Wage hike finding quiet acceptance

California’s lowest-paid workers are about to get a raise.

The state minimum wage jumps today by 75 cents to $7.50 an hour, affecting about 1.4 million people. The increase -- California’s first since a 50-cent boost in January 2002 -- will give the state the fourth-highest minimum wage in the nation. An additional 50-cent raise, planned for a year from now, will catapult the state into first place.

The initial $1,560 in higher annual pay for a 40-hour week should bring modest relief to workers who must get by on the current $14,040 a year.

Passage of the new wage capped a three-year effort by Democratic lawmakers, labor unions and advocates for lowincome workers to convince Republican Gov. Arnold Schwarzenegger that boosting the minimum wage would not slow California’s economy.

The governor, who vetoed two previous minimum-wage bills, agreed to sign the election-year legislation only after Democrats dropped attempts to automatically peg future increases to jumps in the cost of living.

But now that the political dust has settled, many workers and their employers wonder what all the fuss was about. They say they expect changes in the workplace to be less dramatic than an initial 11% wage increase might otherwise suggest.

Some of those who work in the sectors that typically pay minimum wage -- the janitorial, fashion, hotel and restaurant industries -- say their bigger paychecks, though welcome, are unlikely to make enough of a difference at home.

“The price of everything is going up. This should have happened earlier,” said Annalee Herrera, 35, a minimum-wage garment worker who lives in downtown Los Angeles with her 9-year-old son.

Fellow seamstress Veronica Garcia, 39, also is skeptical.

“Just because I have more money doesn’t mean I can buy more things,” she said, noting that the raise would help her meet the growing cost of feeding her four children, ages 5 to 18.

Many business owners, though they opposed the wage hike before it was approved in August, acknowledge that increased labor costs probably wouldn’t hurt the state’s economy.

“For the most part, it’s a nonissue because most of small business is paying more than the minimum wage anyhow,” said Scott Hauge, president of Small Business California, a nonpartisan advocacy group based in San Francisco.

Results of a survey released last week by credit card issuer Discover showed that 70% of small-business owners expected no effect on their employee costs if the new Democrat-controlled Congress and President Bush agreed to raise the federal minimum wage to $7.25.

Still, the fashion and restaurant industries remain two vocal, notable exceptions to the relatively calm implementation of the higher minimum wage.

Employers in the hyper-competitive garment business gripe that the new wage will slash already thin profit margins. They fear losing business to illegal operators, which might pay only $5 or $6 an hour, or to overseas sewing shops that pay far less.

“We’re stuck. We have to pay workers more, but buyers want prices down,” said Samuel Hong, owner of Holy Camp Clothing in the downtown Los Angeles garment district. “There’s so much competition. I don’t believe my competitors can possibly be paying the minimum wage.”

Restaurateurs complain that, with the two increases, they will be forced to raise the base pay of waiters nearly 20% in the next 12 months, even though food servers often earn more than $25 an hour when tips are factored in.

Last summer, restaurant lobbyists unsuccessfully argued in the Legislature that the minimum wage should be frozen at $6.75 an hour for tipped waiters. Food servers represent about 30% of all California workers earning the minimum wage, state labor statistics show.

Many restaurant owners say that giving a legally mandated raise to servers will force them, out of fairness, to provide a similar increase to their “back-of-the-house” workers: dishwashers, chefs and prep cooks, who already earn more than the minimum wage but make far less than tipped staff.

The upshot, they predict, will be heftier bills for customers at the state’s 87,000 eateries.

“We’re going to have to raise prices,” said Tony Palermo, a partner at Tony P’s Dockside Grill, a casual dining restaurant in Marina del Rey.

Michael Osborn, owner of Pie ‘n Burger, a 43-year-old Pasadena diner with four generations of loyal customers, said he planned to spend an additional $3,000 a month on pay raises for his 25 tipped and non-tipped workers.

“I’ve already evaluated my menu, and I’ve tried to raise prices as painlessly as possible,” he said.

The prospect of price increases spurred by a minimum wage hike doesn’t seem to worry customers. The Discover card survey found that nearly 60% of consumers polled said they would be willing to pay more for goods and services from small businesses that boosted employees’ checks.

Voters appeared to agree in November when measures raising the minimum wage passed in all six states where they appeared on ballots. Fifteen other states, including California, raised their minimum wages through new laws or with automatic cost-of-living increases, according to the California Budget Project, a Sacramento-based think tank that advocates for low- and middle-income residents.

Twenty-eight states in all have minimum wages that exceed the federal rate of $5.15 an hour, the California Budget Project reported.

Congress, where Republicans controlled both houses for more than a decade and generally sided with their business allies, last raised the federal minimum wage in 1997. Business lobbyists contended that a boost in pay to low-wage workers would backfire by forcing employers to eliminate jobs. Moreover, they said, most minimum-wage earners are young, entry-level or part-time employees who don’t need more money.

But California Budget Project research tells a different story, at least in California. In 2004, 56.3% of workers earning no more than $1 above the minimum wage were 20 or older and worked at least 35 hours a week, a recent study concluded.

Federal Reserve Chairman Ben S. Bernanke concluded in recent written comments to a member of Congress that “a modest increase in the minimum wage would likely have only a small effect on labor costs for the economy as a whole and therefore a small effect on overall inflation.”

Democrats, who will take power in Congress on Thursday, are vowing to move rapidly on a minimum-wage vote. Rep. Nancy Pelosi (D-San Francisco), the incoming speaker of the House, said she would work to pass a minimum-wage law within the first 100 hours of the session.

In California, some worker advocates say they aren’t content just to boost the minimum wage. They also want so-called living wages that provide even higher pay for poor workers. San Francisco has enacted the only citywide living wage in California. The wage is indexed to the cost of living, rising today to $9.14 an hour.

Los Angeles has a limited living wage, requiring companies that contract with the city to pay workers as much as $10.64 an hour. The City Council and Mayor Antonio Villaraigosa recently expanded the benefit to employees of hotels near Los Angeles International Airport, but the pay hike is on hold pending a possible voter referendum that hotel operators hope to put on the ballot in the spring.

In the meantime, labor unions and Democratic lawmakers in Sacramento have their own plans to push a bill this year that would add an annual automatic cost-of-living increase to the state minimum wage.

“While we’re pleased that low-wage workers will receive a raise, we know it is not enough,” said Art Pulaski, executive secretary-treasurer of the California Labor Federation. “We will continue to fight for long-term solutions for California’s working poor, which must include indexing of the minimum wage.”

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marc.lifsher@latimes.com

alana.semuels@latimes.com