Public Hearing







October 5, 2000

Stockton State Building

31 East Channel Street

Stockton, California






Industrial Welfare Commission


BARRY BROAD (arr. 10:08 a.m.)





ANDREW R. BARON, Executive Officer


MICHAEL MORENO, Principal Analyst














Proceedings 7

On-Site Construction, Drilling, Logging, and Mining 7

LOREN KAYE, Western States Petroleum Association 8

KENT ROGERS, Torch Operating Company 11

Minimum Wage (Out of Order) 22

PAT JOHNSTON, California State Senator 22

On-Site Construction, Drilling, Logging, and Mining 29


DAVID LEFLER, Western Drilling 29

MIKE HARRINGTON, Western Drilling 35

DANNY MEYER, Western Drilling 37

TODD KNIGHT, Venoco 38

THEO PAHOS, California Independent Petroleum 39


LARRY ROHLFES, California Landscape Contractors 42


JAMIE KAHN, Associated General Contractors 44

PHIL VERMEULEN, construction trade associations 58

TERRY STREET, Roebbelen Contracting 55

SCOTT WETCH, State Building and Construction 57

Trades Council

PAUL COHEN, Northern California Carpenters 60

MICHAEL DUNLAP, operating engineer 62

RON MYERS, Laborers International Union 63


INDEX (Continued) Page

RAY SANDOVAL, nonunion construction worker 65

JAMES ROBINSON, carpenter 69

SANDRA BENSON, Van Bourg, Weinberg, Roger, and 69


Minimum Wage 71

JOHN PEREZ, California Labor Federation, AFL-CIO 71

JEAN ROSS, California Budget Project 71

PEDRO ZARCO, farm worker 76

SOFIA ROJAS, farm worker 77

DOLORES HUERTA, United Farm Workers of America, 78



ROSALINDA GUILLEN, United Farm Workers of America, 82


ALLEN DAVENPORT, Service Employees International 85



GRACIELA MARTINEZ, American Friends Service 98

Community Project, Tulare County Civic

Action League

MARIA ROSALES, Tulare County Civic Action League 99

FLORENCIA RAMOS, field worker 101

ALBERTO RAMOS, Foster Farms employee 104


GUADALUPE TORRES, Tulare County Civic Action 110


ROBERTO SALAZAR, Tulare County Civic Action 111


INDEX (Continued) Page


PABLO ESPINOZA, Farm Labor Project, American 113

Friends Committee

GRACIELA MARTINEZ, American Friends Service 120

Community Project, Tulare County Civic Action


DINO PETRUCCI, Madera County Farm Bureau 123

CYNTHIA CORY, California Farm Bureau 130

MIKE WEBB, Western Growers Association 134

CATHERINE NYBERG, Agriculture Council of 137


JOT CONDIE, California Restaurant Association 138

TOM FERDINANDI, restaurant owner 141

ANTHONY CARROLL, franchise restaurant owner 143

SUSAN SHAW, The Chocolate Dipper, Salinas Valley 154

Chamber of Commerce

DENYNE KOWALEWSKI, California Association for 157

Health Services at Home

Sheepherding Exemption 159

JORGE ROMAN, Consul General of Peru 159

GEORGE SOARES, Western Range Association 161

RICHARD HAMILTON, California Wool Growers 165


DON WATSON, sheep producer 178

DIEGO OLAGARAY, sheep producer 182

FRANK MUÑOZ, Kern County Wool Growers Association 189

EMILIO JUARTE, sheep production employee 212

JOSE CALLE, Western Range Association, Peru 217

INDEX (Continued) Page


TIMOTEO LAURIANO, sheepherder 219

SILVIA JUICA, sheepherder 220


VICTOR TOSCANO, sheepherder 222

ROBERT JARIDI, sheep producer 228

PACO ITURRIRIA, Kern County Wool Growers 230


CHRIS SCHNEIDER, Central California Legal 232


LORENZO MOSQUERA, sheepherder 233

VICTOR FLORES, Sheepherders Union 241

DOLORES HUERTA, United Farm Workers of America, 246


MARK SCHACHT, California Rural Legal Assistance 248


Adjournment 258

Certificate of Reporter/Transcriber 259



(Time noted: 10:05 a.m.)

COMMISSIONER DOMBROWSKI: All right. Why don't we get started?

I call the meeting to order. Let the record show Commissioners Rose and Dombrowski present.

As I said, we'd -- as I said the other day, we're going to start off with the construction, oil drilling, logging issue first. That'll be followed by minimum wage, and then we'll go to sheepherders.

We're going to reserve the front row for the panels as I call them up, because there's only two seats at the table, I believe. So please leave that front row open.

COMMISSIONER ROSE: Mr. Chairman, would you please ask the people to turn their cell phones off?

COMMISSIONER DOMBROWSKI: Would you please turn your cell phones off?

I'd better turn mine off, actually.


COMMISSIONER DOMBROWSKI: I want to start with a little bit different subject on the construction. First I want to bring up Loren Kaye, oil drilling. Let's see. Todd Knight, Kent Rogers, Theo Pahos -- Pahos -- sorry about that, Theo -- and I don't know if I've missed anybody there, Loren, but whoever else --

MR. KAYE: There's a couple others.

COMMISSIONER DOMBROWSKI: -- others on your panel, bring them up.

MR. KAYE: Yeah. We need some phone books up here.

Yeah. Can you see me? Can you sit at an angle?



MR. KAYE: You should have put the speakers in the back. Well, we know where we are in the pecking order.

Thank you, Mr. Chairman, Commissioner Rose, and, I guess -- is that who's here today so far?

I'm Loren Kaye, representing Western States Petroleum Association. And we have a panel that will diligently, and each individually briefly, discuss with you the portion of the wage order on on-site industries that has to do with the oil drilling issue.

We were active in the wage board process that happened in June and July, and Mr. Lefler, from Western Well, was on the wage board, and he'll be here to also give you his perspective. We were -- we thought the wage board process worked relatively well. Our representatives were on the minority that objected to the initial adoption of the wage order by a two-thirds vote, but we did find the discussion overall useful and productive.

As you know, after the wage board adopted the overall wage order by more than a two-thirds vote, in fact, at the next meeting there was a discussion of an alternative work schedule for up to a 12-hour day for offshore production drilling and service workers. And as a result of that discussion, the wage board unanimously adopted an alternative work schedule for those workers.

There was a brief discussion at that time of providing alternative work schedules for both workers who work in onshore facilities that process product from the offshore platforms, as well as onshore drilling sites in the inland parts of California. But it was frankly -- there was not enough time, it was generally agreed by the wage board, to have a full discussion on that issue. And I think it was the sense of the wage board to not address those other two issues, and instead put them before -- put them before the IWC.

So, the purpose of us coming before you today is to, number one, note that the wage board did adopt the 12-hour -- up to 12-hour alternative work schedule for offshore workers and to make the case for you, we hope, that that same provision should be extended to the offshore production that occurs in the onshore processing facilities as well as the onshore drilling and servicing occupations.

And that's what these panelists will do today. We have representatives of both companies that perform those services, as well as some workers who actually work.

There's one other point I'd like to make, or at least issue I'd like to raise. I'm not a lawyer -- and I suppose we could get lawyers involved in this at some point -- but we'd like to just make the point that we think the Commission can legitimately make a finding to consider and act upon this issue in your deliberations under the -- I guess what's called the no substantial evidence standard, because the portion of the wage order that we want to discuss today was adopted at the very beginning of the very first wage board hearing. It was one of the first actions that the wage board took, and it was before any substantive discussion of this issue was held, before any of our papers were distributed and the like.

And so, we believe that the action that was taken originally at the outset, but was not based on substantial evidence that was developed later and that was distributed later and that we can -- that we will also provide you today, and therefore, we think that this is an issue that can be legitimately discussed by the -- and acted upon by the wage board.

With that, unless there's some questions, I'd like to introduce Mr. Kent Rogers, from Torch Operating.

MR. ROGERS: Good morning, Mr. Chairman, members of the Commission. I appreciate the opportunity to be here today. Again, my name is Kent Rogers, and I am the district manager for Torch Operating Company. We're located in Santa Maria, California.

Our company is a subsidiary of the Houston-based Torch Energy Advisors, Incorporated. We provide an extensive array of production, facility engineering, environmental, regulatory, safety, as well as field operations to the offshore and onshore oil and gas production in the State of California. My district, which stretches from Orange County to northern Santa Barbara, we operate 12 offshore platforms, four onshore facilities which handle the production from these 12 offshore platforms, and two onshore facilities. Our total wells are over 330 wells.

In addition, we provide operations to three additional platforms located offshore northern Santa Barbara County to Arguello, Incorporated. We also provide the operations to their onshore facility located in Gaviota. Our hourly workforce to support these operations right now stands at 435 people.

I am very pleased to be here today to have the opportunity to offer comments supporting the case for an amendment to your proposed regulation regarding onshore and offshore oil and gas well drilling operations as it pertains to the daily work shift and the overtime rate required by AB 60.

Let me first address my comments to the 12-hour work shift, and then I'll discuss the proposed alternative for the overtime rate.

The men and women who work in the onshore and offshore oil and gas industry in the State of California work in very unique situations that call for flexible and nontraditional hours of work. These work sites are often located in remote locations, such as an offshore platform, and have unusual work environments which require an exceedingly -- exceedingly high attention to safety.

Our employees and those of other companies work in a 12-hour, seven-on, seven-off schedule that has emerged over the years, having an opportunity to provide themselves, their families, and their communities with an extra benefit that a traditional 8-hour work schedule would not necessarily provide.

For the onshore workers, oil drilling service employees often travel hours from their homes to well sites. They provide their own transportation or arrive in crew trucks and would prefer to work longer shifts to reduce the total number of trips to and from their work sites. Some jobs can be up to 100 miles away from their homes. In fact, for both offshore and onshore cases, these working arrangements help employees -- help employers recruit manpower in a tight labor market because it enables them to spend additional time with their families, volunteer in their community, or pursue other interests.

Let's considered the scheduled time off for these employees. Each employee working a seven-on, seven-off schedule works a maximum of 175 days per year, compared to an 8-hour shift worker, who will normally work 250 days per year. This is over one half of the year from the work for the 12-hour shift employee.

Mr. Chairman, members of the Commission, I'll say this. We -- all of our offshore employees that work the seven-on, seven-off schedule receive at a minimum of one shift off for vacation. And depending on seniority, they can receive up to two. So, you see, they do receive a tremendous amount of time off by working this schedule.

The preponderance of conversations and the correspondence that I have received from our employees who either work offshore or related onshore operations is to keep the 12-hour shift. All the workers enjoy the 12-hour shifts because the amount of off time and financial benefit it provides. The most compelling reason I can give to the Commission, quite honestly, to provide for 12-hour shifts in the oil and gas production industry, both onshore -- or both offshore and the onshore facilities, is related to safety and environmental protection. The slogan in my district -- and you see it on the walls -- is SEP, safety first, environment is second, and production of oil and gas is third. That's our philosophy. We take it very, very seriously. Safety, without question, is my number one priority. I have authorized any employee, regardless of title, on our platforms and onshore facilities to immediately shut down the operation if they see any compromise in safety or the environmental protection.

Drilling for oil and gas, as well as servicing those wells, are complex, technical, and very sensitive jobs. Individuals can be working around very heavy equipment and with subsurface reservoirs that can be at high pressures and high temperatures. We cannot afford to do anything that would degrade the safety or alertness of our workers and contractors.

It is our experience with 12-hour shifts that accidents on the job are more likely to occur during the early part of the shift, not because of fatigue, but because of the confusion normally associated with change. Communication between shifts is a top priority for our operators and workers. But in a complex operation such as an offshore platform and its related onshore processing facility, it is critical. Shift changes can be especially complex also because of the interrelated onshore processing facility, where the personnel must maintain ongoing, up-to-the-minute communications with the offshore platform. The more shift changes, i.e., three 8-hour shifts compared to two 12-hour shifts, can bring about more opportunities for missed signals, missed communication, and the possibility of a compromise in safety.

I wholeheartedly support the wage board's recommendation for an alternative workweek up to 12 hours a day for the offshore operations and am very appreciative for that support. I also support an alternative workweek up to 12 hours a day for onshore processing facilities that are connected to these offshore platforms. Our onshore processing facilities are closely linked to their offshore counterpart. The offshore platform and the onshore facility works as a single unit, even though separated by many miles. What affects one operation affects the other. You cannot disengage the two facilities operationally.

In the final analysis, based on safety, based on the uniqueness of our industry, and based on the preference of our employees, the 12-hour shift, seven days on, seven days off, is the optimal way to run our operations, for both offshore and their interrelated onshore facilities. Because of this close relationship between offshore and onshore facilities, I urge the Commission to also extend the 12-hour option to the onshore drilling services and onshore operations of processing facilities related to the offshore platforms.

While I have discussed the advantage of two 12-hour shifts versus three 8-hours, let me turn for just a minute from the safety and environmental concerns to the economic concerns. Workers who drill for and produce oil and gas are highly skilled as well as highly paid individuals. According to the Santa Barbara County Economic Outlook 2000 forecast, which is compiled by the University of California, Santa Barbara, the highest average salary per worker by industry in Santa Barbara County is the oil and gas industry, with an average salary of $61,824. The lowest is the tourism industry, with an average salary of $16,061 per worker.

Financial resources available for investment in new domestic production in the United States is limited, and oil production companies will inevitably invest their capital in those wells or projects where they can gain the best rate of return on their investment. Investment in oil drilling, especially when the price of oil goes down -- and it is inevitable that it will -- is competitive. The investment will move to states or countries where costs are lower, safety standards are not as stringent, meaning that few high-wage opportunities will be available in this industry in the State of California.

Mr. Chairman, members of the Commission, I am not against a fair wage for a fair day's work. The stats I have mentioned earlier prove that this industry in California pays premium dollars to its workers. However, in the long term, if the cost to operate in California exceeds that in other areas -- and part of that cost is the overtime provisions mandated by AB 60 -- then we have two options, as I see it: go to an 8-hour shift to remain competitive, but at what cost to the quality of life for our employees and to the safety of our facilities, or, two, go to other areas where it's more economically viable to extract oil and gas resources.

Because our industry is one of the highest paid in the state, and because I do not want to see our industry here become less competitive in the long term and lose those high-paying jobs to overseas or to other states that do not offer the same high salaries as we do in California, I am asking the Commission to reinstate the wage alternative in AB 60 for onshore and the onshore processing facilities related to the platforms.

I appreciate it, and I would be glad to respond to any questions you may have.

COMMISSIONER BROAD: Yes, sir. I don't know if you guys can see me down there.

MR. ROGERS: I can see you.

COMMISSIONER BROAD: This set-up is making me feel like I'm the incredibly shrinking man.

Anyway, the -- let me preface my questions by saying this. You -- we are, as a Commission, bound by the Labor Code, which places upon us an extraordinarily heavy evidentiary burden to abandon that which was decided by a wage board under a two-thirds vote. The wage board considered this issue and explicitly addressed the alternative of a 12-hour day for offshore. There were representatives of your industry on that wage board. They voted for it. They could have objected at any point to it.

So, I have a great deal of difficulty seeing how we could accommodate you, even if we wanted to, legally.

But, please -- and, you know, that -- I -- you know, that's my opinion.

Now, leaving that aside, because the law is the law, and whatever the law is, the law is, no matter what any of our opinions are. But I do believe that that's the law, and we have to follow it.

I have questions for you about the uniqueness of the onshore oil drilling industry, because I have difficulty seeing what's so unique about it. There are a lot of workers in California that drive up to 100 mile -- commute to work 100 miles a day. There's nothing -- probably millions of them. So I have difficulty seeing what's unique about that.

I have difficulty seeing why we should have a rule for your part of the industry while the oil refining industry -- part of the industry is under the normal manufacturing wage order, which would -- has the 8-hour day.

My question to you is that posed an alternative, sort of two extremes, that we either get the 12-hour day, or that we have the 8-hour day. And let me pose to you two other alternatives that would be perfectly permissible here: one, that you adopt the 4-10 work arrangement for these employees, and, two, that you adopt what is, in effect, a 3-10 arrangement and you can pay people 2 hours of overtime if you want them to work 12 hours a day. We've already said that that's lawful. Why is that -- why are those alternatives for you not workable?

MR. ROGERS: Mr. Chairman, members of the Commission, I understand where you're coming from, but I haven't done -- I haven't really thought about it like that. I -- I do appreciate your comments.

Again, I will go back to what I said. What we're trying to -- what we're trying to impress upon -- particularly for me, is the onshore processing facilities, because they are so interrelated to the offshore platforms. I mean, what happens on one happens on the other. When one has to shut down, there has to be a shut-down on the other.

So, we'd like to, again, instead of going to different alternative workweeks or schedules or have to hire more people, we'd certainly like to keep the same crews working together so we don't have this shift change confusion.

And, you know, we'd be glad to look at other things, but we really believe, since we have the offshore alternative, and the guys and ladies that work onshore are so interrelated, that it just makes sense, at least for the onshore processing facilities, for me -- there will be other testimony to take it further -- but we believe it just makes good operational sense, and the safety and protection of the environment, to be able to have these 12-hour alternative workdays, with the seven-on, seven-off, as well as, again, the amount of time that these individuals have off.

You know, when I read AB 60 when it was first published, I think one of the things in there was to make sure that the workers in California have -- are protected for adequate time off. And I think I've demonstrated here that our workers get a tremendous amount of time off.

MR. KAYE: Mr. Chair? Mr. Broad, if I --

COMMISSIONER ROSE: Excuse me. How many employees onshore work closely with those offshore?

MR. ROGERS: Okay. The 435 that I have right now, onshore I have seventy -- 81.


MR. KAYE: Just to respond to some other portions of your question, the distinction between the exploration and drilling part of this industry as opposed to the refineries is that they have the attributes of -- their locations are both remote as well as 24-hour. And so, the refiners and a lot of other manufacturing facilities may operate in 24 hours, seven days a week, but they don't have remote locations that they go to do a job and then -- and then leave. And that's, I think, a distinction that makes this -- that makes this industry unique, is that they -- they don't spend a long time -- they spend variable amounts of time at a job.

And I think Mr. Lefler actually has folks who go out and drill and can -- can get into that a little bit, a little bit more.

COMMISSIONER BROAD: Can I ask another question? How much of your -- of this portion of the industry that you're talking about is devoted to drilling new wells as opposed to maintaining existing wells?

MR. ROGERS: I can't answer that.

MR. KAYE: We'll have a subsequent witness to answer that question.


COMMISSIONER DOMBROWSKI: One sec. If either of you don't object, I would like to go a little out of order and let Senator Pat Johnston come up and speak in support of the minimum wage issue.


SENATOR JOHNSTON: Thank you very much, Mr. Chairman and Commission members. And thank you to those who deferred your testimony so that I might make some brief remarks prior to your consideration of the increase in the minimum wage, which you will take up shortly.

Welcome to Stockton. We're happy to have you here in the State Building in downtown Stockton. This is a state building that was constructed when Alan Short was the state senator, from the mid-'50's to the mid-'70's and was the chairman of the Assembly -- or rather, the Senate Industrial Relations Committee.

This auditorium we named a few years ago after Bill Montgomery, who was his chief aide and a labor leader here in Stockton.

The history of the San Joaquin Valley, and certainly of Stockton, is one is that is economically dependent upon agriculture. And so, farm work has been an important ingredient in both fueling the growth of California's economy and a mainstay for the nation's agricultural production. It also means that between San Joaquin County and Kern County, the unemployment rate typically is double that of other counties, such as Sacramento, which has a high dependency on government jobs, and certainly the Bay Area and the coastal areas of southern California typically have less unemployed people, a more constrained labor market, and more demand for skilled workers.

But this area is changing. And the construction you see across the street, and the construction you may have seen driving either from Sacramento or the Bay Area will suggest that we are increasingly part of a Bay Area economy. What does that mean for the minimum wage discussion? It means that the cost of living continues to rise not only in those Bay Area counties, not only in Los Angeles and Orange and San Diego County, but for the interior of California, both the Central Valley and the mountain areas.

So, as you consider this issue, you must, of course, look at what income it takes for working men and women to support their families. It is clear that in an economy in which there are low-paid jobs, often without representation on an organizational basis, that those workers, many of them immigrant, are not able to negotiate not only for higher wages, but also for benefits. The high number of individual workers and their families without health insurance has been well documented. Absent those benefits, be it pension, sick leave, vacation, or health, it means that that paycheck represents, for many families, the only ability to take care of their children, whether it is an emergency or whether it is the day-to-day providing clothing and school books for those children to grow up and succeed as well.

It would seem that in this state and in this rich society, having a floor that is cognizant of the real cost of living and is cognizant of the enormous contribution that those individuals who work hard at jobs that don't pay well have in this economy justifies moving that minimum wage from California's current level of $575 (sic) -- five dollars and seventy-five dollars (sic) an hour -- upward, and upward towards eight dollars an hour, so that we look to the future, we set a high base of minimum wage, not so high that you or I, Commission members, would want to support ourselves, much less our families, on that, but that the working men and women can have a minimum level of income to support their families. And, of course, that floor will set a competitive tone so that men and women can compete for higher-wage jobs.

And it's clear in this election season that who gets the benefits of the bounty of this economy is at issue. We, in the public interest, ought to be sure that this nation and this state continue to have a broad base of middle-class families. We can only do that with a minimum wage that reflects our stated value of supporting families and supporting their ability to raise their children and do so successfully.

Thank you very much.


COMMISSIONER BROAD: Thank you, Senator.

AUDIENCE MEMBER: (Not using microphone) Senator, you forget the campesinos!


AUDIENCE MEMBER: (Not using microphone) (Inaudible).

COMMISSIONER DOMBROWSKI: Sir, we have an order appearing here. If you wish to speak, just give me a card and we'll be happy to bring you up. But we can't have people yelling from the audience.

And, please -- please, when he's finished, you can talk to him.

Thank you.

Commissioner Broad.

COMMISSIONER BROAD: Senator, thank you very much for being here. You mentioned -- you mentioned that in the San Joaquin Valley, there's perhaps a larger percentage than in other areas of the state of people who depend entirely on the minimum wage, who don't get other benefits. Does that mean that in this area, that when people do need healthcare for their children, that they become more dependent on the taxpayers, in effect, to finance that for them, that they have to go to county hospitals rather than -- since they have no health insurance, that they require the government, in effect, to supplement their income to provide them enough food to feed their families? And is that a larger problem here than in other places in the state? And is it a significant problem?

SENATOR JOHNSTON: Yes, commissioner. Over the years, it is clear that nonprofit clinics operated to provide healthcare for farm workers and other low-wage workers and those who are unemployed but without the MediCal status have had to fill that need. And those ultimately are public funds, so we do pay from the public sector.

And the county healthcare system in each of the Valley counties is typically strained. Each area can make its own case, but a 2 percent unemployment rate, even when the economy's not so hot, in Santa Clara or San Mateo or San Francisco or Marin County, often is contrasted with 5 to 10 percent, and sometimes well about 10 percent in Merced County, in Stanislaus County, in San Joaquin County. All those unemployed people and all those low-wage workers often have no health insurance and no money to buy it.

