfare program (a welfare system for the working poor) in California pays $5.14 an hour,” McCarthy said. “Now if the Legislature and the governor have made the decision that AFDC (Aid for Dependent Children) mothers in the state should receive $5.14 in order to make them economically independent, we would favor the minimum wage in California at least being increased to $5.01.”

California’s existing $3.35-an-hour minimum wage is the same as that required by federal law. Only eight states, including Alaska, have a minimum wage higher than $3.35, the U.S. Department of Labor said Thursday. Congress is debating proposals to raise the federal minimum wage, but no bill calls for anything higher than $4.65 by 1990, a spokeswoman for the federal Labor Department said.

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McCarthy is running for the Democratic nomination for the U.S. Senate seat held by Republican Pete Wilson. The lieutenant governor announced the commission’s recommendation at a press conference in the Sacramento Food Bank warehouse.

McCarthy’s plea for a higher minimum wage drew support from Father Dan Madigan, director of the food bank and pastor of Immaculate Conception Church. Madigan spoke immediately after McCarthy and said: “I see the poor all the time. . . . To think that the head of a family is dependent on the (current $3.35-an-hour) minimum wage is a joke.”

The Economic Development Commission’s recommendation said: “An increase in the minimum wage . . . will serve as a powerful incentive to seek work. Income will be quickly recirculated into the community, raising demand for goods and services, and hence increasing the need for labor. . . . “

McCarthy said he does not think adopting the nation’s highest minimum wage would hurt the state’s business climate.

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“Businesses are not attracted to California because of cheap labor,” he said. “Rather, they invest in California because of our vast market for goods and services and our highly trained and motivated workers.”

Later Thursday, McCarthy made a campaign appearance before a meeting of the Harry S Truman Democratic Club in downtown Sacramento. To frequent applause, McCarthy said he sees many signs that California will dump Wilson in 1988.

“I have never been more optimistic in my life that we’re going to do well in 1988,” he said.

But the Senate race will be expensive. McCarthy said he will need to raise about $9 million in campaign funds for the race, and he predicted that Wilson will accumulate about $12 million for the campaign.

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