Minimum Wage in State Goes to $4.25 : Increase of 27% From $3.35 an Hour Makes It Nation’s Highest Pay Floor

A state commission voted narrowly Friday to raise California’s minimum wage to $4.25 an hour, the highest in the nation, in an action that drew loud cheers from laborers who took an all-night bus ride from Los Angeles to be here for the decision.

The 27% increase, approved by a 3-2 vote of the Industrial Welfare Commission, will take effect July 1. The rise will make the state’s minimum wage higher than the federal minimum, which has been $3.35 an hour since 1981.

The commission also adopted, on a 3-2 vote, a controversial “sub-minimum” wage of $3.50 an hour for workers who earn at least $60 a month in tips. The vote came over the strenuous objections of Commissioner Michael Callahan, a former official of the Hotel Employees and Restaurant Employees International Union. He said the special wage structure for “tipped employees” discriminates against waiters and waitresses.

Supporters Are Pleased

Although the increase to $4.25 fell short of the $5.01 “moral minimum wage” sought by organized labor and community groups who had lobbied hard for an increase, leaders in the movement declared themselves pleased with Friday’s vote.

“This is a major victory for minimum-wage workers throughout the state,” said the Rev. John Seymour, pastor of Ascension Church in South-Central Los Angeles and a leader of a grass-roots lobbying effort by three Los Angeles community organizations for the increased wage.

“This $1,800-a-year increase is an excellent Christmas present” for the state’s minimum-wage workers, said Rosalinda Lugo of United Neighborhoods Organization, one of the three groups. “It will allow them to buy more food, more clothing and, most importantly, to begin to live in dignity.”

But representatives of some of the state’s major business organizations--including the California Farm Bureau Federation, the California Manufacturers Assn. and the California Restaurant Assn.--predicted layoffs, slowdowns in hiring and increased prices as a result of the raise. They said employers would be forced to take such steps to offset increased labor costs.

Competitive Disadvantage

“We’re disappointed,” said Jim Eller, manager of public affairs for the Farm Bureau Federation. “This is going to place California agriculture at a disadvantage with all the other states in the nation and some of our competitors beyond the border.”

Willie Washington, a spokesman for the manufacturers association, agreed. “It puts California out there by itself.”

Alaska now has the highest state minimum wage in the nation at $3.85 an hour. The minimum wage in Connecticut is scheduled to rise to $4 an hour next October.

The state estimates that 600,000 Californians earn the minimum wage. A full-time worker at the current minimum earns $6,968 a year, which is 77% of the poverty level for a family of three and only 60% of the poverty level for a family of four. The new minimum wage will apply to all workers aged 18 and older and selected workers who are minors.

Friday’s action came after months of hearings and a major lobbying effort by community organizations and organized labor.

Three Los Angeles organizations--the South-Central Organizing Committee, United Neighborhoods Organization and East Valleys Organization--made an increased minimum wage a top priority. The groups marshaled statistics to support their cause, staged rallies and presented testimony by poverty-stricken workers to the commissioners. In their last lobbying effort, they arranged for 500 low-wage workers to be bused here from Los Angeles for Friday’s meeting.

Among the political and community leaders who actively lobbied for an increase were Los Angeles Roman Catholic Archbishop Roger M. Mahony, Los Angeles Mayor Tom Bradley, Lt. Gov. Leo T. McCarthy and U.S. Sen. Edward M. Kennedy (D-Mass.).

The community organizations also sought support from business groups, and staged marches on targeted businesses. Three large supermarket chains--Ralphs, Boys and Vons--and some other business organizations eventually announced support for an increase.

“We broke the wall of corporate solidarity against an increase,” Seymour said.

Goal Had Been $5.01

Friday’s decision marked an increase from the proposed $4 minimum wage suggested by the commission in September. Advocates of a higher minimum wage had pressed for a raise to $5.01, based on a 1985 report by the commission that gave that figure as the amount necessary to enable minimum-wage workers to keep up with the cost of living.

As expected, the decisive vote was cast Friday by Muriel Morse of Altadena, a personnel consultant who is the “public representative” on the panel. The two business representatives, Lynnel Pollock, a farmer from Woodland, and James Rude, a Sacramento hospital official, voted against the increase. The two labor members, Callahan and David Padilla, a retired Teamsters official, voted in favor. All five commissioners were appointed by Gov. George Deukmejian.

In September, the governor vetoed legislation raising the minimum wage in California to $4.25 and said the commission, which can act independently, should set the increase.

The members voted in alphabetical order Friday, so Padilla, who proposed the $4.25 figure, was able to cast the clinching vote with the declaration “Thank God, aye!” Then he walked over to Morse and put his arm around her shoulders.

Rate Bargained Down

It was no secret that Morse, 73, was the key vote. Early in the meeting, she voted against a $5.01 increase. Then Padilla proposed $4.35, but Morse said that also was too high.

Padilla then went to $4.25 and Morse said she could support that figure, based on a variety of factors, including the impact on employees and employers, what sort of workers earn the minimum wage, how long they stay at that level and the “slowness of the democratic process” in responding to the need for an increase.

“I am pleased,” Morse said, after the meeting. “I believe 27% is a significant increase.” She said she “appreciated” data provided her by the community organizations. That data, Seymour said, included a survey of 2,000 low-wage workers who attend 14 Southern California churches. “Most of those workers are over 25 and they spent an average of two years and five months at the minimum wage. That struck her,” he said.

In a unanimous vote, the commission scrapped a proposal it made in September to create a sub-minimum wage of $3.40 an hour for full-time students over the age of 21.

More Demands Ahead

Seymour and representatives of organized labor said they would continue to push for an eventual increase in the minimum wage to $5.01 an hour. “This increase will not put a family of four above the poverty line,” said Jack Henning, executive secretary-treasurer of the California Federation of Labor.

Teresa Santiago, 55, one of 500 Los Angeles-area workers who came here on the bus, said she is disappointed in the increase to $4.25. Santiago, who works as an aide to the elderly for $3.72 an hour and has no fringe benefits, said “it’s not right that we didn’t get $5.01 an hour. You can’t take your kids to a restaurant on $4.25 an hour.”

The commission is supposed to review the adequacy of the minimum wage every two years, but on Friday, Morse said she would agree to re-examining it sooner.

Pollock said a separate wage structure for the state’s nearly 100,000 tipped employees is justified because the average employee in California in that category makes $8.43 an hour when tips are counted.

But Henning and others said the move was illegal. Dennis Hayashi, an attorney with the Oakland-based Asian Law Caucus, a public-interest group, said his organization will file suit within a few weeks in an attempt to block the separate wage. He said it is “clearly barred” by state law. Pollock said she believes the commission’s action can withstand legal challenge.

Viewpoint of Restaurants

Stan Kyker, executive vice president of the California Restaurant Assn., welcomed the sub-minimum. “We’re pleased by the separate wage for tipped employees. That was a very critical issue for us.” But Kyker predicted that restaurants will be hurt by having to pay the higher minimum wage to workers who don’t receive tips.

Within moments of the commission’s vote here, the Los Angeles City Council unanimously endorsed raising minimum hourly wages for city workers from $3.35 to $5.01.