So, yes, they end up receiving their healthcare in the public system. And regrettably, it means often deferring those doctor visits for children when they are necessary, so that their healthcare often is far less than those of us who have the benefit of state health insurance or other employer-based health insurance policies.

COMMISSIONER BROAD: My concern, and I wonder if you share this opinion with me, is that if the minimum wage is too low, that, in effect, what it does is it relieves low-wage employers of obligations which many other higher-wage employers -- obligations that other higher-wage employers meet with regard to healthcare or providing a wage sufficient for workers to purchase these things, that by doing that, what, in effect, we're doing is having the taxpayers subsidize low-wage employers with an indirect subsidy, by saying, "Okay, you don't provide these

benefits" --


COMMISSIONER BROAD: You know, "If you need healthcare, go to the county clinic; they'll take care of you." And I'm concerned that, in effect, those -- that cost should be borne by those employers and shared with it in the same way that it is shared by other employers who pay their workers more.

SENATOR JOHNSTON: Yeah. These issues get linked, and I understand the Commission is looking at minimum wage

-- I don't want to overstay my welcome, and I appreciate the chairman's indulgence -- but, you know, there are different ways of doing healthcare. You can have universal coverage, which the taxpayers pay for, and everybody gets it. Some countries have it; we don't, in the United States. There's been a political debate over the last eight years on it, and apparently the people of the United States do not want it at this time.

Therefore, we retreat to what is a system that is patched together based on employers purchasing group health insurance for their employees and dependents, and the government largely filling the gap through Medicare and through MediCal, in California. But there are many workers who fit none of those. And low-wage workers disproportionately are not afforded the benefits of health insurance through their employer. And undoubtedly, many of those employers would say they simply can't afford it, and it is true. In other cases, perhaps they can afford it but choose not to because they don't have to. Whatever the reason, many families do not have it.

Nevertheless, they make money -- as low as it is, they make too much money to qualify for MediCal, so they don't get public health insurance. And then they're in the gap. We're tried to create programs such as Healthy Families, and the governor has been supportive of that, and both parties have, to try and give children health insurance, but it has to be paid for.

Now, if the State of California is going to mandate, as we do, that you buy car insurance and give you the opportunity to buy low-cost health insurance for your kids, but not for the parents, then those families need to have money after they've paid the rent to buy those essential insurance policies.

This minimum wage issue is connected to whether or not we have healthy kids, because we need families with sufficient money to not only put food on the table without qualifying for food stamps, to rent a place to live or buy a place to live without housing subsidies, because they fall in that gap. We need those families to have enough money so if they're going to be paying their own way, as they are, they have enough to cover healthcare for their kids as well.

Thank you.


COMMISSIONER DOMBROWSKI: Loren, I -- who was the first speaker?

MR. KAYE: Mr. Rogers.



MR. LEFLER: Good morning, Mr. Chairman and commissioners. It's good to be here today. I'm David Lefler. I was a member of the on-site construction, drilling, logging, and mining wage board. I represent the oil and gas well drilling industry. I work for Western Drilling, in Taft, California.

Our industry and employees are intensely interested in having a workweek flexibility to work the 12-hour shifts on a seven-on, seven-off type basis.

Commissioner Broad, you're right -- we are having a little trouble seeing you there, the way things are -- you had a couple of questions that I'd like to address right now, if I would.

You were asking about the uniqueness of our industry, about why would it be different than a manufacturing type industry and some of the other locations within the oil industry. Some of the things that we do -- and what I'd like to do is use an example -- our folks drill wells and service oil wells from our company. And what happened the other day -- in fact, Mr. Danny Meyer is here, and we'll have him speak a little bit later, but he had crews that went over to Pismo Beach. Now, that sounds pretty good if you live in Bakersfield during the summer. The problem is, if you work 8-hour shifts, you're only getting 8 hours of pay for every day you're over there away from your family.

And what we'd like to be able to do is provide those folks with seven-on over there, seven-off, so that they're over at the drill site for seven days, and then they're back home for seven days. Otherwise, they end up working a shift where they're over there for seven days, getting 8 hours' pay, they get about two days off, and then seven days back on, and another seven and two, and then another seven and four. And so, it makes it difficult. It's more trips. It's more difficult for those folks.

So that's one of the areas that -- you know, one time we're working in the Kern River field in our neighborhood, the next well that we go do is over at the coast. And so -- we do move around. That's just kind of one example. And I think that creates some uniqueness in our business, with these highly paid and highly skilled employees that we need to have follow these rigs.

The other item that you were asking about was what percentage of our people in industry we're talking about drilling new wells versus servicing wells, I believe. It's about a 50-50 mix overall in our industry and in the California area. So, that -- hopefully, that answers those questions.

COMMISSIONER BROAD: And how many employees overall are we talking about here? I mean --

MR. LEFLER: Yeah, a little over 3,000. 3,000 to 3,500 employees, something like that.


MR. LEFLER: Okay. Another item that we are concerned about -- I know we've talked about before -- is the safety of our folks, along with the quality of their lives. And it's important for them. They are highly paid, but one of the big things has become, obviously, how much time do we have off with our families to do the things we want to do. And so, I've got a couple gentlemen with me from work that are going to talk about some of that.

But the compressed workweek, using a seven-on, seven-off schedule, provides improved safety, which we'll talk about today, and a lot of time off for our employees. It's kind of great to get 26 weeks of vacation a year, not a bad deal. I've been looking for a job like that, and finally, I think we've found one.

Also, I have letters from our employees that I'll leave here with you regarding their wishes to work this type of schedule and their individual and particular reasons why they would like to do so. And it really boils down to quality of life issues.

With me today is Danny Meyer, one of our tool pushers. He's a -- he's what you call a working foreman out on the rigs. He's going to talk with us a little bit. Also, Mike Harrington, our safety director, who wants to briefly describe some of the reasons for working the seven-on, seven-off schedules on a safety basis.



COMMISSIONER BROAD: -- can I just ask you a couple of questions --

MR. LEFLER: Certainly.

COMMISSIONER BROAD: -- that I'm quite confused about?

What was adopted for the offshore was an alternative workweek which would allow up to 12 hours a day within a 40-hour workweek.

MR. LEFLER: That's correct.

COMMISSIONER BROAD: It's not seven days on, seven days off. It doesn't permit -- I mean, if you work -- under that schedule, if you work someone 84 hours a week, you'd be paying them -- I can't even calculate how much overtime and double time, plus, in addition, the statute, which we can't change, requires overtime on the seventh consecutive day of work within a workweek, and double time after 8 hours on the seventh day.

So, I think you -- if what you're saying is you want what was done for the offshore employees onshore, it isn't seven days on and seven days off with seven 12-hour days in an 84-hour workweek. That's not what it is. It's three 12-hour days, followed by a 4-hour day, at the most. Is indeed that what -- is that what your industry is looking for?

MR. LEFLER: What we're actually asking for is doing that in the workweek. We define our workweek where it splits our week, so that we work 36 hours in one week and the 48 in the other. And so, we end up with 4 hours of overtime along with the workweek.

But it comes from the basis of the definition of a workweek and the start and finish of a workweek.


MR. LEFLER: Yeah. It is a bit confusing, but it certainly works well for our folks. And I know that, basically, over 95 percent of our folks really do want to work this. We've had elections in the past, and that has been the results.

COMMISSIONER BROAD: Yeah. I'm just not sure, having heard it now, I'm clear what you want, that -- beyond the question of whether we could do it because of the two-thirds vote of the wage board, there's a question of whether, even if we could do it and get by that hurdle, whether we could lawfully do it under the provisions of the Labor Code that the Industrial Welfare Commission has no authority to change.

So, I -- there may be sort of a double whammy there, in which you're simply asking for something beyond the Commission's authority, in any way that the Commission could possibly exercise that authority. So it's something that I guess we'll have to think about.

Thank you.

MR. LEFLER: Yeah, that's certainly a concern. Our attorneys in the past have indicated that by utilizing the workweek definitions allowed within the Labor Code, that we are on solid ground to do so.

COMMISSIONER BROAD: Well, as you know, we've been subject to many opinions, many attorneys for many parties over the last year, some of whom are considerably more imaginative than others.

MR. LEFLER: Yeah. Haven't we all? Yeah.


MR. LEFLER: What I'd like to do is now invite two of our folks from --


MR. LEFLER: -- Western.


MR. HARRINGTON: Good morning, commissioners. My name is Mike Harrington. I'm the safety director for Western Well, Western Drilling. One of my many functions at work is to carry the concerns of the employee back to the employer or management.

We've worked a seven-day-on, seven-day-off schedule before, just like the offshore people have. The folks enjoyed it because they had more time with their family. With this schedule, they worked seven and two, seven and two, seven and four. We drive about two to three hours a day to get back and forth from our rig. It doesn't allow much time with the family members. This schedule kind of frees them up, gives them seven days off to spend more time with their family, a 12-hour workday. They can still come home, as long as they're within the Kern County area, and spend some time with their family also there. So, like Dave said, they get a 26-week vacation per year.

Working on the rig is a little bit more difficult. I've worked out there for over twenty years. It's a little strange out there. It's hard to put it in perspective, what a drilling rig does and how you do the operations. But like I say, the current schedule at 8 hours is seven and two, seven and two, which the second two, that only works out to where you get off Wednesday night at four o'clock, and you go back to work at midnight Friday night. That's what we call "short-changed." The seven and four part, you get off Friday morning at eight o'clock, you don't go back to work till Tuesday afternoon at four o'clock. Or you get off Friday morning at eight o'clock, you go back to work Tuesday afternoon at four o'clock.

So, it's kind of a rough schedule to get used to. You get pretty tired pretty quick.

During 1999, while working 12-hour shifts, our OSHA recordable accident rate dropped to one half of the year before. That was a significant drop in the oil field industry. We have a lot of finger, hand, foot injuries. We saw an increase, since we have gone to the 8-hour, to our seven on, seven -- two off, seven, two, and seven, four days.

So, I just trust to you to see if you could help us out, get us back to a normal schedule, and get our people back to where they can spend some time with their families.

Thank you very much.

MR. MEYER: Good morning, commissioners. My name is Danny Meyer. I'm a working foreman for Western Drilling. I'm here on my day off to ask you to let us go back to a seven and seven schedule. Our employees would much rather work seven and seven. It gives us more time at home. It gives us a vacation every other week. A 12-hour shift reduces the number of trips to work.

Thank you for your time.

COMMISSIONER BROAD: Can I ask one quick question, Mr. Meyer?

MR. MEYER: Sure.

COMMISSIONER BROAD: What schedules are you working now? What are you doing now? What's the current schedule today?

MR. MEYER: We're working -- we're working the seven and two shifts, 8-hour shifts.

COMMISSIONER BROAD: Has anyone gone to 10 -- four-10 arrangements?

MR. MEYER: No, we haven't.

COMMISSIONER BROAD: And has anyone gone to arrangements where they're doing four, you know, 10's, plus 2 hours of overtime? Nothing like that?


MR. HARRINGTON: Not that I'm aware of.

COMMISSIONER BROAD: And I just want you to know that a lot of the 24-hour manufacturing operations, which, you know, maybe share -- I assume yours are 24-hour operations, right?

MR. MEYER: Yes, we're 24-hour.

COMMISSIONER BROAD: What the 24-hour manufacturing operations have done is gone to essentially an alternative workweek in which they vote on 10-hour days, and they simply pay 2 hours of overtime. And it is -- it is something that, you know, you may want to consider here as an alternative. You know, I'm not sure how much that really changes your costs, labor costs, in the sense that you're contemplating a schedule that would already have significant overtime in it. So that -- anyway, thank you.

MR. KNIGHT: Good morning. My name is Todd Knight. I work for Venoco Oil and Gas and have, for the past twenty years, in the Santa Barbara area.

I'm currently working with a seven-on, seven-off, 12-hour schedule and have been doing that for the last twenty years also.

It -- I think the reason I was asked to come here today was just to talk a little on the benefits of that 12-hour schedule. That was time with the family, time off -- I live quite far. I live in the Placerville area and I drive to L.A. every week, seven-on, seven-off, about a seven-hour drive. And having this schedule allows me to live where I want to.

That's about it. Thank you.


MR. PAHOS: Mr. Chairman, members, Theo Pahos, representing the California Independent Petroleum Association.

We join both our brethren in WSPA and the workers that are in front of you today and urge you to consider the changes before you, in this submission we have before the Commission regarding the wage order that was recently adopted by the wage board, which we happily did engage ourselves in.

I think we had a burden today to show that we are different than some of the other occupations that you're considering. Number one, we do believe we can make the case that we work in more remote areas than -- on average, than some of the other industries. Secondly, on average, we think that we have just about the highest paid employees. In Santa Barbara, you hear that a driller can make around $61,000. In Kern County, an average -- this is a very conservative estimate -- it's about $45,000. Many people are making much more than that. How many people in this room here supporting an increase in the minimum wage would take a job paying that kind of money? I think many would.

Secondly, besides the fact that I think that we have met the burden to show you that we are different, as it relates to the evidentiary burden on the Commission to overturn the two-thirds vote requirement, I think that review is a review of the public record that you have before you that is an accumulation of what happened in the wage board and what has happened before you as an IWC throughout your hearings through the state. And to my knowledge, there hasn't been one drilling employee that has spoke in opposition to an alternative flexible workweek.

Secondly, the drilling industry representative on the wage board never even showed up -- and that's not to throw mud at everybody. I sincerely believe that they support giving the industry and its employees the ability to work a flexible work schedule of 12 hours on, 12 hours off.

And again, I'd like to emphasize that we're talking about allowing the employees to elect to do this, if they feel it's in their best interest.

It should be pointed out that for the offshore drilling, I think we've set a precedent to treating this industry a little bit differently. The exception for the offshore industry was, in fact, moved and seconded by labor representatives. We were never given a chance, because of insufficient time, to make the case for the onshore drilling industry. It is this process that allows us to do that. And we think, because of lack of opposition to allowing the employees and employers to work an alternative workweek, we think we can meet that substantial evidence rule.

So, in summary, thank you for your indulgence, and we urge you to consider the changes we have before the Commission.

Thank you.

COMMISSIONER DOMBROWSKI: All right. I'm going to bring up Larry Rohlfes, Jamie Kahn, Phil Vermeulen, and Terry Street.

Once again, I'd remind everyone we want to keep some seats open in the front row for the panel, for the people as we bring them up. We only have two chairs.

Please identify yourself and your affiliation for the transcript.

MR. ROHLFES: Good morning. My name is Larry Rohlfes. I am the assistant executive director with the California Landscape Contractors Association. And we are a trade association of approximately 2,500 state-licensed landscape contractors who do landscape maintenance and landscape installation.

Our landscape maintenance workers fall under Wage Order 5, and I believe our landscape installation workers would fall under the proposed Wage Order 16, the on-site wage order.

I'm here today to clarify whether your June 30th amendments to the Statement as to the Basis apply to Wage Order 16, because when I read the Notice of Actions for the June 30th meeting, it seems to read that the amendments only apply to Wage Orders 1 through 13, Wage Order 15, and the Interim Wage Order for the Year 2000. So that is a question that I have for you.

MR. BARON: Your last statement is correct. The actions taken on June 30th would not apply to Wage Order -- this -- the proposed wage order for construction, mining, drilling, and logging.

MR. ROHLFES: Okay. Then I am here to make a pitch for writing similar language -- associating similar language with Wage Order 16.

For the benefit of everybody here, the June 30th amendments clarify that in presenting an alternative workweek schedule to employees, the employer need not specify the actual days to be worked within the workweek before the election. Once the alternative schedule is adopted, however, the employer must schedule in advance the actual work days, as well as the starting time and ending time of each shift.

The amendments also give the employer some latitude to make occasional changes with reasonable notice. However, these changes can't go so far as to create a system of on-call employment, thereby depriving employees of a predictable work schedule.

This clarification does not -- does not appear in proposed Wage Order 16. Instead, proposed Wage Order 16 simply states that an employer's proposed alternative workweek schedule agreement must designate a regularly scheduled alternative workweek in which the specified work days and work hours are regularly recurring. Now, without the clarification that appears in the June 30th amendments, the alternative workweek schedule option would be too inflexible to be used in the construction industry. This is because --

COMMISSIONER DOMBROWSKI: Let me maybe save some time. I don't think we have a problem with this issue.

COMMISSIONER BROAD: Yeah. I would certainly like to hearing the Building Trades' comment on this, but it seems to me that, given that we're talking about industries subject to inclement weather and so forth, if we're going to have alternative workweeks, we're going to have to have some -- a little bit more flexibility for employers, at least as much as what was in the wage orders for the rest of the state, the other industries. I would agree with that, though I think that, at least from my -- I would agree with the chairman on that.

MR. ROHLFES: Well, I won't go on --

COMMISSIONER DOMBROWSKI: Let me interrupt you.

MR. ROHLFES: -- and I will vacate my seat for Mr. Phil Vermeulen.


MR. ROHLFES: Thank you very much.


MS. KAHN: Hi. Jamie Kahn here, on behalf of the Associated General Contractors. And although we think we are making some progress on the wage order in terms of some of the issues, there are some concerns that we still have. And I'd like to kind of go over some of those with you.

The alternative workweek, we would support the -- Larry Rohlfes' request to have that Statement of Basis incorporated into the wage order.

On the reporting time pay, we would ask that there be a provision, an exemption, that would provide for acts of God.

AUDIENCE MEMBER: (Not using microphone) Can't hear you.

AUDIENCE MEMBER: (Not using microphone) Speak up! We can't hear.

COMMISSIONER DOMBROWSKI: Could you please speak up?

MS. KAHN: On the reporting time -- on the reporting time provision, we would ask that there be some exemption, an exemption provided for acts of God or those activities that are beyond the employer's control. That's standard in other wage orders, and we'd like to see that incorporated into this particular wage order as well.

On license for disabled workers, we still have a concern about that incorporation into the wage order. We still feel that that was not recommended by the wage board, and we would ask to have that one removed.

As to records, we are -- I would ask, if there's

-- if it's possible to define or give us some clarity on -- when it talks about recording of mealtime and split periods, what kind of records we're talking about. Is there -- do we need to have our employees log in and log out, or if there's some kind of special provision, or if there's some kind of way of giving us some clarity on that issue, that would be appreciated.

As to meal periods, we would ask that there be some language incorporated into that, similar to that that was recommended on the rest periods, providing that:

"Nothing in this provision shall prevent an employer from staggering meal periods to avoid interruption in the flow of work and to maintain continuous operations."

That would give us a little flexibility when a mealtime would occur and it would be in the middle of some type of a pour.

On the rest periods, we are still concerned about the issue having to do with monolithic pours. When you have a condition where they're pouring and it goes on for lengthy periods of time, we would like to see some types of flexibility as to those types of conditions. Those are -- the more disruptions that occur in a pour, the more problems that we might have in terms of quality and -- and we'd like to see that there be some kind of provision or some kind of flexibility in that area. We'll continue to work on that. We're not necessarily opposed to the idea as much as we feel that there needs to be a little more consideration as to those conditions that occur on a job when there's -- when a disruption in the work operation would create some problems.

We would also like to see some definition on the terms "authorize" and "permit." It says "authorize and permit rest periods." We would like to know if that means ensure, you know, if that would fall into a category where we'd have to have some kind of insurance or sign-off or logs that would indicate that a break was taken or not taken. You know, we -- as employers, we'd like to know what our obligation is in that area, to ensure or to authorize and permit, what level of requirement is that on the employers?

As to seats and temperatures, we'd also like to see those two provisions removed for construction. As we've previously expressed, these are not conditions that are workable for the construction industry. In addition to that, we don't feel that those were approved by the wage board and recommended by the wage board for this particular wage order.

On the elevators, we do feel that Cal OSHA does supersede in this area. But if this particular provision is left in, there's a discrepancy between the height that is required of elevators in this particular provision and those that are regulated by Cal OSHA. So we'd like to see that one removed as well.

And if there are any questions, I'd be happy to answer those.

COMMISSIONER BROAD: Jamie, what's your objection on the licenses for disabled workers? What --

MS. KAHN: That was never discussed at the wage board, and I -- you know, we would like to have an opportunity for the employers and the employees to at least discuss that. Is that something that we need to have in construction? We've never had that before. That's not something that -- you know, I think, that is necessary.

COMMISSIONER BROAD: Okay. I just want you to understand that what that means is that -- and maybe it's not applicable here in any context -- but what that means is that people that are, I guess, so severely disabled that they would be working in sheltered workshops or other places where there's an individual application for them, there's a sort of system for them to receive a license to work at less than the minimum wage. That's essentially what it amounts to.

I don't know that it has any applicability to your industry, and so perhaps we should take it out.

MS. KAHN: We're talking about on-site construction.


MS. KAHN: I think that there's certain dangers and safety issues to consider as well.


MR. VERMEULEN: Good morning, Mr. Chairman, commissioners. I'm Phil Vermeulen. I represent several construction trade associations in California, both, as I said the other day, signatory contractors and non-signatory.

And our concern, just to follow up on my colleagues and some of my remarks the other day, and touch on a couple other briefly, our concerns are that these wage orders reflect the real world in the construction industry. Mr. Broad just recognized the fact that, you know, as much as we like to accommodate as many different types of employees on a job site, you run into problems if somebody's severely handicapped, obviously, on a construction site. It just doesn't work. So we would ask that you take this into careful consideration on your adoption.

Let me touch on the elevator issue for a moment. My engineering contractors are underground contractors. They do sewer lines, water lines, big lines. How do you put an elevator in a trench? And, I mean, we're talking -- some of these go down, way down. So, I mean, we've got problems here.

Again, this goes back to my point: the construction industry is unique. You've got to take that into account.

With regard to the rest and meal periods, same thing. If one of my contractors is making a big pour that day, you can't stop in the middle of it.

And as I brought up the other day, the whole idea of the collective bargaining agreement is that labor and management sit down, because we know that we have unique circumstances where you can't take a break at 10:15 in the morning or 12 o'clock noon, right on the dot. In exchange for that, we increase wages, benefits, and other things to the workers, to offset some of those. And you have to take those into consideration. And to broad-brush and say that all these things work for the construction industry, they don't.

Same thing with seating: it doesn't work. How many times can you be sitting down being a carpenter, for example? It doesn't work. So I would ask that you --

AUDIENCE MEMBER: (Not using microphone) Especially when you're exploited!


Go ahead, Phil.

AUDIENCE MEMBER: (Not using microphone) A pour is no different from anything else --


AUDIENCE MEMBER: (Not using microphone) Construction workers --

COMMISSIONER DOMBROWSKI: We're going to take a break and we're going to have the highway patrol come in. If people are going to be speaking from the audience, they're going to be escorted out. Everybody gets respect.

AUDIENCE MEMBER: (Not using microphone) Some do, some don't.

MR. VERMEULEN: Again, as I was saying, Mr. Chairman, with our unique -- we try to be good employers, and I think that our record speaks for itself in terms of the -- on the signatory side, and as I would -- as I said the other day, I would ask that on the nonsignatory side, we're looking for a level playing field. Don't exceed what is there in collective bargaining agreements for the signatory contractors. That makes sense.

