Minimum Wage Hike Nears Spot on State Ballot

Setting up an intense political battle between advocates for the working poor and major state business interests, a union-sponsored coalition apparently has gathered enough signatures to put an initiative on California’s November ballot to sharply raise the minimum wage.

Even employer groups that oppose the proposition concede it is nearly certain to qualify for this fall’s elections and has a strong chance of winning.

The initiative--designed to tap rising anti-business sentiment and growing frustration over stagnant wages--would boost the state’s hourly minimum wage in two steps from the current $4.25 to $5.75 by March 1998. The federal minimum wage, which establishes a national floor for workers’ pay, also is $4.25 an hour, and efforts by the Clinton administration and its allies to increase the standard have languished.

Although opponents of the California proposition still are formulating their arguments, the debate is expected to revolve around a basic question: Is raising the minimum wage an effective way of lifting families out of poverty?

Supporters say that it is, arguing that 1.9 million Californians now receive less than $5.75 an hour. And the supporters point out that even that isn’t enough to keep a family of three above the poverty level; it would take $6.24 an hour, or $12,980 a year, to accomplish that.

If successful, the initiative “will bring about a very significant increase for the working poor in California who have fallen further and further behind and have lived a survival existence,” said Richard Holober, campaign manager of the Liveable Wage Coalition, the union group sponsoring the initiative.

What’s more, the proposition’s supporters say it would boost the economy by taking families off welfare and giving low-income consumers more money to spend.

Supporters also expect the measure to deliver a broad political payoff. They believe it will draw more liberal-minded and union-friendly voters to the polls, giving a boost to labor-backed political candidates running for election in November, including President Clinton.

In minority communities, activists hope the minimum wage initiative will provide an enticing “bread-and-butter” issue that can be used to spur voter registration and get-out-the vote drives.

“We believe this will focus the political debate on where it needs to be--on the declining income of most Californians,” Holober said.

Along with helping those now making less than $5.75 an hour, Holober said, the initiative would ripple up through the labor market, boosting the pay of many other low-wage workers.

But opponents--led by such groups as the California Restaurant Assn. and the National Federation of Independent Business--counter that higher minimum wages would lead employers to hire fewer workers. Economists have increasingly concluded that raising the minimum wage eliminates no more than modest numbers of jobs, but critics of the proposition say it still would undermine employment prospects significantly.

“The very people it’s intended to help may wind up working fewer hours and making less than before,” said Stanley R. Kyker, executive vice president of the restaurant association.

In addition, critics say most adults hired at the minimum wage quickly move up the economic ladder once they gain skills in entry-level jobs. If minimum wages are driven up, they say, many entry-level jobs could disappear.

“Most people don’t understand the ramifications of raising the minimum wage,” said Shirley J. Knight, assistant state director of the National Federation of Independent Business and a spokeswoman for a still-unnamed coalition of employer groups opposing the initiative.

Moreover, opponents say boosting the minimum wage would be an inefficient way to help the poor because many of those receiving the minimum are teenagers or second wage earners from affluent families.

For instance, Knight argued that 40% of those receiving the minimum wage come from families above the median income level. Holober, armed with estimates of his own, countered that 80% of those receiving less than the proposed $5.75 an hour are working adults.

Opponents such as the California Chamber of Commerce contend that raising the minimum wage in California could spur employers to shift plants and jobs to bordering states with lower wages.

Still, even within business, there are likely to be divisions. For instance, the powerful California Manufacturers Assn., which represents many unionized companies that pay workers well above the minimum wage, is considered unlikely to aggressively oppose the initiative.

The ballot measure is not expected to be officially certified by the California secretary of state’s office until mid-June, and county election officials won’t be given the petitions until next week. But given that a measure requires fewer than 477,000 valid signatures and that the Liveable Wage Coalition claims it already has more than 750,000 signatures, both sides are confident it is a cinch to qualify for the November ballot.

The initiative drive to increase the state’s minimum wage, providing workers with the first such boost since 1988, follows efforts that were shot down in the state Legislature and the California Industrial Welfare Commission.

Both the Legislature and the commission are again considering measures to boost the minimum, but observers said it appears to be too late to cut any political deal to persuade initiative supporters to withdraw their proposition. Likewise, there is unlikely to be any serious legal challenge to keep the measure off the ballot, given the ample number of signatures gathered.