Make-up days, we have that on the employee's side. We would ask that, again, because of acts of God, that we have some latitude in there for the employer to be able to allow for a make-up day.

There was an interesting point that one of my attorneys raised last night to me, and that is, construction work is considered seasonal work. That's why the wages and the benefit packages are higher. And even the union agreements recognize in their benefits that 1100 -- roughly around 1100 hours is typically where the cut-off is for benefits. So, I believe -- what is it? -- 2200 hours in a working year if you're working in a regular job, 9 to 5 job, 8 to 5 job. That doesn't work in the construction industry.

And again, we offset that with higher benefits and wages.

With that, I urge you to look carefully when you go in your deliberations. This is going to have a major impact. We're trying to be good employers, and we would ask for your consideration.

Thank you.

COMMISSIONER DOMBROWSKI: Let me just reiterate something I've said privately, and I want to make sure it's on the record. I mean, you know, in talking about construction, my brother is in construction. I mean, he pours concrete, and I've been -- when I was back home in Wisconsin, he was pouring a bridge. It was like a 16-hour job. So, I mean, I get it.

On the other hand, I think everybody here has to understand there are going to be meal periods, there's going to be breaks, and how do we make it work in this wage order? We understand.


COMMISSIONER DOMBROWSKI: Please, no. No, no, no. Stop. Stop. No.

What I'm asking is for the parties to come together with some language that we can look at and make this thing work. I think both sides genuinely, I think, now recognize they have to come together here. So let's -- let's really get this done and get this done fast --

MR. VERMEULEN: Absolutely.

COMMISSIONER DOMBROWSKI: -- because we are -- we are running out of time.

MR. VERMEULEN: Yeah, we don't have a problem with that.

You know, for example, I've seen language talking about staggered. Again, that works, and that's typically what happens out -- Mr. Street here will -- as a contractor, will attest to that, that if you're doing a pour, you're coming up to lunch time, you stagger lunch breaks, let the guy have a sandwich. I mean, that's what happens every day, obviously, I mean -- and don't just lock our feet in so much that we can't operate in the real world. That's all we would ask.

COMMISSIONER BROAD: Yeah. Let me make this point, that I will make myself available with the chairman for a meeting, and we can do it tomorrow morning, to put this together. The fact of the matter is, from our vantage point, sitting where we are, there's very little left to argue about here, that almost all of these issues can be dealt with. They're rather minor. And to some extent, some of the stuff about meals and rest breaks, I think you guys are perhaps -- and I say this with all due respect -- you're getting trapped in sort of rhetorical stuff that arises when you get all -- everybody all excited about, you know, what we're about to do. Right? So you get them all excited about stuff, and the rhetoric sort of blows up. And it blows up beyond where the real issue is.

There's -- there is absolutely nothing in the current wage orders and in what's proposed here that now prohibits staggered lunch periods, staggered rest breaks. It's all pretty flexible to begin with. Now, we can -- we can clarify that further, and that's the sort of thing we're talking about.

We have seen bridging of the gaps between the labor side and the employer side on issues much, much thornier than what you guys are dealing with. This could be wrapped up in a meeting that takes about an hour, as far as I could see. And -- but we don't have a lot of time, so I would join Chairman Dombrowski in saying, like, "Let's get to it."

MR. VERMEULEN: We're committed. Again, I would ask one quick little follow-up, and that is like -- things like temperature, how do you do a temperature control on

a --

COMMISSIONER BROAD: I don't think temperature is applicable to an outside -- and we've said that -- but this wage order deals with both inside and outside situations. Not all of it is on-site. An offshore oil platform facility has some inside elements. A mine has some inside elements. We can't predict every single workplace, so that's why it currently talks about what's practicable, what's based on industry standards. That's already there.

And we can clarify that, perhaps in the language itself or in the Statement of Basis, to make it dead-on certain that we're not suggesting that when you go to a work site in the morning where you're going to pour the foundation, and there's nothing there, and it's 32 degrees, that, you know, we're asking you to make it, you know, 35 degrees. It's -- obviously, it's not applicable.


COMMISSIONER BROAD: It is applicable, however, if you're working in an offshore oil platform and the inside part of the platform where there are offices, it's not appropriate for those rooms to be 115 degrees. So that's -- that's the reason.

And so, we just want to make it make sense. We're not trying to do anything here that's impractical at all.

MR. VERMEULEN: Well, and that's all we ask, you know. And we're committed to working with you on that, to make sure that we don't put ourselves into a literal box.




MR. STREET: I'll be very brief because I know this -- I think we're just kind of reiterating a lot of the similar items.

I'm a general contractor, president of Roebbelen Contracting, in northern California.

THE REPORTER: Your name?

MR. STREET: Terry Street.

And we are covered by a collective bargaining agreement for our employees.

And, again, I think the flexibility is a key issue because there's -- there's costs involved with things that can happen. We've kind of beat that up.

Temperature, seating, elevators, again, were our issues. I think, even on the temperature issue, one of the things I don't want to get in conflict with is Cal OSHA-type related issues that -- you know, ventilation and those kind of things. They have -- there's other departments in the State of California that are going to deal with some of those unhealthy or unsafe conditions. And I'd hate to create a conflict in any of those, that, you know, we're getting enforced at different levels.

We're concerned. Let's not add more conflict to what's already being dealt with somewhere else.

And then again, the disabled scenario is something that, you know -- and access issue, job sites, you know, for a handicapped ramp. When you're building a handicap ramp, there is no handicap ramp. I mean, you've got issues there that kind of create a chicken-and-egg scenario that make that virtually impossible.

So, I'll be brief and thank you very much for the opportunity.


Okay. Let's shift gears. Scott Wetch, Paul Cohen, M. J. Dunlap, and Ronald Myers.

MR. WETCH: Thank you, Mr. Chairman. Scott Wetch, with the State Building and Construction Trades Council.

Being that this is the last hearing, I'd just like to say, first off, for the record, that I want to thank the Commission, the commissioners, and all the staff for the incredible amount of patience and diligence throughout this process, and the fact that I think is absolutely extraordinary, that this Commission has allowed every single person who's appeared at a hearing an opportunity to speak. And you should be commended for that.

Just briefly, I agree with what Commissioner Broad and the chairman have stated. We've been working for the last ten months -- especially I'd like to thank the Construction Employers Association and the Associated General Contractors for their willingness to work through these issues with us over that long period of time -- and that in regard to the rest periods, we're very close on finalizing language that we can both support to this board in regard to rest periods and flexibility in that.

We agreed prior to this Commission hearing to work out language regarding acts of God and occurrences beyond the control of employers that are similar to language in other wage orders, and we will hammer that out post haste.

In regard to the temperature, seats, and elevators, I think we've all agreed that that provision should be restricted to existing industry standards. And we can come up with some language, I think, that we can all agree on and that the Commission would feel comfortable with.

In regard to one of the issues raised by the AGC in regard to the language in the wage orders regarding "authorize" and "permit," our interpretation is, is that that is very clear, that the onus is on the employer just to authorize and permit. And if there's any sort of complaint filed with the Labor Commissioner's Office or through the grievance process, the burden is on the employee to demonstrate that they were prevented from taking their rest period.

In regard to the records, I think that we would agree that the same standards that are used in all the other wage orders in regarding to what needs to be maintained by the employer should be applied to this wage order as well.

And then, finally, in regard to the issue of some specialty sorts of production issues regarding long cement pours, certain types of tunneling work, I think that, again, we're committed to working out some language with the AGC and CEA that we can all agree to on those issues.

And with that, I'd just like to thank the board.

Being that I'm not going to be able to stay here, Mr. Chairman, I would just like to state the State Building and Construction Trades Council's support for the proposal on the minimum wage being put forth by the California Labor Federation. While it doesn't impact -- minimum wage doesn't directly impact any of the construction members that I represent, we have a longstanding history of supporting increases in the minimum wage. And because this wage order specifically indexes a few items to the minimum wage, it does impact our members. And for that reason, on behalf of the 300,000 members that I represent, we strongly support the $8.10 on the minimum wage.

Thank you.


COMMISSIONER BROAD: Scott, I need to ask you a question pertaining to the oil industry part of this, actually, as a member of the wage board.

Was it your understanding that you were covering with this alternative workweek, including 12-hour days, offshore oil platforms to the exclusion of any onshore facilities?

MR. WETCH: Mr. Broad, I'll tell you, to my recollection, how that happened. There was a motion by the drilling representative to apply a 12-hour day, or approve an alternative workweek for 12-hour days for both onshore and offshore. I made the motion, it was seconded by Wage Board Member Rankin, to limit that provision just to the offshore drilling.

However, I do have to refer to the record and I'd ask staff to do that, perhaps after the hearing -- my recollection is that I prefaced my motion by saying that we just didn't feel that in the time of the wage board that sufficient evidence had been provided to us at that process to convince us that there was a reason to do it onshore. But we didn't -- I didn't, in making my motion, exclude that perhaps, at a later date, there might be evidence to the contrary. We just didn't feel comfortable doing that. And that is the -- where I made the motion and where we went with it.

We didn't feel at the time -- the wage board specifically limited it just to offshore because we felt that that is the only instance where the evidence that was provided provided the argument to do that. But it was -- it was a limited amount of discussion.


MR. COHEN: Good morning, Mr. Chairman, commissioners. My name is Paul Cohen, representing the Northern California Carpenters, a member of the wage board.

I appreciate that we're finally getting down to talking about some of the detailed issues. I think if you go back and look at the record, at least the labor representatives, and some of the employer representatives, to be fair, at the first wage board meeting were attempting to get some of this discussion happening and get some of it resolved. I'm glad that we're kind of all agreeing, and I'd be happy to make myself available as well to try to resolve the last couple of outstanding issues.

I do want to just sort of make a general comment today -- I won't go into some of the technical issues we've talked about previously -- just sort of overall, that we've heard some testimony Tuesday, a little bit again this morning, that this is about collective bargaining and collective bargaining exemptions or interfering in the collective bargaining process. I would submit to you it's not about collective bargaining; it's about public policy.

Government sets sort of the minimum threshold in a wide variety of areas when it comes to labor: child labor, overtime, safety -- that's all well accepted. The occupations that would be covered by this wage order are hard, dirty, and dangerous work. On-site workers deserve the same minimum protections as workers in other industries and occupations in the State of California.

I'm a carpenter by trade. I'm proud of my craft and I'm proud of my skill at it. As I mentioned to you on Tuesday, over twenty years ago as a young apprentice, I sat in the union hiring hall and read Wage Order Number 4 -- it was posted -- and wondered why construction workers weren't given the same protection by the state as other workers.

I greatly appreciate having been given by you the opportunity to play a part in rectifying this situation. On October 23rd, you'll have the opportunity to extend this basic coverage to workers in the construction, logging, mining, and drilling industries, and I urge you -- I know you will do the right thing and approve this wage order.

Thank you very much.


MR. DUNLAP: Good morning, commissioners. My name is Michael Dunlap. I'm an operating engineer. I live in Alameda County, and I've been an operator for over twenty years.

I've worked in both grading, underground, hoisting, and drilling, and I'd just like to make a brief comment on some of the representations that were made here this morning regarding onshore drilling. The petroleum industry was here representing themselves as the drilling industry, and drilling is related to more than just the petroleum industry. I had the pleasure of working at the Geysers on more than one occasion, and I worked under collective bargaining agreements that basically allowed me to make a good wage, a living wage, make overtime that also allowed me to address -- one of the issues that was raised here repeatedly by the petroleum industry about working away from home and the time it takes to get to and from the drilling platforms -- the fact of the matter is, by virtue of the fact that I worked on overtime and got paid overtime wages with signatory employers, it allowed me to pursue something that I consider to be a wonderful recreation: I went out and got a pilot's license. And I can get to a drilling platform real fast.



MR. MYERS: Mr. Chairman, my name is Ron Myers. I'm with Laborers International. And I come out of the tunnel industry.

I met most of you gentlemen. I've sat with you on the board and whatever.

But I'd to iterate one very important thing, you know, is the fact that in the tunnel business, it's a totally different world than the world on the outside. And down there, it's a go-get-'em situation. The guys work different shifts. They do work 10-hour shifts, and there's a reason for that, you know, the haulage in and out and such as this. And I'd like to reiterate the fact that, you know, this ten-minute break, rest period, in a tunnel, it's almost impossible. But they do get breaks in between.

Also, I'd like to iterate the part about the pouring concrete, stuff like this, on a construction site. And that's one of the main reasons I'm here, to reiterate that and to say I think you're doing a fine job.

And one other thing I really shouldn't say, but we need more inspectors out there. I mean, all these rules and regulations are fine. We need more people out there to enforce them. Same way with OSHA, Cal OSHA, and the rest of the group. I know we have a surplus of money, and we ought to use it to protect the workers in the field.

Thank you.


COMMISSIONER DOMBROWSKI: All right. I have four more speakers on this topic, and then we will segue to minimum wage.

I don't know if John Perez is in the room, but if someone could locate him -- Sandra Benson, Janet Staples, Raymond Sandoval, and James Robinson.

Again, please identify yourself for the transcript.

Go ahead.

MS. STAPLES: Hi. My name is Janet Staples. I'd like to say thank you for allowing me to speak.

I'm going to touch briefly on show-up time/ reporting time. I think that every worker deserves a fair wage. However, I think that it is not a unique situation when construction workers drive in excess of 50 miles, and once they're on the job site, they're turned away for inclement weather, or a superintendent or foreman who decides to look up in the sky and say, "It may rain two hours from now," or, "There's no work."

I think we deserve show-up time pay, reporting time pay, whatever you want to call it. But I think that we should still deserve that.

And as a single parent, if I go home, my babysitter still needs to be paid. As other single parents, they must still pay their babysitters. So when we drive in excess of 50 miles just to be turned away, I think that is unfair. And we still deserve show-up time/reporting time pay.

Thank you.


MR. SANDOVAL: Hello. My name is Ray Sandoval, and I represent the nonunion workers. I've worked nonunion for eighteen years building homes.

The bad thing about building these homes and being nonunion is they expect me to supply my saw, my cords, my compressor for my nail guns, and also supply the gas. And also, when I work overtime, they expect me just to accept cash. And a lot of my fellow companions, who are getting paid probably minimum wage or a little above minimum wage, are supposed to be accepting the same thing, show up with a cord and a saw and do the same work as everybody else.

Thank you.

COMMISSIONER BROAD: Could I ask a question?


COMMISSIONER BROAD: So what you're saying is that it's frequently a standard practice to require you to show up with power tools?

MR. SANDOVAL: Yes, it is. On mostly the nonunion housing jobs, they expect you to show up with your cords and your saw.

COMMISSIONER BROAD: So including really expensive tools like, you know, nail guns and compressors?

MR. SANDOVAL: Yes, also that. They figure if you're going to do the roof, you need a nail gun to nail off the roof.

COMMISSIONER BROAD: Do they supply the nails, or you've got to bring those too?

MR. SANDOVAL: They supply the nails, but you have to supply the compressor, the gas, and the nail gun.

COMMISSIONER BROAD: They supply the cheap part.


COMMISSIONER BROAD: And what happens if the equipment wears out? It's just like, "Go get more equipment"?

MR. SANDOVAL: Well, basically, we work in a group of five, so basically, we're piece-working. And, yes, that's what they expect. They expect you to go -- they'll loan one to you, they'll rent it out, until you get yours fixed, or basically --

COMMISSIONER BROAD: So, let's say somebody puts a nail through the hose, right --


COMMISSIONER BROAD: -- which I've seen happen. And so that -- you know, it's dead for the day or something -- you know, it wears out, these things wear out. They rent you the equipment, the employer?

MR. SANDOVAL: No. That -- if you put a nail through the hose, you'll just repair it yourself, right there on the site. You usually carry parts with you. But what I'm talking about, the compressor breaks down, they'll probably be -- they'll be nice enough to go rent one for you, and then, as you get yours fixed, because you're paying for all this, then they'll just take it back. But basically, we have to go home and repair our own tools and take care of them, make sure they're in top condition.

COMMISSIONER BROAD: And do you think that's a pervasive practice?

MR. SANDOVAL: That's most of the practice that we've dealt with in the housing in over the last -- past ten years. It seems like the housing is going up, but the wages are dropping. And even sometimes they could be under minimum wage.

COMMISSIONER BROAD: Can you give me an estimate of what you think, in your situation, you're being required to invest in tools, what the value -- you know, essentially how much worth of tools do you have to buy?

MR. SANDOVAL: It's about $1,000 worth of tools to keep myself going, and the other four with me.

COMMISSIONER BROAD: And then the other four that are with you sort of --


COMMISSIONER BROAD: -- depend on you --

MR. SANDOVAL: They'll all pitch in together and get the compressor, the hose, and the nail gun. And we'll get a couple of skill saws, and we'll get about 400 feet of cord.



COMMISSIONER ROSE: Also on the job, when you leave for the day, do you have to take all the tools with you or is there --


HR -- a storage area provided?

MR. SANDOVAL: There is no storage -- there is no storage provided. We carry our own tools. They're our equipment.

COMMISSIONER ROSE: And if it's stolen?

MR. SANDOVAL: And if it's stolen, then it's our loss.




MR. ROBINSON: Good morning. My name is James Robinson. I've been working in construction as a carpenter for over 25 years.

I remember my first apprenticeship class when the instructor told us that we didn't get breaks on construction jobs. I was totally amazed. I'd already worked in restaurants, body shops, and mobile home factories and was always provided with a break, and I couldn't understand why this should be any different.

My years in the construction industry have been the most physically taxing work that I've ever done, long days in hot sun, cold rain, with sometimes not enough to even get a drink of water or use the restroom, let alone to take a break, rest, refresh your body.

I strongly urge you to make these mandatory breaks part of this legislation.

Thank you for this time to speak on this important issue.



MS. BENSON: Good morning. Sandra Benson, from Van Bourg, Weinberg, Roger, and Rosenfeld. I'll be very brief. In addition to representing over 500,000 unionized construction workers, I also sit on the California Apprenticeship Council's Blue Ribbon Commission on Apprenticeship Standards for the State of California, so I have a significant body of dealing with construction workers.

And I just want to thank the Commission because, with this order, you will be bringing to construction workers the basic dignity and rights that all other workers are afforded. And it's long past due.

We will definitely make our office available to work on any of the last-minute adjustments in the language.

And I'm sure that everyone will be glad to know Patty will be back tomorrow, so -- she's very familiar with this.

Thank you for your attention to this very important matter.



COMMISSIONER DOMBROWSKI: All right. We're going to shift over to the minimum wage.

John Perez, political director, California Labor Federation, has a panel.

John, I'm going to leave it up to you to identify or get them up here and I'll check them off as they speak.

MR. PEREZ: Great. We'll bring them up.

First off, Mr. Chairman, I want to thank you and all the commissioners for allowing us to give this testimony again today. As you've heard, some of -- through the last few hearings, some of the themes are consistent that we've been presenting.

To start us off today, I'd like to introduce Jean Ross, the executive director of the California Budget Project.

MS. ROSS: Thank you again. And I know that you have heard a lot of what I have to say before, but I'd like to reiterate a few key points and also address some of the testimony that you have received over the past several weeks.

Thank you. This has been a very open and full public process, and we appreciate the time that you have taken considering this issue.

First of all, a number of opponents of increasing the minimum wage have come before you and have suggested that few, if any, workers in our new economy work for the minimum wage in California. The facts say something quite different. Approximately 1.2 million California workers, about one out of twelve workers in California, works for the minimum wage.

The second myth that we've heard repeated is one that dies slowly, and that is that only teenagers work for minimum wage, and it's somehow a training wage that only the very young in our workforce receive. In fact, 84 percent of California's minimum wage workers, workers at or very close to the minimum wage, are adults; 62 percent, nearly two out of three, are full-time workers who work to support themselves and their families. While we don't have comparable figures for California, we know that nationally, a third of the workers earning less than $6.15 per hour are parents. And since a larger share of California's minimum wage workers are adults than for the nation as a whole, I think it's fairly safe to assume that at least a third of those earning the minimum wage in California are parents who are working to support not only themselves, but also their children.

MR. BARON: Jean, just to clarify a little bit. Both the 84 percent who are adults that work for the minimum wage, that is -- that is a California figure --

MS. ROSS: That is a California figure.

MR. BARON: -- as well as the fact that the 62 percent who are full-time workers, that's also a California figure.

MS. ROSS: That is also a California figure. The only thing that we haven't been able to obtain for California is the number that are parents.

COMMISSIONER BROAD: Excuse me, Jean. I just need to interrupt.

The Highway Patrol has asked that those of you that are sitting on the side take a seat so that they can figure out how many other people to let in, because there's people waiting outside to get in, and they don't want to overcrowd the room.

Thank you.

MS. ROSS: Another claim that you've heard repeatedly is that the minimum wage is a training wage, and that people rapidly move once they're hired to higher wage levels, and thus it's somehow appropriate to have this very low minimum wage. In fact, the best research that we've been able to find addressing this issue, which is by a Federal Reserve Bank economist and a federal Department of Labor economist, found that over 8 percent of the workers they studied -- and they used a special data set that looks at people over a ten-year period after they get out of school, so we've taken out anyone who is in high school or college out of this study -- and they found that over 8 percent of the workers spent at least half of their first ten years in jobs paying near the minimum wage.

That's about the same number -- same percentage of the workforce as a whole that works for minimum wage. And so I think it's fairly safe to say that a very substantial part of the minimum wage workforce is staying there. I'm sure that the individual employers are very sincere, and that reflects their employment practices. But if you look at the economy as a whole, for many minimum wage workers the minimum wage is a career, not a training wage.

The final myth is that the minimum wage -- or an increase in the minimum wage hurts employment. That's the old orthodoxy. And I think if you look within the economics profession, there's a new orthodoxy which shows that you can have an increase in the minimum and an increase in employment. Studies done of the California economy by Professors Krueger and Card, at Princeton at the time they did this study, research that was done for the California Budget Project examining the impact of the increases enacted by Prop. 210 and the federal increases in the minimum wage found that the increases had no negative impact on the California economy.

You've specifically heard from the restaurant industry that they have not had the kind of growth they expected. We used a number of different economic models. If you use one that controls at the county level for employment and unemployment trends, we found no statistically significant impact on employment in any of the industries that employ significant shares of low-wage workers.

Finally, there's the question of the adequacy of the current minimum wage. There are a number of ways to measure adequacy. The one that I suggested before that you look at is the one that was adopted by your predecessors back in 1961, which was the Minnie's Budget. If you update Minnie's Budget, which is a budget for a single person -- and we know that, again, there are some people supporting a family out there -- to buy the same market basket of goods that your predecessors identified some forty years ago would now take you to slightly over $8 per hour.

If you look at going back to 1968, when the minimum wage most closely tracked gains in the economy, and a comparable period in terms of the status of the economy and having a very strong economy, we'd have a minimum wage of $8.37 an hour.

We developed a standard that looked at what it takes to achieve a very basic standard of living for a family of four supported by two full-time workers. In order to buy a very basic market basket of goods, each parent working full-time would need to earn $10.69 an hour.

So, I think by any standard that one could use, clearly the current minimum is extremely inadequate. $6.75 is very modest, and I think there's very sound grounds to consider a minimum wage significantly higher.

I'd be happy to take any questions, and thank you for your consideration.

MR. PEREZ: Thank you.

Mr. Chairman, next I have Pedro and Sofia Zarco, who are joined by Rosalinda Guillen, the national vice president of the United Farm Workers, who will be translating for them.

MR. ZARCO: Mi nombre es Pedro Zarco --

COMMISSIONER DOMBROWSKI: A little louder, please.

MR. ZARCO: (Through Ms. Guillen, interpreting) My name is Pedro Zarco, and I work in the fields. Both my wife and I work in the fields, and we earn minimum wage.

The minimum wage does not allow us to really progress in our lives with our children. This wage doesn't allow us to provide for our children, to help them, give them proper education, to even take them to the doctor. In reality, this wage does not allow us much.

MS. ROJAS: (Through Interpreter) My name is Sofia Rojas, and I live in Arvin. I have -- the reason that I'm here is to let you know that I've worked in the fields. And during the last five years, I have worked and earned only the minimum wage.

I want you to know that this is an unjust wage, because with the minimum wage, we have to pay for daycare, we have to pay for rent, we have to pay our bills, we have to try to buy proper clothing for our children.

Many times, I have to try to cure my children -- my children's sickness with home remedies because I do not have the money to be able to take my children to a doctor.

So we want to let you know that if there's any way that you can find it within yourselves to raise the minimum wage and help us earn a little bit more, we would be grateful.

MR. ZARCO: (Through Interpreter) My wife and I, as we were saying, that for us it is sad that many times we have to cure our children with home remedies because we really not have enough money to take them to the doctor.

So we would like to say that we hope that you take into consideration the farm workers and raise the minimum wage so that you can help us at least attempt to have a better life.

Thank you.





COMMISSIONER BROAD: Rosalinda, I have a question. Rosalinda, I have a question.

First of all, thank you for coming, sir. Do you work full-time during the course of the year or only part of the year?

MS. GUILLEN: He says he works in the field for periods of time 8 hours a day, full-time every day, but he goes by, you know, seasonal.

COMMISSIONER BROAD: So in the course of the year, do you work, you know, nine months, ten months, twelve months?

MR. ZARCO: (Through Interpreter) I will work a season, four months, another season, seven months.


MR. PEREZ: Mr. Chairman, next I have with us the national -- I'm sorry -- the vice president emeritus of the United Farm Workers and the co-founder of the United Farm Workers, Dolores Huerta.

MS. HUERTA: Thank you very much for this opportunity.

I just wanted to bring some facts to the Commission here. First of all, back in 1982, we were signing collective bargaining agreements for $8.50 an hour minimum for farm workers. This was before the demise of the Agricultural Labor Relations Board, when many growers went to labor contractors and dropped the wages down to the minimum, when was then $4.25. So farm workers' wages have generally dropped 23 percent over the period of the last fifteen years.

Of course, as you heard here, farm workers have to compete with other people at the grocery store. The housing market is a -- farm workers have to pay the same rate for housing that other people have to pay. It's not unusual that farm workers have to $600, $700 a month for rent, which means that families then have to crowd together, which is a very unhealthy situation for the families, and also for the children.

I want to point out also that it's been very difficult to negotiate contracts for farm workers because the wage is so low. So even when you're trying to negotiate a wage increase, plus a medical benefit, it makes it almost impossible to be able to get what farm workers need to be able to live in a decent way.

I want to point out that in Washington State, the minimum wage is $6.50 an hour, which includes and covers farm workers. In California, we produce 60 percent, 65 percent of the fruits and vegetables of the country. We are the largest employer here in California of farm workers, you know. So I think that we need to really increase the minimum wage for farm workers in particular.

And this will actually help the economy because farm workers spend their money in the community. They don't put it away in stocks and bonds. They put it right back into the community in terms of buying the things that they need for their families.

Just one other -- two other points. One of them is that in our union contracts, we have a 15- -- we have 15-minute rest periods in all of our farm worker contracts. And as you know, there's also a lot of talk now in Washington about trying to bring in guest workers. Well, the thing is, if you raise the wages for farm workers, first of all, we don't have a labor shortage to begin with, because we have, in every rural county, anywhere from 10 percent to 20 percent unemployment. But I can assure you that raising the minimum wage will definitely solve any type of so-called labor shortage that exists.

Thank you.

MR. PEREZ: Thank you, Dolores.


MR. PEREZ: Next, Mr. Chairman, we have Rosalina Garcia, who you've heard from before. She's a janitor and a minimum wage worker in Sacramento, and she's joined by an interpreter as well.

MS. GARCIA: (Speaks in Spanish)

MR. RODRIGUEZ: (Interpreting) Her name is Rosalina Garcia. She is a janitor. She has -- she is a single mother, and she works in Sacramento.

MS. GARCIA: (Through Interpreter) I work 8 hours nightly, and I only make $5.75. That is not enough to support my children.

I take home $930 per month, and that's not enough to pay for rent, bills, and clothing, and to go -- even to do the laundry. That's not enough. We need you to increase the minimum wage.

We don't have money left to go to a park or to a zoo because there's no more money left. And the before I spoke said that we don't have enough money to pay for doctor. We have emergency medical only.

It's really difficult for us, not just for single mothers, but also single fathers. There's a lot of people behind me, and they're -- they cannot -- they've been struggling earning just minimum wage. There's no money left to pay for a babysitter.

Who takes the worst part of everything, of, you know, our problem, is our children, because they don't get to spend so much time with us because we are struggling getting another job. We don't have that much time to spend with them. And, you know, the children are the future of our country here.

We have a lot of thinking about how to pay our bills, and sometimes we don't have time to really put focus into our children's education sometimes because we have a lot of worries. We just have to think about how to pay our bills and how to survive with $5.75.

I would like you to put yourself in our shoes, and I believe you'll be on this side speaking before somebody else.

And we know that you have the power to put a little bit into our lives, and we urge you to do it.

Thank you very much.


MS. GUILLEN: My name is Rosalinda Guillen, and I'm the political director for the United Farm Workers as well as a vice president on the national executive board.

We would like to state for the record that -- realizing that this may not be the appropriate forum for this -- however, this is extremely important, that this is the only industry -- the agricultural industry is the only industry in California that's forced by law to work over 8 hours a day and over 40 hours a week and receive no overtime pay. This is -- we're talking also about a 10-hour day without overtime and a 60-hour workday (sic), as opposed to a 40-hour workweek, without any overtime. Currently, there is no seventh consecutive day overtime pay for farm workers.

We want to go down -- we want to make sure it gets in the record, even though we know that this is not the forum -- we will be back to discuss this, because we need to consider changing this. Apart from the fact that this is -- these are the lowest paid workers in California, we are also -- this is the only state that's excluding farm workers -- the only industry in California -- excuse me -- that's excluded from this kind of overtime pay. And it's time to stop.

So please make sure that goes on the record. Again, my name is Rosalinda Guillen, with the United Farm Workers of America.


MR. PEREZ: Mr. Chairman, again, I'd like to thank you and the other commissioners for hearing this testimony today.

We've brought with us a package that we'll leave for you of press clippings from throughout the state and letters to the editor talking about the important challenge before you as you consider this decision. But in particular, we brought with us a letter from Bob Waterson, a Republican member of the Fresno County Board of Supervisor, who speaks very clearly about his personal experiences and about the efforts in the County of Fresno to build economic strength in that county, and the importance of your work in increasing the minimum wage so that they can experience the economic recovery that they're attempting to have in Fresno County.

Today, as in previous hearings, you've heard from a variety of workers and you've seen that we've been joined by hundreds of workers from throughout the region who are here with us to express our great concern about the challenge before you to ensure that the minimum wage is adequately increased to support a decent quality of life for working people throughout the State of California.

Unfortunately, you have not been able to hear from enough of these people. There's one million minimum wage workers in the State of California, and an additional two million people living under $7.75 an hour in the State of California, people who would love to be with us today to present firsthand stories about the difficulty to try to provide for a family at these wages that you're considering, but people who are unable to be with us because they have to go and continue their daily work life to be able to provide for the quality of life that they're able to enjoy right now.

We ask that you join us in pushing forward for a minimum wage increase not to $6.75, but to $8.00 an hour to help the working poor in the State of California regain --


MR. PEREZ: -- to help the working poor in the State of California regain some of -- regain some of the purchasing power that they had in 1968.

Thank you, Mr. Chairman. If you have any questions --



COMMISSIONER DOMBROWSKI: Allen Davenport -- I'll butcher this name, I think -- Richard Dolezal, and then I have a card for American Friends Service Community Project, a panel of nine individuals, I believe -- you're here? Okay. Come up after them.

Go ahead, Allen.

MR. DAVENPORT: Mr. Chairman, Allen Davenport. I'm the director of government relations for the Service Employees International Union in California.

I'm here to specifically speak to the exemption of personal attendants, which is proposed to be repealed, as I understand it. And I understand at the last meeting, there was testimony protesting that exemption.

I have a couple of qualifications, I think, for speaking for this. First of all, SEIU represents over 100,000 unionized homecare workers in California who are not specifically covered by this order, but who do similar work under circumstances where they take care of indigent people in their homes, and who are paid from a source of state, federal, and county funds. We have collective bargaining agreements to represent all of these -- all of these workers in California.

And I did have the opportunity to review the order and look at the definitions that apply to personal attendants, and certainly, the people that we represent do many of these services. And these services basically allow people who are unable to take care of themselves because they have a long-term disability and they're aged, and need specific kinds of household chores done for them, and minor attendance to things like making sure they take prescription drugs on time and things like that. And I think that this does fall into the rubric of the kind of people we're talking about here when we're talking about personal attendants, though looking at the definitions, I -- you know, for instance, our folks do feed some people, but they also do the cooking and the dishes, and so -- and clean the house, because these folks can't get those kinds of things done any other way. It keeps them out of nursing homes. It's been a very successful program in California, and we're very proud to represent these workers.

But I think that -- the other thing that I can bring to you today is that I am -- when I'm not being the director of government relations for SEIU, I'm in this marketplace myself as an employer, and I have a daughter who needs to have constant attention when she's not attending school, and I do hire someone to take care of her when I'm not around and her mother's not around -- her mother works too. And so I'm familiar, I think, as an employer with the labor force and the labor market in this respect, and what you need to pay people in order to get good help in this area.

And I can tell you that exempting these personal attendants from the minimum wage or from some of the other provisions of Wage Order 15 makes no sense in the labor market today. These workers are engaged in bona fide employment, employment that's going to be growing in this century. We're getting away from institutionalizing very many people who need care of this type, and we are moving into a home-based kind of economy for many of these services. We ought to recognize these workers are no longer a minority in the workplace. They're a substantial portion in the workplace. They're practically 25 percent of my union in California.

So I think it's important that as the service economy grows, we get away from these kinds of shunning this kind of employment in the way the wage order previously applied.

I know there was some testimony at the last hearing as to whether people should be paid for time that they have to spend in the night with people who are not capable of being taken care of, and I wanted to specifically address that. I believe that -- it was reported to me that the testimony of the employers in this regard was that, well, people are just sleeping, and that we don't have to pay them for sleeping. I would submit to you that people are not being paid to sleep; they're being paid to wake up. They're being paid to be there when something occurs.

People that we're taking care of here can have dementia, so that they may be up at all hours of the night, they may be incontinent, they need to be taken care of in the middle of the night. There are a lot of things that go into live-in, 24-hour kind of care that involve work done during a period of time which would ordinarily be a rest period, but which, on an urgent and emergency nature, may need -- needs to be done. And I think we pay firefighters to be standing by for an emergency. There's no reason why we shouldn't be paying these workers for standing by in the case of an emergency.

So it makes sense to me that they should be paid the minimum wage for all the time that they are on the job. And if you want to have a rested person, you're going to let them sleep, but you're going to want to make sure -- their responsibility is going to be to be awake when they're needed. When I've had occasion, on a rare event, for a person that I've hired to do this overnight work, I can assure you that I have always felt that this person was on the job the whole time, even when they were sleeping. And I expected them to be available at a moment's notice to take care of my daughter when the time came. I would certainly expect them to be paid for the time that they were waiting.

You know, having looked over the whole wage order, I think there are a number of other exemptions -- I don't just think the minimum wage is one that we should begin to apply to this kind of work. I think that, you know, Item 5, on "Reporting Time Pay," "Records," Item 7: Item 8, "Cash Shortages and Breakages"; Item 9, "Uniforms, Equipment, and Tools"; Item 10, "Meals and Lodging Credit" -- I think, especially when you're talking about this overnight situation, it does seem fair that if people -- there are people who are so poor in this -- in this industry that they are essentially trading lodging for work. And I think that to the extent that you're going to pay them by the hour here for all the time that they're on the top, certainly there's a tradeoff in terms of the cost. And you've established a new cost in the wage order that ought to be deducted. But that seems to be the fairer way to go about this.

On the other hand, some people maintain two homes when they do this work, and they need that -- they have that additional cost also, so they need to be paid for the time that they're working.

Meal periods, rest periods, I don't think -- changing rooms, seats -- all of -- elevators, even -- all of these things can apply to household workers, to personal attendants. I don't know that they're all within the purview of the minimum wage here, but I think that, certainly, the ones relating to meals and lodging, uniforms and equipment, all of these -- cash shortages and breakages -- all of these things are wage-related, and I think you ought to consider as broad an exemption as you can under this particular wage order, under this particular circumstance.

I think that about covers what I had planned to go through here. But I did want to make sure that we got on the record as formally in support of repealing this exemption in the broadest possible way.


Mr. Davenport, that one -- I think one option -- at this point, I don't sense any view here among the commissioners that we should maintain a broad exemption for personal attendants from the minimum wage. The question -- the only question that's arisen is what occurs in the rather narrow circumstance where the person is regularly scheduled to be there 24 hours a day on a live-in basis. And that's more than simply overnight; that's -- they are there 24 hours a day, living with the person.

We can -- we can -- there's a couple of ways we can go with that issue. We can simply say that they're paid for 24 hours a day, but that the employer may, consistent with Section 10 of the wage orders, "Meals and Lodging," deduct a weekly amount for a room and the amount for meals which are supplied, or an alternative which I talked to you about yesterday would be something in the nature of, in that narrow circumstance where you are scheduled to work 24 consecutive hours, that you do not count as hours worked those 8 hours of time that is uninterrupted, and three meal periods, that -- however, if the person is interrupted, they're paid for the time that they actually do work during that period, and that the employer, in that circumstance, be required to provide room and board free of charge.

So I'd like you to think about whether that's an appropriate alternative. I don't think it's anything that you need to respond to today. You can certainly respond to us in writing. But it's something that I would like you to think about, whether it makes sense.

I have to say, from my own personal perspective, this is one of those circumstances where we're asking people to do one of the toughest jobs that anyone can be asked to do in our society, literally one of the toughest and most difficult jobs, to work with people that have significant disabilities, that may be dying, that have -- this is a very difficult kind of work, and it seems to me that we ought to be elevating their status rather than depressing their status economically, because a growing segment of our society, and probably everybody in this room, is someday going to need that kind of care. And I think we'd want the person caring for us to be able to care for themselves.

So I would like you to think about that and perhaps communicate with the Commission how you feel.

Thank you.

MR. DAVENPORT: Thank you, Mr. Broad. I will take that under consideration here. I think you could probably guess what I would respond right now, but the -- I understand you've got to get three votes here, and we've always had a --



MR. DAVENPORT: But in the long run -- right. In the long run. And I appreciate the Commission -- having worked with the Commission on a number of other occasions, I'm satisfied --


MR. DAVENPORT: -- that we'll get good work from you.


Mr. Dolezal, I didn't -- I may have inadvertently put your card in the wrong spot. If you want to testify now or if you want to wait for the employers' side, it's your choice.

Your choice. Go ahead.

MR. DOLEZAL: Yes, I am on the employers' side.

I am an employer. I'm --

COMMISSIONER DOMBROWSKI: Could you please identify yourself --


COMMISSIONER DOMBROWSKI: -- for the transcript?

MR. DOLEZAL: My name is Richard Dolezal. I'm a farmer. I live in Ripon. I've got 45 acres of cherries and about 40 acres of almonds.

I want to state that I'm not -- I don't think any of the employers are against the people making more money who have spoken here. The hardships they've spoken of are real. We cannot deny that. What I'm against is demanding that it come from farms and businesses that can never gross enough income to justify high wages. And I believe it's just an attempt to get blood out of a turnip. There's just not enough there to justify it.

It was stated earlier that you have the power to take -- or to give a little bit to their lives, and they urged you to do so. I guarantee you you have the power to take a little from my life, and I urge you not to do that.

Now, the one thing that I want you to realize is that when you vote to raise the minimum wage, you also vote to decrease the minimum employer's wages. It's a zero-sum game. You can't have one without the other. So if you give them more money, you're taking it from the employer. There's no way getting around it.

While some employers, mostly those that provide a service, can raise prices to cover an increase in costs in this present economy, most can't, most employers can't. Any of those in production agriculture have no ability to raise the price of their products. We are price takers, not price setters. Supply and demand set the prices. So if you raise the wages I have to pay my employees, I take -- I take it. I can't go and ask for more money. They'll only offer me what they think it's worth.

Now, in my situation in particular, as a cherry farmer, a couple times this year I had a hundred people out in the field. Now, if you raise the minimum wage $1.00 an hour, with all the other benefits, the deductions, you know, the FICA, the workmen's comp, the unemployment, you will cost me roughly $1,000 a day decrease in my wages, by raising the minimum wage $1.00 an hour. It's a huge hit to a lot of people in agriculture that depend upon a lot of hand labor. There's no getting around it.

So another issue is the issue of freedom. If the government has the power to raise the wages that I pay my employees above my ability to pay them, then I've lost my liberty to have that business. And I think liberty is more important than any concept of social justice here. Freedom is more precious, and it can be lost by this type of thing. If you raise the bar above which I can jump over it, I have lost my freedom to be a high-jumper. I can't do it. And I've lost -- we will lose our freedom to have a business if we can't pay the wages that you demand. And in some cases, it's big.

Those that advocate raising the minimum wage use some employers as the first proxy of their mercy. The vast majority of employers who pay minimum wage are small, struggling farms and businesses who cannot pay higher wages and justify the existence of their business. I believe that most of the employers would love to pay higher wages, but cannot.

To see someone in need and open up one's own wallet and help that individual with one's own funds is a beautiful trait that should be encouraged. But to see someone in need and then go to your neighbor, take his wallet out of his pocket, and give your neighbor's funds while not touching your own pocket, is morally decadent. It needs to come out of your pocket if it wants to be your mercy. Pity and mercy must come from your heart and your own wallet, not others. To demand that others be merciful with their funds on threat of prosecution and prison is extortion.

Now, here's a couple of things that's going to happen if you do this. No one will want to have a business whose success is predicated on entry-level or low-skill workers, knowing that the government will never be satisfied at the wages and benefits they provide. And employers know this. I know this.

And when I look at my acreage, I think, "I do not want to plant something that's going to cause me to have employees," not because I hate employees, but I want to exist, I want to survive. So that -- there's no doubt that that will happen, and has happened.

Second of all, the rich will own most of the land, as people needing to make a living off the land are driven off. When others -- when people must get out of farming because they cannot survive, the wealthy buy the land at decreased prices. The amount of land ownership on farms a number of years ago was 33 percent of the population. Now it's less than 2 percent. And you will push people that need to make a living off the land as you demand this. Only those that are independently wealthy can pay what they -- the business doesn't justify.

Thirdly, there will be few fruits and vegetables grown in the U.S.A. The new world order and its trade agreements allow foreign produce to compete against that which is grown here in the United States. While we function under many regulations and mandates demanded by the government, many of these farmers in other countries are free to do whatever they want to achieve a crop. They pay workers less in one day than we must pay in one hour, and we're in direct competition with that.

My contractor who picks my cherries told me that he'd need a total of nine bucks an hour to pick my crop. That price reflects the cost of minimum wage, workers' compensation, unemployment insurance, both state and federal employer FICA contributions, and other overhead mandated upon the contractor. The contractor needs a little wage, he needs a profit.

In Mexico, for example, they can get two workers in one day for the price that we have to pay in one hour, and we cannot compete against that.

In closing, I just want to say, when you mandate more than I can give, you've taken away my freedom. You should -- and I don't think you should be in the business of doing that. There's inequities in a free society, and I admit that, and there are inequities that come with a government-controlled society. And I prefer the inequities of a free society, and I do admit that there are some, to a government-controlled society.


MR. DOLEZAL: Any questions?


COMMISSIONER DOMBROWSKI: Okay. Let's bring up the next -- the panel, American Friends Services Community Project.

MS. MARTINEZ: It's the American Friends Service Committee Progecto Campesino and the Tulare County Civic Action League. We have a panel of about six or seven people that are going to give brief testimony, and I will be the interpreter. My name is Graciela Martinez.

COMMISSIONER DOMBROWSKI: Could I ask you to make sure you identify them for the transcript?


COMMISSIONER DOMBROWSKI: There are some more open seats over here.



MS. ROSALES: (Through Ms. Martinez, interpreting)

My name is Maria Rosales. I'm the president of the Tulare County Civic Action League. I am representing over 600 students that are on their way to becoming citizens.

I came to demonstrate to you what I earned last year. I am a single mother, and I have to keep up three jobs in order to survive. I work seven days a week. I have no days of rest. When there is no working in the packing house, I go and clean homes, or I work as a substitute in the childcare schools. And even with those three jobs, I cannot get ahead.

To be able to survive, to be able to make my house payment, which is $568 a month, I had to rent out one of my bedrooms in order to be able to help me pay my bills.

And with the minimum wage there is now, not even if you work 24 hours are we going to be able to survive. That is why we come here today to ask all of you to please raise our wage to at least $8.00 an hour.

I can -- I have here evidence, and I can demonstrate to you how much I earned last year. And I ask that the businesses and the growers also demonstrate how much they made last year so that they can compare.


MS. ROSALES: (Through Interpreter) I also brought my water bill to show you it is very high. Last month I paid $71. This month I only paid $61 because I didn't water my garden.

That's all I have to say. Any questions?


MS. ROSALES: (Through Interpreter) No questions?

COMMISSIONER BROAD: I have a question. Could you just please tell me what your three jobs are?

MS. ROSALES: (Through Interpreter) Right now, I am working sorting kiwi. When there is no work there, I work at a private home taking care of incapacitated people. Saturday and Sunday, I work at those jobs. When there's no work in either of those, then I call the schools to ask them if they have any jobs for me as a substitute in the preschools. And when there is no work in any of those fields or places, I make tamales so I can sell -- because I have to be able to make my house payment and meet my other needs.

I will work at anything that comes along because I have to make my house payment. And they say that this is an American dream, but it's not a dream because I have to work so hard to keep it up.

COMMISSIONER BROAD: Are there -- do all of the jobs that you work pay minimum wage? Do any of them pay above the minimum wage?

MS. ROSALES: (Through Interpreter) The childcare work I do, they pay me at $5.91 an hour. I can't come ahead -- get out ahead with that.

COMMISSIONER BROAD: When you work taking care of -- I guess it was -- was it elderly people? -- are you paid the minimum wage for that?

MS. ROSALES: (Through Interpreter) Yes.

COMMISSIONER BROAD: Okay. Never less than the minimum wage.

MS. ROSALES: (Through Interpreter) No.

COMMISSIONER BROAD: And is that -- are you employed by the person themselves, or is it through an agency?

MS. ROSALES: (Through Interpreter) By the person themselves.


MS. ROSALES: (Through Interpreter) They're private homes.


MS. RAMOS: (Through Interpreter) Good afternoon. I am Florencia Ramos. I too come to ask you to please raise the minimum wage because what we earn in the fields is not enough.

What the ranchers say, that they don't make enough, I feel is not true. They make a lot of money. They transport their fruit and they're well paid, but they never pay us any more. And that's why we came to ask for your help, because I feel that you can do that. We're really not asking for a favor, because as farm workers here, we are really living a miserable life. We're actually living worse than in our own country.

In Mexico, as somebody said earlier, even though we earn a little bit, at least over there we don't have to pay rent and other types of bills, so it allows us to have a little bit more.

I ask that the minimum wage be increased for all of us, not just for the farm workers, because we all have to pay rent and bills and doctor. I have children that are about four years -- I have children that I haven't taken to a doctor for about four years because they took away my medical card, saying that I was an indigent person and that we didn't have the benefits. And the children are citizens of the United States. They were born here. And even like that, they took away my MediCal benefits.

That's why I'm here today to ask for a raise in the minimum wage, because with both of us working -- my husband works for a large company, Foster Farms, and he too gets paid minimum wage. And even with both of us having a job, there's not enough to pay all our bills and be able to get medical care for our children.

I have never gone to a beauty salon to have my hair worked on, or my nails filed, or my toenails filed, because I never have enough money left over for that, but other people do have enough for it.

MS. RAMOS: (Speaks Spanish)

MS. MARTINEZ: That was a long one -- I'll try to remember.

She expressed her gratitude for your attention and she appreciates the Tulare County Civic Action League. They have helped her to become a citizen. She is now a citizen, and she hears that citizens have lots of benefits, so she's waiting to see what benefits she will gain as a citizen, and appreciates the people who helped her with the classes to become a citizen.

MS. RAMOS: (Through Interpreter) The day I became a citizen, there were 735 other people that became citizens. I don't know why they're doing it. It's possible that it could be because there's a vote coming up, but we'll see.

I send this message also to the president, the vice president, the Congress, and everybody -- not here -- I want everybody to hear this.

That's all. Thank you for listening.

Any questions?

COMMISSIONER ROSE: I'd like to ask why you and your husband came to America.

MS. RAMOS: (Through Interpreter) We came to see how America was, to see if it was true what we were told.

COMMISSIONER ROSE: Have you found what you're looking for?

MS. RAMOS: (Through Interpreter) No. That's a lie about the American dream. Here they say that it's the richest country and that we're going to come out ahead, that it's the place of the American dream, but it's not true because the one that's on top is always stepping on the one that's on the bottom, the one who doesn't have anything.


MR. RAMOS: (Through Interpreter) Good afternoon. My name is Alberto Ramos, and thank you very much for listening to what my wife had to say here. I also have a few comments.

I'm here also because of the minimum wage --

MS. MARTINEZ: I'm sorry.

MR. RAMOS: (Through Interpreter) -- and asking for your help.

MS. MARTINEZ: He's here to -- in support of the minimum wage.

MR. RAMOS: (Through Interpreter) You might be thinking, why do we have so many children? But it's not the fault of our children; we know that. We the parents are responsible. We don't think about it, but now I have my children. I have them already, and now I have to think about how to support them. It is our fault, but it's also a problem in that our children, who don't have enough -- we don't have enough to support our children -- seem to fall into crime. They fall into drugs. They fall into things that --

MS. MARTINEZ: He made a long list of things that the kids could fall into.

MR. RAMOS: (Through Interpreter) I don't have that problem in my home, but I have known of people who don't have enough whose children do fall into gangs or are causing trouble with the neighbors.

MS. MARTINEZ: I'm going to try to do a summary translation here from now on, because it's difficult for me to try to follow.

COMMISSIONER DOMBROWSKI: That would -- that would be helpful.

MS. MARTINEZ: Yes. And if the summary translation isn't working, please do let me know.

MR. RAMOS: (Through Interpreter) I'm sorry. Please keep it very present. Examine poverty. This is why the people in poverty are always at the bottom, because there is not a leveling off of wages some places. And they say when you go to ask for public assistance, you have to have $200 for every child. "You earn too little; we can't help you." That is what the programs, the government programs, say, the county and federal.

And how are we going to progress? This is the richest country in the world. California can support the United States very well. We have worked 22 years in this country, and I know all the movement of ranchers, contractors, companies. They are under the control, but not for the workers.

I say this because I live this. Now I work at Foster Farms. I am here not to complain about them, only for you to hear what I am saying. If you ignore me, that's okay. I will -- will do by talking what I feel.

I come to the cherry runs every year here in Stockton. A cherry is sold to Japan for $75, $100, or $150 a box. And the pickers get $3 or $4. How much of a gain is that in 50 tons? They don't see that when it's good for them. They know it when it's bad and they do not level out our salary, our wages. When you ask for the salary or the wages you want to earn, like $70, $80 a day, and they tell you, "If you don't like it, go; if you don't like it, go."

When I didn't have my papers, I worked a lot of time with Chincholo's -- it's a company in Stockton. When the harvest was over, the day before, they would call the migra, the border patrol, and keep our money.

That's why I'm asking that you try to control all those systems if you can. Please, we ask you because we came here to progress, but I haven't seen that.

My children, I think, will someday be somebody in this country because they're citizens. But on the contrary, I thank -- I thank them because they have not given me any help, because for the reason that if someday one of my children should need the military service to serve this country, I'd have a lot to tell them, because I have family in the service, and they don't see how they treat us. They just want us to serve them, keep serving them, and keep serving them.

I'm not mad at you. I just want you to rethink and analyze why there is so much poverty in this country.

That's all. Thank you very much for having invited us. Thank you.

Any questions?

COMMISSIONER ROSE: One question. Do you work twelve months a year?

MR. RAMOS: (Through Interpreter) Yes.

COMMISSIONER ROSE: And you were born in Mexico?

MR. RAMOS: (Through Interpreter) Yes.

COMMISSIONER ROSE: And you came to America why?

MR. RAMOS: (Through Interpreter) Because my sister came first. She never wrote to us, so I came to look for her. I stayed. I don't regret that. I don't regret that because my children were born here. But someday, my children will be helping your children, not just you, but I think that something -- one of my children has to be somebody. That is my goal. Of course, that's God willing

-- I can't do it by myself.



MR. SUAREZ: (Through Interpreter) Good afternoon, ladies and gentlemen. My name is Adrian Suarez. I am here helping out on issue of the minimum wage.

I come from the County of Tulare. I have approximately twenty years of living in the county, and I have worked there all this time in the fields. And already, I have seen that they've always got us obligated to second-hand workers.

I'm a father of four children. Fortunately, I have all of them in school right now. But lately, my wife and I have seen the cost of living raises daily, and the wages are down on the floor. They keep raising up very slowly.

My wife and I have worked hard to try to bring our family forth. And sometimes my wife and I just have time to greet each other, because I work during the day and she works at night in a hospital. Even with both of us working, we haven't been able to get ahead because of the cost of living being so high and the wages so low.

I work approximately 50 to 60 hours a week. And in spite of the fact that they pay me just a little bit above the minimum wage, it's not enough to be able to get ahead and take care of all our responsibilities so that we can get a good education. And we have responsibility to educate our children and to see that they get to college, or maybe a university.

The work that I do can be done by anybody because they say that the work in the field needs no skill. And that's why the boss has -- the law the boss has, that if we don't well enough because we are old already, then they'll take another worker, and they won't even thank us.

Unfortunately, we really can't count on any help from our employers because we don't have like security, any type of benefit. I came with all my fellows that I'm traveling with to ask for your help, if they can raise the minimum wage.

Being short, I think that's all I can tell you. Do you have questions?


How many -- just for housekeeping reasons, how many more speakers do you have?

MR. ESPINOZA: Three more.


For those in the audience -- I know that some of you are here for the sheepherder -- we have 12, 12 more -- after this panel, there's 12 more individuals who want to speak from the employer side on the minimum wage. So, I would estimate that would take probably another hour. I don't know if you've had lunch. If you want to go and have lunch, if you want to stay, obviously, you're welcome.

MS. TORRES: (Through Interpreter) My name is Guadalupe Torres. I'm a resident of Visalia, in the County of Tulare, member of TCAL. That's the Tulare County Civic Action League.

I'm here to support --

COMMISSIONER DOMBROWSKI: One second. Who has the cell phone?

Please, please --

COMMISSIONER ROSE: Shut them off. Come on.

COMMISSIONER DOMBROWSKI: Let's turn the phones off, folks. Come on.

MS. TORRES: (Through Interpreter) I'm a single mother of four children. My wage that comes into my home is $1,100. For the whole year, I earned $15,000. I think, with the kind of salary I'm earning, I cannot send my children to a university, because every day things are higher. Even though I'm just slightly above the minimum wage, not even that way can I pay all my bills, because if

-- I'm looking for a job now, a part-time job. I tell them that I want a salary of $7 an hour, and they get scared and they don't even call me.

That is why I'm here in support of all these, because every day things are getting worse. And I thank you very much for letting me be here. I hope that someday we can have a wage that we all deserve, all workers deserve. We all come, as they say, in pursuit of the American dream, and this is not true.

I thank you all for giving me the opportunity to be here today.

Thank you.

Any questions?


MR. SALAZAR: Good afternoon. My name is Roberto Salazar. I'm here representing TCAL. I think I'm here representing like the teenagers and kids that live in a house. With the minimum wage, it's like we're the ones that suffer more. It's like that's how it is in my house.

The other day, like my -- I live with my sister and my brother-in-law. My brother-in-law is the only one that works. And the other day, like he didn't work like for a month because there wasn't any jobs, and it was kind of sad because my -- I have three nephews that -- and so, in total, we're six -- and the other day, there was like no food in our house. And my nephews were like hungry and stuff.

And so I don't how my brother-in-law did it, but he like got money and came back with food.

And I think that was like really sad, because I don't think that little kids like that should suffer.

And it's -- we come to this country to get a better life, but when we get -- when we are here, we notice that it's like the same or sometimes even worse than our home country. And by the time we're here, it's too late to go back because we don't have the money to go back, or sometimes we have like troubles in Mexico or something.

So, that's like all I have to say. We need to raise the minimum wage, not for the parents or anything, but for the kids especially, because they need to go to school. They're the future, and they need their education.

And that's all I need to say.

COMMISSIONER ROSE: A couple questions. Explain the acronym. What is it? TCAL?

MR. SALAZAR: TCAL? Oh, that's Tulare County Action League -- Civic Action League. That's like -- isn't that for the classes? -- citizenship classes. I'm a volunteer there.

COMMISSIONER ROSE: All right. Were you born in this country?

MR. SALAZAR: No, I was born in Mexico.

COMMISSIONER ROSE: And why did you come to America?

MR. SALAZAR: I came because my brothers thought that I was going to get a better education here. But it's almost the same, I think. And it's like the same -- it's for better education for me, so I can have a better future. But it's kind of hard.


MR. ESPINOZA: Good afternoon. My name is Pablo Espinoza, and I have a written statement that I wanted to make to the panel.

Just before I make my statement, there are a couple of things that I wanted to share with the panel. I have lived in California for approximately forty years. And up to today, I have not heard one employer, whether you're in agriculture or out of agriculture, that admits that this year was so well, it was good. It seems like every year there's a problem with agriculture, or out of agriculture.

I don't know how much -- if I'm going to live long enough to see employers come -- Ms. Rosales challenged employers, "Here is my income of 1999" -- that employers are willing to come forward and tell us, "This is the income that we earned back in 1999."

Now, the other comment that I wanted to -- if someone would define for us what is the American dream, that anyone could tell us what is the American dream. I think people have a problem to define, you know, the American dream. It might look good on paper and words, but in reality, a lot of us, we didn't enjoy, you know, the American dream.

Let me read to you the statement that I want to read to you.

I am El Primo Pablo Espinoza, the director of the Farm Labor Project of the American Friends Committee. Our office is located in Visalia, in Tulare County, and we provide education and other services to the farm workers community of the central San Joaquin Valley. Typically, we provide information and education on many subjects, such as state and federal wages, hours, laws, pesticides, fuels, sanitation, drinking water, farm workers housing, and landlord/tenant laws. It is a pleasure to tell you about the wages paid to farm workers and the need to increase the minimum wages.

I was a migrant farm worker for twenty years, and I therefore have firsthand knowledge of the living and working conditions of farm workers.

A) The present minimum wage is only the beginning. I understand that the issue before this Commission is whether the minimum wage should be increased for all California workers. I want to focus on farm workers and raise a very important issue for farm workers. Under the IWC Order 14 -- -14, farm workers are not entitled to overtime wages unless they work more than 10 hours in a working day or more than 60 hours on a working week, except for the sheepherders and irrigators, who are generally exempt even from many basic rights. No other workers in other industries are required to work more than 10 hours in a working day or 60 hours in a workweek before qualifying for overtime. Other workers are entitled to overtime after 8 hours in a working day or 40 hours in a working week. Therefore, there's no reason or justification for requiring farm workers to work more hours than any other group of employees before they qualify for overtime.

Raising minimum wages is important to farm workers. However, it is perhaps more important to change the overtime provision of the Order 14- -- 14-80. When compared to other workers, farm workers have for generations, in effect, been working longer hours for less pay. This practice means that they have been paid less than the minimum wages when compared to other minimum wage workers who get overtime after 8 hours.

It is time for the Commission to change Wage Order 14-80 to require payment of overtime after 8 hours in a working day or 40 hours in a working week. There is no justification for the poorest among workers to work the longest hours. Farm workers should be placed on an equal footing with other workers. They deserve no less.

B) The next step is to provide greater enforcement in the fields. Increasing the minimum wage without increasing enforcement in the fields will mean that many farm labor contractors and growers will find even more ways to avoid paying the minimum wages without fear of detention or persecution. Our experience is that the farm labor contractors continue to pay farm workers less than the current minimum wages. Workers are required to pay for necessary and required tools and equipment, such as gloves, knives, pruning shears, saws, picking buckets, sacks. Oftentimes grower or farm labor contractors will require workers to do work before and after official starting and ending times, will not record or pay the time as time worked.

For example, growers or farm contractors require workers to be at the work site prior to the official starting time so they can prepare tools and equipment such as boxes or trays, which they will use during the working day. They also require farm workers to do exercise prior to the official starting time. At the end of the day, workers are required to complete boxes, and many employers will not credit workers with partially filled boxes or putting away equipment after the official ending time. None of this work is included in the working hours as the time worked. None of this work is paid.

During the workday, growers and farm labor contractors will often not give farm workers rest periods or will reduce their lunch periods to less than half an hour. This practice extends the number of hours worked in a working day and reduces workers' wages, particularly when they are getting paid the minimum wages. For example, if a worker -- if a worker worked 10 hours on the clock at minimum wages, he is entitled to $57.50, 10 hours at $5.75. If, however, all hours worked are recorded, including off-the-clock hours, then it's clear that the worker is getting paid less than the minimum wages.

Personally, farm workers have two choices. They can bring their own lawsuit for unpaid wages in court, or they can file a claim with the Labor Commissioner's Office. Neither of these choices is meaningful. Except for a few attorneys in the private sectors, there's virtually no one to file a lawsuit on behalf of farm workers. For private petitioners, the costs overweight the benefits. But for farm workers, even a few unpaid wages could mean the difference between paying the rent or providing food for their children.

As to the Labor Commissioner, my experience is that the office is largely unresponsive and unwilling to aggressively go after farm labor contractors or growers who violate the law. Farm workers, therefore, have few resources to enforce their rights. Because of the resistance to increasing the minimum wages, many employers will not pay farm workers the increased wages, knowing fully well that they are very likely to go unpunished.

Accordingly, while it is important to raise the minimum wages, it is even more important to ensure -- to ensure that growers and others will comply with the law. The IWC and the Labor Commissioner must do more to enforce the rights of farm workers at the workplace so they realize the full impact of increases to the minimum wages.

C) One dollar over two years is not enough. In farm labor, very few employers pay more than the minimum wages. Even fewer provide health and other benefits. An additional dollar will not enable farm workers to pay for the increased cost of housing, food, fuel, and other necessaries of life. In additional, 50 cents in an hour does not help. In a 60-hour workweek, a farm worker will get $30 more before taxes. Over the course of an average season, about seven to eight months, farm workers may see an increase of about $900 before taxes. Phased in, this dollar, in 50 cents next year and 50 cents the following year, will not help farm workers.

We believe that farm workers must get at least $8 an hour and that this should be implemented immediately. It would be an increase of $135 a week, or $4,000 over an average season. This increase would enable farm workers to meet their immediate needs and to properly provide for their families.

We also believe that an adjustment to the minimum wage should be made annually based on the Consumer Price Index.

Let me give you an example of why this increase is necessary. Our office is in contact with a farm worker family of six wage earners. They are a hard-working family. They each get a minimum wage of $5.75, and their yearly income is $13,000. This family is way below the federal government poverty guidelines and has no reasonable hopes of providing for itself unless the minimum wage is increased to at least $8 per hour. With this increase, this family would see an additional $5,000 per year. Even then, each of the wage earners would average $3,000 a year and the family would still be under the federal poverty guidelines.

D) Conclusion. This Commission must act properly in increasing the minimum wages for all workers, but it must also address the specific condition of farm workers. They deserve recognition for their hard work and to be treated with dignity and respect. None of these workers enjoy the American dream. They have not been the beneficiaries of the booming national economy. It is time to start treating our most important workers as second-class citizens. No one in America deserves to be paid with Third World-like wages.

Thank you. Pablo Espinoza.


MS. MARTINEZ: And last, but not least, Graciela Martinez. I'm also with the American Friends Service Committee Progecto Campesino.

And my mother was a single working mother. And through a series of misfortunes, we came to California. And she had to go work in the fields. And I'm an example of a family that was not able to educate their kids. I was only -- my mother could only put me through high school. Had she been making the kind of living wage, a wage that could have afforded sending me to college, I might be sitting up with you, Bill, or with Barry.

COMMISSIONER DOMBROWSKI: I wouldn't -- as the youngest of eight, whose father was a janitor who made $300 a month, I would encourage you to not give up on the American dream.

MS. MARTINEZ: The American dream --


MS. MARTINEZ: I still have stars in my eyes, and I too am still in pursuit of the American dream.

We ask for a definition of it. It's hard. I know that a lot of people that come from Mexico, it's a lot better over here, but still, the living wage is -- it's not a living wage. It's not a living wage. I don't think that any of you sitting up there could ever support your families and your wives on $5.75, $6.25, even $8.00 an hour, at least not in the way that they're used to living.

And then just to counter the gentleman who came up before, who was a grower and who complained about if you raised the wages, that he wouldn't be able to afford his job, well, I have this to say. I live in a rural area. I live way out in the country, and I have to take all the rural roads to get to work. And I'll tell you -- and I -- and I tell you, I see the grower driving by in a nice big truck, I see his wife driving by in a nice big truck, his kids spin rocks in my little Ford Taurus in their nice little GTO's, their little Beamers, so if the rancher doesn't make that much money, then how come they have to live in such high standards when those of us down here that are earning -- well, I'm not earning minimum wage, but I was at one time -- can only afford to buy rags for cars, which only lead to more problems? We get them out on the street. We get a ticket because it's throwing out a lot of smoke. It's all we can get.

So, it's actually -- the wage that we have now is not a living wage. It actually puts a big burden on the people who don't earn enough. They don't even have access to the legal system, no access at all.

So, it's not just being able to feed your kids; it's a whole range of things, even going to the movie show. So please consider -- $6.75 even is not enough. Even $8.00 is not enough. We need a raise to $8 -- at least $8 an hour, and we need it now.

Thank you very much.

MR. ESPINOZA: Let me just make one comment, because all the people who testified before me, you know, all of them, I think we need to provide you all the information so you can make, you know, a decision. All the people who came, even people who are making above the minimum wages, all those people, they fall before -- way low -- way before -- way before the poverty guidelines. You know, you've got people here -- I've got people today that have families. You know, under the federal guidelines of 1999, we families should earn $28,000 -- $28,000. These people earn $13,000. How do these people survive?

Many of them, they go on Saturday mornings -- wake up early and go to the yard sales to buy some decent clothes, you know, or fair clothes.

But we want you to take into consideration that these people -- and I gave you, on my packet, to each one of you -- we gave you a copy of the poverty guidelines, you know. And we need to do our homework. I mean, why people

-- why people, especially farm workers, are being punished? You know, we cannot substitute -- I mean, we cannot continue, you know, working for low wages, you know, when it's back to, you know, that the economics is so great, you know -- onto the side of the farm workers.


MR. ESPINOZA: Thank you.


Okay. I want to ask Cynthia Cory, Dino Petrucci, Mike Webb, and Catherine Nyberg.

MR. PETRUCCI: Do you want us in any particular order?

COMMISSIONER DOMBROWSKI: If you want to go first, go ahead. Just identify yourself for the transcript.

MR. PETRUCCI: I'm Dino Petrucci. I'm president of the Madera County Farm Bureau. My parents came to this country in 1919 and 1921 searching for the American dream, and they found it. They found it through hard work.

They had two children because they felt that's what they could afford. And my brother and I have lived on the ranch that we paid for, that my parents paid for, doing very, very hard work.

Now, I want to talk about the minimum wage and how it affects me. My salary for farm work last year was $35,000. I delivered grapes the last two weeks. I delivered grapes to the winery in gondolas not knowing what I was going to get for that grapes. I still don't know. My brother and I delivered 1,000 tons of grapes, and we have absolutely no idea what we're going to be paid.

The man who grows cherries gave you the same scenario. He talked about his crop, the problems that we have. We're the only industry that is told what we're going to get for our commodity.

I grow corn, I grow pumpkins, I grow deciduous fruit, and I grow grapes. And every one of those crops this year are a disaster. The economy in agriculture is at a low ebb, and I think that it's going to be lower this coming year. My guess is that in grape industry, that tons of grapes are going to remain on the vine.

I left home today with 23 employees cutting grapes. Granted, an increase for these people would be a necessity, but we have to consider the other side of the picture too. And the other side of the picture is this. We have to compete with the rest of the United States who has a lower minimum wage than we have. We have to compete with the world and the world trade, and we've opened those markets now, and I have no opposition to that, except -- except that we need to play on a level field. And that level field means that they need to meet the requirements that the California and the United States farmers have to meet as far as insecticides are concerned, as far as pollution is concerned, and anything else that you want to talk about. Maybe what we need to do is consider a tariff that would allow this to happen.

Now, as I mentioned earlier, I have absolutely no opposition to increasing wages. But at the same time, we have to increase the thing that all of us in this room need to have, and that is food. We are -- we are able to get food at the lowest price in the world. Now, an increase in wages would not allow that to continue.

So I urge the Commission, Chairman Bill and the rest of the commissioners, to take into consideration that there are more problems than just raising a minimum wage. We have farmers in our community that will not be able to cover their debt this year. We have people that are in farming that will no longer be in farming next year -- good farmers, outstanding farmers that do all the right things. But unfortunately, as I mentioned earlier, we can't demand a price. We're told what we're going to get.

I thank you for your time. If you have any questions, I'd be glad to answer them.



COMMISSIONER BROAD: -- I believe you said you delivered 1,000 tons of grapes to market.

MR. PETRUCCI: Yes, sir.

COMMISSIONER BROAD: So that's two million pounds of grapes.

MR. PETRUCCI: A thousand -- I didn't figure it out, but we delivered 1,000 tons, yes.

COMMISSIONER BROAD: Okay. Did you deliver a comparable amount of grapes last year?

MR. PETRUCCI: Yes, sir.

COMMISSIONER BROAD: And what was the gross that you brought in for that?

MR. PETRUCCI: The gross was in excess to what we're going to get this year.

COMMISSIONER BROAD: No, but I mean what was it? How much in dollar terms?

MR. PETRUCCI: In dollars, last year it was $175 a ton on the average. This year it's $100, $125 if you're lucky.

COMMISSIONER BROAD: So you brought in how many millions of dollars out of that? I mean, how many -- I guess I just want the actual figure. What did your farm gross last year?

MR. PETRUCCI: My farm gross this year is going to be roughly $50,000. I have a loan for $50,000, so my share of the 1,000 tons, sir, was half of that, 500 tons. At $100 a ton, that's $50,000. My expenses on that were $35,000 for labor. Now we have to add water, we have to add insecticides, we have to add fertilizer, we have to add taxes, and according to my banker, he says, "Dino, you're going to break even, if that, this year."

That's -- that's the story. That's the way it is.

I was talking to a wool grower back here just a few minutes ago, and he said -- I asked him, I said, "What are you getting for wool this year?," and he says, "I bury it." I said, "What did you get twenty years ago?"


MR. PETRUCCI: That's the common thing that's happening to agriculture.

And again, I repeat, I know what my employees need as far as making a living and providing. But they have to give some consideration prior to some of the things that they do.

COMMISSIONER BROAD: No, and I -- I'm sensitive to agriculture. I have chicken growers on both sides of my family a couple generations ago.

MR. PETRUCCI: They're luckier.

COMMISSIONER BROAD: They went broke before they ever hired their first employee. They just worked, you know, 18 hours a day themselves. And I understand that. But at the same time, there is sort of a truism here that there are -- you know, there are no rich farmers, and that when farmers say they're having a -- you know, they're going out of business, they're having a great year. I mean, you know, there's a lot of nobody's making a living, nobody can afford anything, and that's sort of a continuous cycle.

And it strains credibility a little bit that, you know, farmers are all impoverished. And, you know, I appreciate the difficulty of an industry that's based on seasonality and so forth, but it is also California's largest industry, and somehow, despite being in a constant state of bankruptcy, it manages to go on. And to me, it makes it very hard for us when we hear this kind of stuff and it's -- it's not -- it's just simply hard to believe that you're all going broke all the time.

And I understand there are good years and there are bad years. Lots of employers in this state have good years and bad years. I mean, it's the same for a lot of people.

MR. PETRUCCI: But, sir -- but, sir, how many -- how many are told --

COMMISSIONER DOMBROWSKI: By the microphone, please.

MR. PETRUCCI: How many are told what they're going to receive for their product? I mean, you -- I've heard the oil drillers today, I've heard the carpenters today, I've heard everybody. But, you know, they know -- they know what they're going to receive.

Unfortunately, farmers do present a bad image. The woman that spoke about the new pickups and that type of thing, I happen not to have a new pickup. I'm not a pickup farmer. I'm out -- before I came here today, I went out and changed water. I know what farming is. I've got the calluses to prove it.

COMMISSIONER BROAD: And I totally believe that. But I also believe that not every farmer, you know, is in -- sort of next to bankruptcy all the time.

MR. PETRUCCI: Agreed. Agreed. I can't dispute that, sir. I can't dispute that.

COMMISSIONER BROAD: And I think it makes it difficult for us because, you know, when Proposition 210 was on the ballot to raise the minimum wage, and it raised the minimum wage by a percentage, considerably above the percentage that's being contemplated here, I don't even believe the agricultural industry opposed it.

MR. PETRUCCI: And yet -- and yet it cost one farmer in Madera, a large farmer, over $2 million. The increase this year, for my -- I also do catering -- the increase for me in both my occupations will cost me $5,000. If it wasn't for my catering, I'd be where you're saying I can't be, I'd be broke.

COMMISSIONER BROAD: I mean, I don't dispute that you may not have -- that you may not be the wealthiest farmer or whatever. I'm just saying that what we hear here is that nobody in agriculture is making it.

MR. PETRUCCI: Not this year. You need -- what you commissioners need to do is check the results of our income. I heard this morning, and I -- it must be wrong -- we had the best year in agriculture we've ever had this last year. 44 percent of that was because of the government making payments. That's wrong, entirely wrong. They ought to take that way. It ought to be supply and demand, and we ought to be able to pay for what we can pay for, and we ought to stop this doggone thing of foreign imports coming in at a lower price than we can produce it.

That's all --



MR. PETRUCCI: Thank you very much.

MS. CORY: Chairman and members, Cynthia Cory, from the California Farm Bureau. I'm going to take for granted that you're up there. I can see kind of the tops of your heads.

COMMISSIONER DOMBROWSKI: You didn't hear our order when we said we needed telephone books, but nobody brought them.

COMMISSIONER BROAD: They must grow them tall in this county. I don't know.

MS. CORY: I'm going to be very brief and very succinct.

I'm here today to ask for a delay in the proposed minimum wage increase. As you've heard from Dino and as you'll hear from a number of other growers, agriculture is n not enjoying the benefits of the healthy economy that other business sectors are in this state. We're not a dot-com business. I wish we were. I sure the heck wish we were.

I've been hearing from the growers and ranchers that I've been working with for the past ten years. If they're getting the same prices they got twenty years ago, and I know we can all say, well, is that -- you know, as Commissioner Broad has said, we hear that a lot.

Well, I decided I wasn't going to come here and say that without some backup, so I called the ag statistician, the chief ag statistician from the Department of Food and Agriculture, yesterday and asked him. I said, "Do you have anything in all your statistics from USDA or from CDFA that shows the prices that growers have been receiving for their commodities and what their cost of production is for now and from twenty years ago?" And I'd like to provide that for you today, and it's on their letterhead direct from them, and I've brought copies.

I'd like to say that the growers had, you know, exaggerated. But actually, what they did was they underestimated. They're getting one percent less for their commodities than they did in 1980 -- than they are getting today. The price of production has increased 26 percent. So, I just want you to take that into consideration. So you might think that this is anecdotal, but I would like to provide the figures for that.

COMMISSIONER BROAD: Is that in real dollar terms?

MS. CORY: That is a price index that is used on a federal and state level, and I've got the whole explanation here for how the index is created.

COMMISSIONER BROAD: But -- so, then, balanced against an even larger decrease in the real value of workers' wages, what does that mean? I mean, they -- I mean, real hourly wages in agriculture, as I understand it, in real dollar terms have declined more than one percent.

MS. CORY: I'm just telling you that we're getting the same prices we got twenty years ago, and our prices have increased 26 percent. The math doesn't work.

COMMISSIONER BROAD: Yes, but the workers are getting less.

MS. CORY: How are the workers getting less, Barry?

COMMISSIONER BROAD: Because they're -- what -- you're obviously getting increased -- if you're saying it's an index and you're looking at adjusted for inflation --

MS. CORY: Absolutely.

COMMISSIONER BROAD: Right. Well, workers' wages in agriculture, adjusted for inflation, have declined.

MS. CORY: Well, it's all relative, isn't it? I mean, if we're -- if ours are adjusted for inflation and we're getting the same we were getting -- one percent less than we were getting twenty years ago --

COMMISSIONER BROAD: And they're getting 6

percent --

MS. CORY: -- how are we supposed to pay them more?

COMMISSIONER BROAD: And they're getting 6 percent less.

MS. CORY: Well, I'm just -- there's two sides to every story here --


MS. CORY: -- and I just hope you can understand it, you know --

COMMISSIONER BROAD: No, I -- I do, but --

MS. CORY: -- that we didn't yell or jeer at anyone when they got up here and said that they were having hard economic times.

So, that's our only point. I know you've heard it many times, but this time I would like to provide the numbers to back it up.

Like, again, I'm asking that -- you know, as you know, we prefer that you do not move ahead of federal action on an increased minimum wage. We believe that the minimum wage needs to be set at a federal level. And that's -- and that's our -- my point I'd like to make today. Thank you.



COMMISSIONER ROSE: One question. I'd ask the gentleman, what kind of grapes do you grow?

MR. PETRUCCI: We have Thompson seedless, today we're harvesting Carignane, that go for wine, and we have French Colombard.

COMMISSIONER ROSE: Do you do raisins too?

MR. PETRUCCI: No, we do not do raisins. I haven't done raisins in ten years. We got caught with rain three years in a row and forgot it.


MR. PETRUCCI: Thank you very much. Thanks for your time, commissioners.


MR. WEBB: Good afternoon. My name is Mike Webb. I'm with Western Growers Association. We represent approximately 3,500 growers, packers, and shippers of fresh produce.

We oppose the proposed increase in the California minimum wage. We believe that the minimum wage should be uniform throughout the United States, and any increase should be handled on the federal and not the state level.

An increase in the California minimum wage places California agriculture at a competitive disadvantage to farmers who grow outside of California, whose labor costs are lower than those in California.

Also to be considered is that agriculture typically operates on a small profit margin. Growers, packers, and shippers of produce are price takers and not price makers, meaning that the market sets the price that they receive. They can't set it. Thus, any increase in the California minimum wage has to be taken out of their already small profit margin.

We believe that an increase in the California minimum wage would have a detrimental effect upon California agriculture, and we must oppose the proposed increase.

Thank you.

COMMISSIONER BROAD: Can I just a question? What's -- would you consider us to be competing against states near us? I mean, who are we competing with?

MR. WEBB: We're competing against states such as Florida, Texas, Arizona, other states that have a lot of produce coming out of their borders.

COMMISSIONER BROAD: Washington and Oregon?

MR. WEBB: Correct.


MR. WEBB: But, I mean -- yeah, I mean, those states as well.


MR. WEBB: And we also -- we also are competing with Mexico and Chile and foreign markets as well, who also have lower production costs than California.

COMMISSIONER BROAD: So, do we -- do we manage to compete with growers in Oregon and Washington?

MR. WEBB: Yeah, we compete with -- I don't understand what your question is.

COMMISSIONER BROAD: Well, they have a higher minimum wage than we do. So --

MR. WEBB: But, I mean, those are -- those are two examples. But, I mean, there's a -- I mean, when you look at the United States, how many states have a higher minimum wage than California? You're looking at two, maybe three, states. The other 46 states, potential production states, have a lower minimum wage, and the competitive disadvantage is there.

COMMISSIONER BROAD: Right. Although they don't all produce crops that we have --

MR. WEBB: Correct.

COMMISSIONER BROAD: -- growers that do.

MR. WEBB: And neither does Oregon and Washington.

COMMISSIONER BROAD: Right. I mean, it depends on the crop. So, in fact, you can't make a simple comparison between our state and other states because there's other variables like our weather, right?

MR. WEBB: Correct. But, I think, with Arizona, Texas, and Florida, the three states that I mentioned, they produce many of the same crops that our members do.


MR. WEBB: And whereas Oregon and Washington produce some of the crops that we produce, I don't think that the comparison could be made with those two states as great as it can be with Texas, Florida, and Arizona.


MS. NYBERG: Hello. My name is Catherine Nyberg, and I'm with the Agricultural Council of California. And we represent agricultural cooperatives throughout the state.

We oppose any increase in California minimum wage at this time, and we think a decision should be made at the federal level before an increase in California state wages occurs.

We believe an increase starting in January 1, 2001, is untimely and would be detrimental to thousands of California growers and processors throughout the state given the unstable state of the California agricultural economy.

Growers have been hit hard by highly subsidized foreign imports, low commodity prices, and diesel fuel costs have recently increased in the last couple of months and have cost growers thousands of dollars that they hadn't accounted for. An increase in the minimum wage, coupled with these factors, will only exacerbate the unemployment crisis mentioned by Senator Johnston in the Central Valley by forcing growers to go out of business, and subsequently, making their employees become unemployed.

Therefore, we oppose any increase in the federal minimum wage at this time and we encourage the IWC to table an increase until action occurs at the federal level. And we also support a continued exemption for California sheepherders.

Thank you.



COMMISSIONER DOMBROWSKI: Jot Condie, Tom Ferdinandi, Hank Provine, George Badway, and Marc Wolfe.

MR. CONDIE: My name is Jot Condie. I'm with the California Restaurant Association.

I trust that the sandwiches that you just ate were from a good CRA member restaurant.

COMMISSIONER DOMBROWSKI: And we paid our own way.


At the outset, let me just say Marc Wolfe had to leave, and so he left me with some written testimony that I'll provide for the Commission.


MR. CONDIE: We appreciate the opportunity to address the commissioners today at this last hearing on the proposed $1.00 increase in the minimum wage.

At the outset, I want to compliment the commissioners and the staff for the manner in which you've conducted these hearings. We believe you've been even-handed and respectful, and for that, we appreciate that.

Last December in Los Angeles when you commenced this process, taking testimony on the minimum wage increase, you heard from a restaurateur in Santa Cruz named Ted Burke. Ted Burke described for you numerous success stories that came out of his restaurant, success stories where people went on, left his restaurant to become head chefs or own their own restaurants. Each of those success stories began with an individual who was making the minimum wage, or the starting wage, as he put it. He called it the starting wage because it allowed him -- the minimum wage, that is -- allowed him to provide training and opportunities to succeed for people who are generally unskilled.

A few weeks ago in San Diego, you heard from a restaurateur named Susie Bauman, and she described for you the process that she had to go through when we saw the last minimum wage increase as a result of Prop. 210, which represented, I believe, a 35 percent increase over a period of two years. She had discussed with you the fact that she had to realign her benefits. Regrettably, she had to limit her benefits to employees who worked 30 hours or more, because of the increase, and she feared, she said, that if the increase went up January 1, she'd have to realign those benefits again, and she feared that it would be limited to employees who worked 40 hours or more.

And then, just a few days ago, you heard from Bob Puccini and Michael Wolf, and you heard them describe for you the unique wage structure that we find in the restaurant industry with tipped employees. Generally, when you talk about the restaurant industry with tipped employees, the only people that are making minimum wage are the folks that are tipped. And in many cases, they're making $30 to $40 an hour. And so they talked to you about the fact that a minimum wage increase mandated on our industry would force them to give wage increases to the people who needed it the least, and therefore taking away the money and the ability for them to give raises to the people who needed it the most. And that's the back-of-the-house people, the dishwashers and the cooks, the folks who are making anywhere in between $8 to $15 an hour. So they're making well over the minimum wage.

And then, back in August, you heard from our association, CRA. We presented testimony to you, and I think we submitted that in written comments, and I won't go over those again today.

But I have with me Tom Ferdinandi, who's a restaurateur, who represents restaurateurs in the Central Valley. And he'd like to talk to you about how an increase would impact his business.

MR. FERDINANDI: Thank you, Jot.

Thank you, commissioner and board members.

My name is Tom Ferdinandi, and I'm a restaurateur from the City of Fresno.

And I'm concerned about this topic of raising the minimum wage and especially how it affects my ability to operate my company and the benefits we provide our communities and the communities in which we operate.

Our company is one that grants opportunities to its employees. We have about fifty restaurants located in the central San Joaquin Valley, mainly based out of Fresno. And these opportunities will diminish as the minimum wage increases.

We provide training to employees, such as marketing, sales, human resources, accounting, and management. There are many employees of our company that, while starting at entry-level positions, are now operating as managers. One is now our director of human resources, one is now our director of MIS systems, and another is a director of equipment and purchasing. I have three more entry-level employees who are now district managers supervising ten stores each. If our company cannot enjoy an economic environment that encourages hiring and training entry-level personnel, these opportunities will diminish.

Most of you probably know and have heard testimony to the fact that our unemployment and poverty rates are the highest in the state, in the central San Joaquin Valley. Companies like ours play a role in strengthening communities that suffer these problems. Last year alone, our company gave 26 cents of every pizza sold back to the community in the form of school programs, church programs, other non-profit programs. We printed free raffle tickets and helped fundraisers. We sponsored numerous youth athletics and various city and park rec programs.

I'm telling you this because there is a cost to an increase in the minimum wage. The cost is simply the lost opportunities that our company has been making available to our employees and our communities. A higher minimum wage makes us reluctant to hire the unskilled worker and train them, because for the same costs, we can employ experience. A higher minimum wage will impact the amount of money we can give back to our communities, communities that even our government leaders are asking businesses like ours to support. These are real consequences, and they cannot be simply mitigated by a price increase.

Our company has still to recover from the 35 percent minimum wage increase over the last years. To raise prices that much would result in an over-$25 pizza, and you can get steak and lobster for that price.

Please realize the cost and consequences of a minimum wage increase. The ramifications extend beyond our income statement.

Thank you.


Jot, can I assume Hank Provine is not --

MR. CONDIE: He had to attend a meeting.

COMMISSIONER DOMBROWSKI: Anthony Carroll, Susan Shaw, and Sam Johnston.

MR. CARROLL: Hi. My name is Anthony Carroll. I work for a franchise organization here in the Valley. Our major holding -- we have more than one restaurant chain, but our major holding are Taco Bells. We have 41 in the immediate area here.

And I'm here to discuss what minimum wage means to us, how minimum wage increases in the past have affected us, and how potentially they'll affect us in the future if you continue to raise the minimum wage.

We're a big company compared to the ma-and-pa type companies that own a couple of restaurants. But yet, when you get right down to it, we represent less than two-thirds of one percent of the entire Taco Bell organization. So, to that degree, we are a small business.

And there seems to be a perception that we have deep pockets, that we can continue to keep reaching in our pockets and providing these increases to people in order to benefit them and their income needs.

Let me give you a little history on Taco Bell. Taco Bell was owned by Pepsi, and it spun off in 1997, it divested. And when it did, Taco Bell Corporation made sure to hold onto the 1,200 higher volume restaurants, volume interpreting into profit -- if you have a higher volume, you generate a better profit -- yet with their flow-through in 1998 -- and I don't have the '99 stat -- but in '98, they ran a 9.7 percent bottom line. Sounds pretty healthy.

Okay. Now, we as franchisers subtract 5 to 6 percent off the bottom line, depending how generous a franchise agreement you worked out with the corporation. And our bottom line is down to 3 to 4 cents on the dollar.

Okay. The minimum wage increase that we experienced when you took it from $4.25 to $5.15 hit our particular company to the tune of $1 million, bottom line. The increase that you then generated for us from $5.15 to $5.75 was another two-thirds of a $1 million hit to our bottom line.

In 1998, we made no money, broke even. This last year, '99, I believe that we lost almost $400,000 for the year. So, here we are, an organization with 41 Taco Bells. You'd consider us to be pretty comfortable. We are actually to the point where it's impacting us seriously.

What have we had to do? We've had to freeze wages. We've not given a crew-level increase because the 35 percent that has been imposed over us -- on us over the last couple years has been much more significant than we could even begin to absorb.

One of the negatives to that, from our point of view, is one of the ways that you reward a person for their performance is through wage and salary. You've taken that away from us. We no longer have the ability to do that.

Our restaurants are staffed probably 20 to 30 percent less than they were at this point three -- three years ago. And the reason for that is, because of the soaring costs of labor, we can no longer afford to put as many people into the restaurants to operate them. To some degree, that offsets any potential increased income that you would be trying to generate for the people working for us because we might not be able to give somebody 40 hours now. We might only be able to give them 30.

So it has created a circumstance where we're paying more for the labor, but we're getting less labor into the restaurant, and its impact in the way that we staff our businesses. The value to our customers isn't there any more. We've had to raise our prices a couple times already, and it still isn't offsetting our losses. But who's going to pay a dollar for a taco? I mean, we've already raised the price once. There are other people in the Bay Area that have already raised it a second time. You now, Taco Bell was famous for its 59-cent taco for a very, very long time, at least ten years. You can't find that any more -- 69, 79, even, in the Bay Area -- I've seen some as high as 89. And these are the costs that people are generating just to try to offset these costs.

And at the same time, we're reducing the service levels we can provide to the people in the restaurants. Some companies -- fortunately, not ours -- have had to cut bonuses out of the program. And bonuses are a very strong incentive to bring people to your organization that are going to help drive your business. We've had to increase the insurance costs, the benefits that we offer our full-time employees, we've had to increase the costs significantly, almost doubled them, to our people.

So that's the dollar-and-cents impact to us.

Now, a large part of this whole push towards the increased minimum wage is to generate what's called a living wage for head of households. Well, I'm the senior operations supervisor, and I hold meetings in our two major markets in Fresno and Modesto monthly, and I had the opportunity over the course of yesterday to have virtually every manager who works for our organization at the higher level at a meeting. And I just did a cursory survey of the people saying, "How many of your people that work in your restaurant are generating a living -- are trying to generate a living wage, are trying to provide an income that you would call head of household?" And I got three out of fifteen, three out of twenty. Bottom line, there wasn't a person in the room out of 41 managers there who -- and they know their crew well, because there's only 20 to 30 in a restaurant and they work for them on a daily basis -- and there wasn't more than, at any point, 25 percent of the people that are trying to generate a wage that's a living wage out of these restaurants.

We have entry-level jobs, college students with flexible schedules. I've had young men and young ladies come work for me who have, over the course of their educational process while they're in school, utilized the flexible schedules that our industry offers them, in order to work around their education. If they had wanted to be -- if they had wanted to work in a factory eight to four and go to school at the same time, it wouldn't have happened for them, because the structure of the employment would have compelled them to make a decision, either take the job or continue the education. And so we offer a niche there for people who want a flexible schedule, who can work these flexible hours and accomplish their ends.

I've had people go on to become accountants with Merrill Lynch. I've had people go on to be teachers. I have people who have gone on to be law enforcement officers, correctional officers. And they all entered the system as minimum wage people. And through their efforts and through their application, they rose through our system, and then they utilized our system to educate themselves and then moved on to other things.

In addition to that, you know, there's the high school students, the high school students that just want to work 15 hours a week, want to be able to get enough money to put gas in their car and insure their vehicle. And again, these are the different things that we potentially will lose.

We have housewives that work in our businesses that, once those kids have gone to school, they've got free time until two or three in the afternoon, and they want to be able to generate a little discretionary income for themselves. So they come and work in our restaurants during our peak meal time, because lunchtime is the peak time for most restaurants in the quick-service industry. And they're just generating the minor income.

We hire senior citizens, senior citizens whose productivity level, very honestly, is not quite equivalent to somebody who's much more youthful and energetic. And we also hire people who are developmental, that have different disabilities that they are impaired with. And we provide the opportunity. Within the restaurants we have, we have a number of different people who fill that criterion, and it's getting very hard to justify continuing to hire those people because their productivity levels are the same. We have dialed down our staffing 20 to 30 percent to try to stay in business, and now we're being put into the position of having to decide to stop continuing to hire these people within our community because we can no longer afford them because they can't generate the same level of productivity that we would like to see.

Charitable contributions as a whole, from our organization, we put a lot back into our community. We do a lot of charitable things. I'm on the board of directors of the Boys and Girls Club here in Stockton. And I've had to scale back the amount of contributions I can generate for the organization through our company and through the other two larger franchisers in this area, because the squeeze is on us financially, and we just cannot afford to take a check out of our pocket and give it to them any longer.

So the amount of services or charitable contributions that we can contribute, and the degree that I'm involved in these organizations that I can help generate for them, is down.

So that's my comment, as far as the living wage aspect of the discussion.

The third part is just inflation. That has obviously raised income -- the interest rates a couple times this year, a half-percent, quarter-percent. You know, they're offsetting some of the generated inflation that is occurring. We're experiencing inflation just in the amount that we charge. The last increase we did was a 4.6 percent hit to our total menu mix in our restaurants. So we've already, you know, had a double-digit increase in our costs. Our costs are across the board. I think we can see that not a whole lot costs the same that it did a year and a half ago. I feel that it is inflation there, to some degree. Spending power is just going to be absorbed.

And it sounds like a little bit of a rhetorical question, but who's going to subsidize us when we no longer can do business? Workmen comp -- last year, workmen comp costs went up 15 to 20 percent. Health insurance costs went up 15 percent. Liability costs as a whole are constantly rising. Transportation and supplier costs, due to gas prices, et cetera, have all increased. We're all seeing larger charges and surcharges for gasoline, just for the delivery trucks that come to our businesses. Real estate costs continue to go up. That impacts our ability to purchase new buildings or land to build buildings on. PG&E is probably going to be doubling or tripling on us pretty soon, as it is in the San Diego County area right now.

And again, these are all costs we have to absorb. If my company, which is a large company, is experiencing the stress, what is it doing to the smaller businesses out there the ones that only have a couple of businesses -- a couple of restaurants to live off of?

Just recently, I closed down the last of our -- a pizza chain that we were running in the Bay Area. I just closed the last one down on August 21st. We couldn't afford to do business any more. We couldn't afford to have six-digit losses any longer in that chain. We cut it down.

I shut down one of our Taco Bells in the Modesto area, and it's a done deal now too. And it's gone, again, because we couldn't afford to make money there any longer. And there are other restaurants in our chain that we're looking at right now that we can no longer -- we were making money there a couple years ago, but the 35 percent increase we took on the minimum wage, along with the other costs that we're experiencing, we're taking a hard look at the viability of them.

Now, we're a business that employs over 2,000 people, 2,000 people who get jobs, generate an income, and spend that money in the community. And we're to the point now where we're really seriously thinking about going into a contraction mode instead of an expansion mode. And it's a loss to everybody. It's a loss to the people.

I've been in this industry for almost twenty years, and this is the first time in my careers with these

-- that these -- I've been with this company twelve years now -- first time in my career, the last two years, I've been seriously concerned as to what my future is, because it is getting to the point where we can no longer make money.

When you -- over the last two years, when you've lost hundreds of thousands of dollars, and you're tapping other sources just to try and stay in business, and we're looking at trying to raise the minimum wage another percent again, I mean -- not to seem disrespectful, but, you know, maybe it doesn't mean a whole lot to you guys sitting up there on the board. But you know what? It's my career -- my career. And I'm seeing a death nail being put into it with the increased wages being imposed on us.

There is an opportunity, I believe, for people to enter at a minimum wage level and -- I've heard a lot about the American dream being commented on all day. I'm an immigrant. I moved here when I was young, and my father lived the American dream, taught himself English -- he was a German Jewish refugee of the Holocaust -- and he was able to educate himself, to teach himself the English language, and he became a teacher, worked his way all the way up to getting a Ph.D. and teach at the university. But he accomplished that because the opportunities were there. When we came to America, he had minimum wage jobs. He had two of them. And he just ran real hard and he made what was there.

Thank you. That's all I have to say.



COMMISSIONER ROSE: A couple questions. First, you said, if I got it right, about 3 percent is what your profit is. And that's -- that's to pay for your employees and --

MR. CARROLL: Well, what I said was 9.7 was what the corporate held -- pulled off with the highest volume units, so that's the rosiest picture. Subtract 5 to 6 percent, depending on the royalty fees. So, system-wide, you'd anticipate franchisers would make 3 to 4 percent at best. We actually did less than that. We are actually slightly below zero right now.

COMMISSIONER ROSE: And do you know about your competitors -- say Burger King, Carl's Junior -- do they operate on about the same --

MR. CARROLL: The margins? You know, honestly, I can't tell you. I've never been involved that deeply in their financial levels. We associate with them at restaurant meetings, et cetera, but I couldn't --


MR. CARROLL: Certainly.

MS. SHAW: My name is Susan Shaw, and I own a small business, the Chocolate Dipper, in Salinas, California. I'm in Monterey County. And I'm also here representing the Salinas Valley Chamber of Commerce.

We are against raising the minimum wage. Again, I feel many of the points this last gentleman had. I'm an entry-level position. I have had this business for fourteen years. I've also been -- my husband and I have operated drive-in restaurants and a bowling alley and a restaurant for about twelve, fifteen years, prior to my doing this. So I have been an employer for a very long time and have hired many, many people at entry-level positions at minimum wage.

I don't feel it's a wage that's supposed to support a family. It's people usually earning extra cash for special occasions. It's a learning experience. It's a stepping stone for the future for many. I hire many high school and college students, and I also hire parents who can only work from ten to two and want to be home for their children, and other people who just want to work weekends making extra cash for things.

I believe that wages should be based on supply and demand, not government regulations. If an employer can't find people to work, the wages will increase because they'll have to pay higher wages. And in Monterey County, people are paying higher wages than minimum to start, many times, because the available work pool isn't out there. It's just -- it's very, very slim. There are "help wanted" signs in many, many windows.

And the employers have to be really creative with incentives for employment, giving discounts for -- one of the things I do is give discounts for things, offer free classes and things that are taught at our store.

And raises should be based on performance. And I'm having to get -- if I have to pay a higher wage initially, I'm not able to have the separation of employees who've provided service and been there for a long time. As an employee learns more, they become more valuable, and an employer may choose to increase wages or lose an asset, a person who is trained.

There's also a domino effect. When you increase the minimum wage, it creates unhappy employees who are more experienced and not getting that same amount of wage increase, because I can't afford to -- if minimum wage goes up, when it went up last time, and -- over a period of a year, it went up a year -- a dollar an hour -- I wasn't able to put up employees who had worked for me ten and twelve years, higher wage -- a dollar an hour higher, because I couldn't afford to pass all those costs on to my -- on to my customers.

Although I am a service business, we do -- we make our product on site. We make the best chocolates you'll ever have. And hopefully, we'll be able to stay in business, but things are getting slimmer, much slimmer.

And when I have to increase the price of my product, which I really hate to do, but I have to because of increased costs that I -- that I have due to -- freight has gone up a tremendous amount, the products I buy, packaging things -- all these things have increased a great amount, and so it's increased our bottom line. And like I said, I don't like to increase prices, but I do. But we get to a certain point where customers are not willing to pay those prices, and that makes business go down.

And some of the -- I'll just -- so, anyway, the -- there are many businesses in our town that have closed down, small businesses. And it's kind of like, when you talk around at Chamber meetings and at business organizations, "Who's going to be next, who's not going to be able to take all the increases that are going along?"

So we hope that you will take these things into consideration in your decision today.

Thank you very much.


Again, I call Sam Johnston --

AUDIENCE MEMBER: (Not using microphone) He had to leave, but he submitted a written statement.


AUDIENCE MEMBER: (Not using microphone) Thank you.


This is the last speaker we have on minimum wage. Then we're set for sheepherders.

MS. KOWALEWSKI: Good afternoon -- am I on? -- good afternoon. My name is Denyne Kowalewski, and I'm representing the California Association for Health Services at Home.

First of all, I know Mr. Baron just walked out, but I just want to thank him for all the help he's given me to understand this issue.

Oh. Thank you, Mr. Baron.

I wasn't intending to speak today, so I'll keep my comments brief since you were provided with testimony on Tuesday. However, earlier today, a representative from the SEIU brought up a couple issues that I'd like to address.

I'm speaking specifically for personal care attendants. These attendants provide services to basically medically fragile individuals as well as the elderly. The majority of the agencies -- the majority of our homecare agencies that employ homecare personnel receive no state, federal, or local reimbursement for personal care services. The arrangement, the cost for these services is arranged between the patient-recipient and the provider and agency.

Secondly, the people who -- the person speaking previously had the luxury that he was not on a fixed income. The majority of recipients who receive personal care are on fixed income. Again, these are frail individuals and elderly persons. So what -- the discussion here, raising the minimum wage, that will result in these individuals, who are on fixed income, who are the majority of the clients that we serve, this service will not be available to them.

As an industry, we do pay over the minimum wage. We're forced to. There is an extreme worker shortage over there for entry-level personnel. The field of home healthcare or personal care attracts workers into this field because of the flexibility that it affords to the worker. Agencies who employ personal care workers have costs associated with bringing in an entry-level person, and those costs are associated with training, supervision, as well as providing a career path, since there are different levels of personal care.

Again, I would just like to reiterate, payment for personal care attendants, the majority is borne by the clients. No one subsidizes those care -- that care. Any increase in the minimum wage is passed directly on to the client. The pass-through will, in many cases, eliminate this option for people who are wishing to stay at home. And bottom line, it's going to force more of these people, these individuals, into institutions.

So I just wanted to clarify a couple points and thank you very much.


We're going to segue to sheepherders. I'm going to ask that the Honorable Jorge Roman More, general consul from Peru, speak first.

MR. ROMAN: Good afternoon, Mr. Chairman.

My name is Jorge Roman. I am the consul general of Peru in San Francisco. From there, I cover ten states in the United States, representing the government of Peru.

Even though I am not going to testify today, I would like to read a statement I have handed the Commission, to Mr. Baron, this morning that will speak for itself, if you allow me.

Honorable Mr. Chairman, I would like to thank you for the opportunity you give me to convey to you, the members of the California Industrial Welfare Commission, a cordial greeting from the people and the government of the Republic of Peru. I would also like to congratulate the Commission on its interest in the situation of foreign workers in California. Amongst these, there are a significant number of Peruvian citizens working as sheepherders as part of a larger group in several states in this country.

Allow me to say that the Peruvian government has as a high priority and permanent concern in assisting the Peruvian community residing abroad. This is a function that is done within the frame of the Vienna Convention on Consular Relations, internal laws of every country, and Peruvian jurisprudence. Taking extreme care in not interfering with the internal affairs of any country, it is within this context that we would like to acknowledge the different authorities, entities, and private citizens, foreign or Peruvians, that in one way or another have collaborated with the Peruvian community living in the United States to continue developing, in an environment of legality, respect to the American laws, and to the human rights of the immigrant workers so they can become a factor in the development and integration of society.

We all are aware of the different bills in favor of the immigrants, of the issues raised by specific cases on the program approved by the executive branch regarding resident visas that many Peruvian citizens qualify for. These are situations that propitiate the peace of mind necessary for any immigrant worker in a foreign country. It is because of all of this that we are certain this Commission will see to it that the issues presented here concerning Peruvian workers in the State of California will be dealt with fairness and justice.

Signed, Jorge Roman, Consul General of Peru.

Thank you, Mr. Chairman.


Mr. Soares.

Can I assume that William Weber is going to be part of your -- or not?

MR. WEBBER: (Not using microphone) Mr. Chairman, I'm here in support of our very beleaguered, but I'll defer to people who can better say it.


MR. SOARES: Mr. Chairman and members, George Soares, on behalf of the Western Range Association.

I'd like to briefly describe to the commissioners what we intend to do today. I'd like to begin the -- I'd like to begin the process by identifying for you the audience. And so, with that, I'd like everyone in support of the position of Western Range Association in the audience to stand, please.

(Audience members stand)

COMMISSIONER DOMBROWSKI: I guess you've turned them out.

MR. SOARES: Thank you very much.

There's some significance to that -- at least I believe there is. We -- if we keep in mind, Mr. Chairman and members, that this is a small industry -- we've talked about it in past hearings -- when you consider the size of the industry, a hundred producers, 250 to 300 sheepherders, I wanted to demonstrate to you today the seriousness with which they treat this issue. And so many of them, obviously a significant portion of the entire industry, is here today because they treat it this seriously.

I also want to provide to the Commission -- and unless you want them now, I'll just reference them -- I have petitions signed, that look like this. I have copies made if -- Nancy -- we'll get those in a minute, if I could refer to these.


MR. SOARES: We'll be getting --

COMMISSIONER DOMBROWSKI: That's fine. We'll get it. Just give them to us whenever you're ready. That's fine.

MR. SOARES: Okay. Thank you.

We have approximately 800 signatures here, which, once again, for our industry, we think is very significant. These signatures include 50 sheepherders. And remember, there's approximately 250 in the state right now. So we want you to take note of this, that we take it seriously, we've talked to the industry about this issue, the industry is engaged, very interested, they're here today, they've signed petitions. Hopefully, you'll take the time to look at those.

I'd also like to submit for the record five letters prepared by individual sheepherders in their own language and then interpreted. I believe we'll have at least a few more letters like this that we will submit to the Commission along the way. We'll have copies of this for all of you in a while as well.

Commissioner -- I think it was Commissioner Rose that asked at the last meeting a couple of things. I have with me the advertisement that we place periodically in conformance with H-2A that attempts to find domestic sheepherders. And only after that advertisement is run for a period of time are sheepherders from other countries eligible to participate in the program. I have a sample of that that runs not only in California, but in all the affected states, that we'll provide for you.


MR. SOARES: And then, if I remember correctly, Commissioner Rose, you also asked for information on the H-2A program. I hope we're responsive to your request with this document that we'll provide to all the commissioners. It's prepared for the regional administrators -- it's prepared by the Department of Labor, and it's my understanding that this is the guidebook for administering the program.


MR. SOARES: For sheepherders, yes.

And so, as soon as we can find our copies, we'll get them distributed to all of you.

We have today, Mr. Chairman, new speakers. The theme remains the same. We want you to meet more of our industry. And at the conclusion of our presentation, I would like to make a few closing remarks.

I would ask the following from the audience, that they not applaud -- we want to refrain from that -- and just speak to the issues as clearly as we can and be responsive to any questions from the commissioners.

So, with that, Mr. Chairman and members, I'd like to now call up our first two speakers, Richard Hamilton and Don Watson.

MR. HAMILTON: Good afternoon. I'm Richard Hamilton. I'm a fourth generation sheep producer from Rio Vista, just west of Stockton. Today I'm here representing the California Wool Growers. I'm currently the president of the Association.

For a little background, the California Wool Growers Association is a commodity organization. It's the oldest commodity organization in the State of California for ag commodity groups. We represent sheep producers from northern California to southern California.

One of the things that I would like to, in my discussion today to you, I'd like to talk about four points about the sheep industry and the H-2A program, these being the uniqueness of the sheep industry in comparison to other types of businesses, the problem the sheep industry faces in California and in the United States, the solution the sheep industry is using to tackle its problems, and then give some observations to the remedies in dealing with the H-2A program and keeping a goal of profitability for both the sheep producer and the sheepherder.

The sheep industry: the sheep industry is made up of a wide diversity of production systems, from open range operations to fence operations to purebred operations to lamb-feeding operations. There's -- all operations are not the same. Sheepherders from the H-2A program are used in the various types of production systems.

In comparing the sheep industry to other industries, the sheep industry, like the rest of production agriculture, we are price takers. We are not price setters. If a production cost like labor goes up, we can't pass the cost through the pricing of our product to the consumer, as other businesses can. The consumer price on products are not reflected to the on-farm price that farmers and ranchers receive for the products. In most cases, when increased costs occur in the further processing of our product, it is usually passed down to the producer and is reflected in the ranch price of our product.

Two, the income of the sheep industry is seasonal. In most cases, it happens one or two days out of the year. This makes cash flow problems in the sheep industry, which is very common to the rest of production agriculture.

The sheep industry operates in an open environment. In regards to its production systems, we have biological and climatic factors of production. We are at the mercy of nature for success in the quality of our production, where most businesses operate in a closed environment.

Problems facing the sheep industry and agriculture: as pointed out on Tuesday's hearing, producers in agriculture are facing extreme difficulties, market collapse, infrastructure decay, rising production costs, which leads to a total collapse of the farm and ranch economy. With the perceived strength of the U.S. economy, America's backbone industry, agriculture, is nearly dead, and the U.S. consumer has no idea that he or she are close to losing its domestic supply of food. Today consumers believe that the food is raised in the supermarkets.

It was interesting to me that in the first presidential debate, both Gore and Bush made no mention about the huge problems facing U.S. agriculture. Specific problems facing the sheep industry -- some of this you heard on Tuesday, and probably down in San Diego, but -- volatility of the lamb market. The reason for this volatility, there's concentration on the lamb processing segment that has eliminated fair competition. Domestic lamb processor own captive supplies of imported sheep, imported lamb, which they use at the detriment of the domestic lamb industry. With NAFTA and GATT, in combination with the collapse of the Asian economy, we have a currency imbalance, which leads to dumping of undervalued product into the U.S. markets. Foreign competition, that being Australia, UK, New Zealand, still get strong government support in their production systems, which also allows for unfair competition to the U.S. producer.

As pointed out very eloquently by Ray Talbott, we have a -- a second problem is the collapse of the wool market. Wool today is a cost; it is not a revenue source to the sheep industry. In the past, we depended on both lamb and wool as our sources of income. We can only depend on wool (sic) today as our only source of income.

A third problem, environmental and welfare -- health issues. In the United States, we are held to the highest standard when we talk about health and wholesomeness of our product when compared to our foreign competition. We are constantly attacked on the use of livestock in grazing public lands and private lands and are always fighting the argument about how they are not good for the environment.

In comparing food safety of foreign imports and domestic products, they are not held to the same standards. The domestic is under stricter standards. Both are -- but both are allowed to sell in the same marketplace.

Predation: in California, we the consumers allow uncontrollable urban sprawl. That pushes wildlife to new homes and food sources. But we the consumers defend it when the sheep producer -- or get offended with the sheep producers for protecting his sheep from predation that, in most case, are from relocated wildlife from this urban sprawl. In Australia, for an example, they do not have a predation problem. They are fully protected by their government.

Solutions to the problems facing the sheep industry: the sheep producers, not wanting to lose their way of life and the future of the younger generations, committed themselves to extensive self-help measures. The industry came together and developed unity among all sheep producers within the industry. As a result of this unity, producers in California passed the California Sheep Commission to help promote lamb, wool, and to develop both consumer education, producer education, and production and market research. The unity helped recognized and revigorate (sic) the California Wool Growers Association so it can deal with concerns facing producers today and in the future.

Second, the industry was successful in their 201 lawsuit in getting the ITC to recognize the inequalities of trade between domestic and foreign lamb. It is questionable as to whether the Clinton administration programs of remedies will address the documented problems brought out by 201, but it is a start.

Third, the industry is pushing the U.S. Congress for a country-of-origin label and continual support of the Wildlife Service program which deals with predation.

Fourth, the industry continues to work at improving production efficiencies through new technology and continue to work to keep our products safe to the consumer and for the environment.

Here are some observations to dealing with the H-2A program. Like any industry, the sheep industry is not perfect. Like any industry, it at times has bad apples. But it is the industry's responsibility to police itself and to remove any problems where they might be. The California Wool Growers and its members does not tolerate abuses to animals, to the environment, and especially to the people who work hard to help our operation survive and grow.

Any solutions to better the H-2A program need to keep in mind that to be successful, it needs to be profitable for both the sheep producer and the sheepherder. If there is any imbalance in the solutions that favors one side, everybody will lose. We will lose an industry, we'll lose a way of life, and we'll -- and we'll lose a way of making a living.

Government needs to clean up their inconsistencies of how they deal and monitor their responsibilities to the H-2A program. An educational program needs to be developed so there's a better understanding to the program and the role it plays to the sheep industries. Standards need to be developed that protect both the sheep producer and the sheepherder. These standards need to protect the humanity of the herder, but be realistic to the economics of the sheep industry. It is the responsibility of the sheep industry that these standards are uniformly enforced by both the herders and the producers.

Hopefully, with your help, we can move in a positive direction that works for both the sheep producer and the sheepherder in making a better California sheep industry. Thank you again for the opportunity to address you.

COMMISSIONER BROAD: Yes, Mr. Hamilton. I have a couple questions.

Are there any domestic sheepherders? I mean non-H-2A sheepherders in California, that you're aware of? Does anyone employ --

MR. HAMILTON: To my knowledge, there's no American citizens working as sheepherders. But I'm looking in my area, my -- for example, I'll use -- in my operation, we farm and ranch, and in our operation -- and that's strictly farming, the only Caucasian that works on that ranch is me and my -- and my family. But all our -- all our help is -- in our sheep operation is H-2A workers or they are green card workers.

COMMISSIONER BROAD: Well, there are -- well, those are -- those are residents of the United States, the green card workers.

MR. HAMILTON: No, they're seasonal workers that come up.

COMMISSIONER BROAD: But they -- they're -- they have green cards.

MR. HAMILTON: Yes, they do.

COMMISSIONER BROAD: Okay. So they're not in the H-2A program.

MR. HAMILTON: There are workers brought -- not in the -- probably in the livestock industry. They're not in the H-2A program.

COMMISSIONER BROAD: Okay. That industry segment, they are not subject to this $900-a-month wage level because they're not in the H-2A program. So what do you pay them?

MR. HAMILTON: That's not -- that is -- they follow basically the same format, that when you're providing housing and the -- we, in our operation -- I can't speak for people that do not use H-2A workers -- in our operation, we use only H-2A workers. So, for me to answer that, I can't give you an answer.


MR. WATSON: They work for cowboys --


Microphone, microphone. Identify yourself, please.

MR. WATSON: My name is Don Watson. They work for cowboys, which would be similar but not exactly the same. They come out to rope, brand our calves. It's $30 a day.

COMMISSIONER DOMBROWSKI: How much? I didn't hear.

MR. WATSON: $30 a day. The nature of being a cowboy is the dream of being a cowboy. That's probably why it's so significantly lower. But they work for cowboys, $30 a day.

MR. HAMILTON: But one thing I'd like to bring up, when I was a little kid, at one time there was a lot of citizens and working Caucasians, American citizens working in agriculture. Today, in the last twenty years, and even

-- like from when we belonged to Western Range, we have to solicit in the major labor areas. And to my knowledge, as long as I've been involved in the organization, we have never, ever had a -- somebody besides -- using an H-2A program work in our operation.

It's not that we are -- just concentrate on the one. In our operation, we want to -- we want to get the best person possible. And they have the knowledge and the ability to do the job.

And there is just not the labor force there in the -- and through really even the green card program in our area, and Caucasians that want to work in the livestock field.


COMMISSIONER DOMBROWSKI: But excluding the H-2A program, you said you have other employees, green card holders, right?

MR. HAMILTON: But that's in a cropping operation.

COMMISSIONER DOMBROWSKI: In the cropping. I understand.

MR. HAMILTON: But that's not sheep.

COMMISSIONER DOMBROWSKI: It's not sheep. I understand.

COMMISSIONER BROAD: They don't do any of this sheepherding work?

MR. HAMILTON: No, they don't.

COMMISSIONER BROAD: Okay. Well, I guess I would like to ask that question of other -- others of the witnesses, because, clearly, you have this situation set up for the H-2A program, which creates some minimum working conditions. But for sheepherders outside of that, domestic sheepherders of any sort that are outside the H-2A program, there is literally no labor standards, under our current rules, and presumably, under the Fair Labor Standards Act as well.

And so, that's something I'm interested in knowing, how those people are paid.

Now, perhaps what goes on -- and some of you can comment -- that people in that situation, a green card holder or a U.S. citizen working -- maybe they're treated the same way as a sort of customary industry standard, but I'm sure that there's -- there simply is no legal standard for them, under state or federal law, as far as I can tell.

Let me ask you another question. Generally speaking, in your industry do people who are in this business produce both wool and lamb for, you know, meat production, as part of the same system?

MR. HAMILTON: In the past, when there was -- up till just recently with the collapse of the wool market, the sheep industry produced a dual product, lamb and wool. When you go back in history, wool was a bigger percentage of the income. In the last few years, it went down from 20 percent, down to 5, down to nothing.

As the industry tries to grow and to overcome problems, I mean, and technology changes, there are new -- new things the industry is looking at, using hair sheep, sheep that do not produce wool. But basically, today, we are solely dependent on a lamb income. And that's the scary thing about it, because of the volatility. When you look at the retail price of lamb in the supermarket, there's probably very little fluctuation in a 12-month period. In a swing in the on-farm price, we could have a 40- to 50-cent swing. That's -- and that's common with a lot of ag products. The stability in the marketplace is not there for agriculture. And that is a concern to all of agriculture, just not the sheep industry.

COMMISSIONER BROAD: Okay. Now, what -- can you just tell me about the collapse of the wool market? I mean, what caused that? Is it a glut of worldwide wool production?

MR. HAMILTON: What it -- some of the main sources of it is -- one of it was that in some countries, they value agriculture a lot more. We never had a food shortage in the United States. So countries like that protect their -- their domestic -- their own domestic ag.

One of the things, when you look at Australia and New Zealand, wool and lamb products is one of their main products coming out of their economy. One of the problems in the past was that the wool -- the government of Australia would buy wool on -- would subsidize by purchasing wool and creating a stockpile. Well, that stockpile someday has to hit the marketplace. When it does, it collapsed.

Plus, with the failure of the Asian economy, China being one of the largest wool users in the world, they just did not -- and plus, when we put an embargo on trading with China, that really decimated our domestic industry because it was filled by the Australian markets.

But there was just a -- two things: there was a lot of wool moving, that needed to be moved through the system; and two, by creating these embargoes, it just did not allow us to move our own domestic product when we did have the market.

COMMISSIONER BROAD: And so, now, the way I sort of hear you discussing it, it sounds like that you might -- that we might have sort of hit bottom in the wool market and that the prices are firming up. Is that occurring, or what's the -- what's happening in the market?

MR. HAMILTON: No, it's -- the wool market is -- is very stagnant, and problems with -- and what's a problem with agriculture today, when you look -- I thought the scenario that Ray Talbott said the other day in San Francisco is true: in 1970, 210 fleeces would buy a pickup, and today it takes over 9,600 fleeces.

The problem with agriculture today is -- and the misconception is, people view the price farm -- the farm producer gets or the sheep producer gets as being related to what they pay for food in the supermarkets. If you see the price of lamb of $5.50, or you say a wool jacket you want to buy at, say, $200 or $300, you think the wool industry is reaping a benefit. It's just not true. It's the way -- the marketing structure that agriculture faces. We are totally the price taker. We can't set the price.

You know, an interesting scenario, I read that in a box of Wheaties, that Tiger Woods gets more money than the sheep -- than the wheat producer that grew the crop that's in that box. And that affects all agriculture like that. And the sheep industry particularly, when, at one time in California, we had eight different markets, we had eight -- we had all kinds of wooling infrastructure. We just don't have it today.

And the thing that people don't realize -- and I listened to some of your other hearings -- that people think there's this wealth of money sitting in these industries. And it's not, because it's slowly -- the infrastructure, the rising costs, our -- our prices aren't raising. We're selling lamb today at the same price we were selling it ten years ago, fifteen years ago, twenty years ago. And then you look at other industries, that's not true. Just look at the car industry. You go to -- look how much that car prices raised in the last twenty years.


MR. WATSON: Hello. My name is Don Watson. I'm probably a little bit different than most of the people in this room. I'm a first generation sheepherder. I retired as a CPA in San Francisco in 1986 and my wife and I decided that we were going to run sheep.

We have one H-2A herder. He's our only employee. He's kind of a member of the family. His name is Severiano Maximo Beraun, and he is also from Peru.

I spoke with Max this morning, to try and give you an idea of how he perceives the working conditions here in the United States. He is formerly an employee and an associate of an agricultural cooperative in Peru known as SAIS Pachacute. And this operation runs about 60,000 ewes in the Alto Plano of the Andes Mountains. Over the last few years, the economic conditions that we have in this country have also affected them. His return down there is 500 to 600 solas per month, which is something less than $200 a month. For that reason, he left his associate position as a sheepherder there and came to work for us.

What we end up paying for Max is something over $20,000 a year, not that $900 a month. We end up paying for his -- the legal costs of getting a visa and the labor certification, transportation into the country, and room and board while he's here.

As far as our sheep operation goes, we have something less than 1,000 ewes, so we're quite a bit different from many of the larger sheep outfits that you'll see. But we also have been hampered by the economics. We lost money last year. And Max has observed that. We have a pile of wool in the barn that can't be sold at any price. And we've talked about what opportunities there are. Max's contract is up on April 15 of the coming year, and we've talked about whether or not he wants to come back. And he does.

What he will do with the income that he's generated this year is buy a house. With his next contract, he'll pay for that house.

And if I can answer any other questions, I'd love to do that.

COMMISSIONER BROAD: Yeah, I have one question. Is there kind of a rule of thumb of how many sheepherders you employ per size of -- number of sheep? I mean, is it -- or does it just vary totally?

MR. HAMILTON: That -- that really depends on the type of production system. Some -- you know, some productions have just -- it varies. A rule of thumb in the open range is one man per 1,000 ewes. But you've got to understand, if you're -- it depends on the production goal of that operation. Some -- some guys work for very prolific sheep. You need a high labor at lambing time, and -- which was pointed out by the Indarts the other day in their testimony.

But to standardize a standard formula, it can't be done. The diversity is too great.

COMMISSIONER BROAD: So, in your operation, how many sheepherders do you use?

MR. HAMILTON: We use four.

COMMISSIONER BROAD: And you have how many --

MR. HAMILTON: And -- but then -- but then I'm active in -- I'm active in the operation, and so are some of my other partners, my dad, and my uncles. So --

COMMISSIONER BROAD: How many head of sheep do you have? Is that what you call them?

MR. HAMILTON: We run sheep in -- 4,000. But then -- and -- and then we run some cattle too.

COMMISSIONER BROAD: Okay. Mr. Watson, you have 1,000 and one sheepherder?

MR. WATSON: Approximately 1,000. I would say, as a rule of thumb, I have been told something like 1,200 ewes per sheepherder. I don't know that the economics work out that way. I don't know how many people made money in this room. Probably not a lot in the last couple years.

MR. HAMILTON: But again, I want to say, you cannot standardize it because if you're running open range, you get a lot more labor. Where we use fences, they need labor to manage their sheep. And that's a -- that's a big difference.

COMMISSIONER ROSE: Just out of curiosity, how many acres of land per sheep?

MR. HAMILTON: That again -- I mean, I hate to be real vague, but that depends on the topography, the climatic conditions, whether you're running on irrigated pasture where you're artificially watering the grass and growing it, or you're depending on rainfall, and rainfall can vary from -- if you go down to the desert -- if you're in Bakersfield, and you have 12 inches of rain a year, you have a monsoon. Here, we have 12 inches, we're thinking drought.

So there's -- you -- what you try to do is -- is efficiently manage your factors of production, including the number of -- amount of labor, the type of system you run, to best utilize the resources that you're trying to operate under.

MR. WATSON: To answer that question, for 1,000 ewes, I lease 2,000 acres.



MR. WATSON: Thank you.


MR. OLAGARAY: Good afternoon, commissioner and board members. My name is Diego Olagaray, and I'm a grower from Lodi, just up the road here. My background is I come from a diversified family operation.

And first of all, before I begin, I just want to let you know that I am a product of a former H-2A program. My dad came to this country back in '51 as a shepherd, along with many others in the audiences -- there's many products of the H-2A program. And it gave my dad an opportunity to start business here in California. And with that, he's expanded and grown over the years, and then he's passed along to us sons.

I kind of want to remark, first of all, real quickly, on the question about the wool economy that was asked to Richard Hamilton. Wool, to us, for most of us growers in California, this year was a liability. It costs us $2.80 per head for just shearing costs along, let alone all the other costs associated with bringing the sheep in and corralling them and such. And we brought in about -- lucky if you got 25 cents a pound, about $2 per head. So that was a deficit of about 80 cents per head.

So wool, as Richard mentioned, is really not a product for us. It was at one time, an economic product, but it's a liability. And we're solely relying on the lamb meat.

Now, what I want to focus on right now is not so much the monetary -- I mean, I just touched on that a little bit -- but something that you all need to realize, what could happen to the California sheep industry, not monetarily, but also the impact from the environmental and social aspect as well.

If you look up and down through the State of California, we have a diverse terrain with all sorts of ecosystems. And over the years, sheep have done a good job grazing all the different terrains of the environment, some of these being public land, some of these being private land. And sheep have contributed substantially to these environmental concerns, something that's difficult to quantify. And if we were to lose the sheep industry, I think it would be a huge loss to California as a whole.

And what I'm talking about is, first of all, from the environmental aspect, there are many producers here that contract with BLM and the Department of Forestry and go in and graze the underbrush in forestry. And what they're trying to do is control the fuel load so they don't have these wildfires. There's growers that contract with military bases to graze their premises, for a number of reasons, for fire control, for brush control, control of noxious weeds and such.

And that's something, on a personal level, my dad's done, back many years ago. He grazed Fort Ord for a number of years while it was an active military base. And that still goes on with some of the different bases.

There are some watersheds as well in the vicinity that utilize sheep, contract with sheep growers, to graze their watershed areas. There's also urban areas, outer lands of Oakland, San Francisco, that's contracting with shepherds and goat raisers to graze and control the weeds there. They've learned a valuable lesson back eight, ten years ago, with those wildfires.

There's a number of growers that are grazing in rural communities, such as -- personally, we've done Commanche Village for a number of years, for fire control and noxious weed control. And currently, we've been working with Sea Ranch, along the coast. They would like us to go in there and do some grass management there as well.

Looking at it from another perspective, since California is a real diverse economy, there's very -- it's one of the nation's most diverse agricultural economy as well -- there's many crops produced up and down the state. A typical sheep producer does not focus on one crop in a given year. In a given year, sheep may experience a multitude of crops, anywhere from two or three to about ten different type of crops. And what I'm speaking of is primarily crop residue. As crops are harvested, there's residue left over, and that's where the sheep come in. They'll utilize that residue, such as stubble, corn stubble, tomatoes, melons, carrots, alfalfa, numerous crops that sheep will come in and graze.

And what that does for the environment is, when sheep grazes a crop residue, that cuts down tillage passes that the farmer has to make. It cuts down on the field preparation. Some producers are growers that have crops, who are forced to burn the residue, which impacts air pollution also. Here, when sheep is brought in, they bypass that operation.

In our own personal operation, we grow some wine grapes. In our vineyard operation, what we incorporated over the past couple years is we've brought in sheep to graze our cover crop. Rather than having to mow and spend the money on fuel and everything, we're doing something that's environmental-friendly. We're bringing the sheep down there, grazing it off. In turn, they're converting all that residue over to organic matter, reducing our fertilizer input, commercial fertilizer input, and they're also controlling our weeds, so we're reducing our pesticides. And, believe it or not, they're reducing our hand labor in the vineyard operation because, at the same time, they'll sucker the vines. They'll do that in early spring.

So, there's quite a bit of environmental benefits in the vineyard operation. It's something we're looking at increasing.

And Don Watson does a lot of that in the Napa area. It's getting to be very popular.

And finally, one last thing I want to touch on -- this is more from the social aspect -- each year, we get a group of children from nearby schools that come over to our farm, and we just have a general farm tour. We bring them through with the lambs, allow them to bottle feed, talk a little bit about their life cycle, explain to them what wool is, have them touch wool, walk them through -- we talk about our soils, the crops we grow, the alfalfa the sheep graze on, and it kind of -- it's kind of educational, to kind of expose them a little bit of what farm life is, because a lot of these school children have lost touch of the reality of where their food comes from, and what is agriculture.

Those are some of the things that we, as a sheep industry, are doing as a whole. And, you know, the way the sheep industry is headed on this decline, this minimum wage factor really will affect the industry drastically, and it's going to impact us not only monetarily, but it's going to impact us environmentally and socially.

Are there any questions I could answer at this time?

COMMISSIONER BROAD: Yeah. I wanted to pose to you the same question I had asked about -- in your operation, are all -- is all the sheepherding work done by H-2A?


COMMISSIONER BROAD: Okay. So you would -- there are no domestic workers.

MR. OLAGARAY: No. The only domestic are just if we have family members. The day-to-day, actual herding is all done by H-2A workers.

COMMISSIONER BROAD: Okay. And when you contract with the military or with some government agency or whoever to do this --


COMMISSIONER BROAD: -- kind of weed control, you're paying them or they're paying you, or how does it work?

MR. OLAGARAY: It varies. It varies. Usually, with the military, it's a full lease, and we are paying them. We haven't done anything with the Department of Forestry personally. A number of growers have. I'm not sure if they pay them or if Forestry pays the growers. But with -- I know, in the vineyard operations that Don Watson, I think he charges them. But with us, with like Commanche Village, we -- we charge them. Sea Ranch, we'll provide (inaudible) they may assist us with transportation costs.

So it's -- but I hear a number of growers in the Oakland hills area in San Francisco are being paid by the utility districts or (inaudible).

So it's a combination. It varies. It varies with the type of vegetation you have --


MR. OLAGARAY: -- the surroundings, the number of herders you need, (inaudible). And that's why there's a variability. Every field is different, and you've got to look at all those factors for the economics. (Inaudible).


MR. OLAGARAY: You're welcome. Any other questions?

(No response)

MR. OLAGARAY: Thank you.


MR. MUÑOZ: Before I start, I'd like to apologize for any mutterings that I might make, because I left Bakersfield at three o'clock this morning to attend this hearing, and my wife had to see that my socks were matching.

You have a copy of the statement I want to make and comment to this board.

My name is Frank Muñoz. I am the administrative assistant and the executive secretary of the Kern County Wool Growers Association.

Kern County, as you may be aware, is among the largest lamb and wool producing counties in the United States. And I would like to state that, as administrative assistant to several sheep operations for the past forty years, I am aware of sheepherder and their employers' day-to-day activities, including recording their payrolls.

You as the Industrial Welfare commissioners are being asked to consider a motion to eliminate the exemption from minimum wage currently in effect for sheepherders.

Sheepherders currently come into the United States under the H-2A program for a period of three years. The majority of participants sign on for additional years. The H-2A provisions of the federal Immigration and Naturalization Act were enacted in 1952, nearly fifty years ago. Legally admitted sheepherders have been the principal source of sheepherder employment in the United States and California for over half a century. The H-2A program is administered by the U.S. Department of Labor and the U.S. Immigration and Naturalization Service.

The current situation of the sheepherder is this: The sheepherder receives $900 per month, plus two weeks' paid vacation. During the past year, July the 1st, 1999, to July the 1st, 2000, he received a 29 percent increase, from $700 to $900. The majority of herders are content and satisfied with this pay, as evidenced by lists of applicants wanting and waiting to enter the United States from Peru to work as sheepherders. This attests to the worthiness of the current program.

What do sheepherders do with their current pay? Some sheepherders wire their pay to banks in Peru, while others send monies through Western Union outlets to Peru. Others open bank accounts in the United States, accumulating savings until time of departure, then closing their accounts. It's not unusual for a herder to return to his native country with savings of $15,000 to $20,000 after a three-year period. There is widespread acceptance by the sheepherder of this wage level.

There is no need, then, to change to a minimum wage concept. Who, then, is complaining?

The current situation of the employer is this: The employer pays the herder $900 per month, plus two weeks' paid vacation. The employer pays the herder -- woops -- plus two weeks' paid vacation. The employer pays travel expenses to and from the home country. The employer pays to board the herder and provides him rooming. Health and workers' insurance premiums are paid by the employer. Administrative services are provided the herder from the day of arrival to the day of departure.

Though the current minimum monthly salary established by the Department of Labor is likely to drive the commercial sheep ranchers out of business, they will attempt to make it work.

Who, then, is complaining?

The most important issue, as far as you commissioners are concerned, is the motion to eliminate the exemption from minimum wage currently in place for sheepherders. If such an exemption is eliminated, it would subject the employers to much higher labor costs, as minimum wage and hours of service regulations would have to be followed.

The minimum wage for H-2A sheepherders is set on a monthly salary basis because sheepherders are out on the range with their sheep on a 24-hour, seven-day-a-week basis. An hourly wage concept is unappropriate and unworkable for this occupation. The uniqueness of the industry would not tolerate such standards, thus creating economic devastation for both sheepherder and employer. The sheepherder would no longer be coming to the United States, and the sheep man would go out of business. No one would benefit.

Along with the above, the sheep industry, at the current time, is going through a severe and serious economic plight, what with historically high interest rates paid to banks for operating loans, historically high fuel costs, giving rise to high hauling costs incurred while moving sheep from pasture to pasture, increases to premiums for business insurance, labor increases, and others. Unfortunately, there is no compensating income to offset these rising costs, along with the erratic lamb markets and the wool market being severely depressed for the past two years. The industry, then, is in the process of becoming an endangered species.

In conclusion, you as commissioners have two choices: one, to continue the exemption from minimum wage currently in place for sheepherders -- possibly the old adage might be appropriate here; that is, if H-2A works for sheepherders, then why fix it? -- no change is necessary; or, two, remove the exemption from minimum wage and thus contribute to the eventual economic devastation of the sheep livestock industry and a way of life as we know it today.

Today there still remains the economic opportunity for sheepherders coming to America. Let's preserve this traditional way of life.

And I thank you for the opportunity to comment.

COMMISSIONER BROAD: I have a question that either of you can answer. I'd like to try to understand a little bit about the economics of your industry.

The salary under the H-2A program is approximately $10,800 a year, plus food --

MR. OLAGARAY: Vacation, health --

COMMISSIONER BROAD: Yeah, a couple of thousand -- I mean, whatever it is. So the employee costs somewhere around $13,000 --

MR. OLAGARAY: Transporting (inaudible).

COMMISSIONER BROAD: Transportation, right. I understand. So that it's --

MR. MUÑOZ: It would probably be closer to $16,000 to $17,000.

COMMISSIONER BROAD: Okay. That's fine. Let's just assume that.

MR. MUÑOZ: Well, no. Let's be realistic.

COMMISSIONER BROAD: Okay. That's fine. Let's -- I'm perfectly willing to do that.

MR. MUÑOZ: Assumptions don't get us anywhere. That's the problem we have today.

COMMISSIONER DOMBROWSKI: No, he's -- go ahead, Barry.

COMMISSIONER BROAD: Okay. I'm really not asking this question in any hostile way, so there's no reason for you to be defensive.

MR. MUÑOZ: Excuse me. I didn't mean to answer in a hostile way.

COMMISSIONER BROAD: Okay. And from the previous witnesses or speakers, you said that as a rule of thumb, you're talking about one sheepherder for 1,000 head of sheep, you know, more or less, and it varies from operation to operation.

What kind of revenue does 1,000 head of sheep generate on an annual basis? I'm trying to figure out the ratio between labor costs and income.

MR. OLAGARAY: (Not using microphone) (Inaudible).

COMMISSIONER DOMBROWSKI: To the mike -- to the microphone, please.

MR. OLAGARAY: I'm sorry. I understand where you're getting at. You're looking at the gross side. But importantly is you've got to look at the expenses that's involved, not just direct labor, but --


MR. OLAGARAY: -- total investment on the sheep --


MR. OLAGARAY: -- equipment. I mean --

COMMISSIONER BROAD: Right. I totally understand that.

MR. OLAGARAY: -- which we can't prepare that, with you today. But I'll give you a gross on lambs, more or less. You're looking roughly -- probably on 1,000 ewes, you'll maybe get -- a typical range operation, maybe 80 percent lamb crop, so 80 percent. This year, average price for lambs was probably around, say, $80 -- well, 110-pound, but -- $88, $90 per head. So $90 per head times 80 percent of 1,000, so 800 -- take 800 head times $90. That's $72,000?


MR. OLAGARAY: And that's gross.

COMMISSIONER BROAD: I understand that.



MR. OLAGARAY: And that's all relative --

COMMISSIONER BROAD: Right. So the labor cost component, excluding other costs -- now, I'm in business for myself, so I understand that there's more to business than your labor costs, but your labor cost component is around 20 percent.

AUDIENCE MEMBER: (Not using microphone) 40 to 50.

MR. OLAGARAY: Of the gross?

COMMISSIONER BROAD: Well, if you've got -- if you're -- if it's $72,000 and it's costing you $16,000 --

COMMISSIONER DOMBROWSKI: Wait, wait. Wait, wait. No, we can't --

COMMISSIONER BROAD: You know what? Actually, unfortunately, I'd like to make it a community discussion, but it doesn't really --


COMMISSIONER BROAD: We really can't, because we have to -- it has to be recorded on the transcript, so if people aren't identified -- so, if you want to come up and testify and address this issue, that's fine.

I'm just trying to get to this. I'm not -- I'm not disagreeing with you or challenging you in any way. I'm just trying to understand this.

MR. OLAGARAY: You're basically looking at the percentage of the gross. So you're trying to figure out what percentage labor is of the gross? Is that what you're getting at?


MR. OLAGARAY: Okay. But I don't know how relative that is -- I mean, to the bottom line. I mean, it's -- I mean, we could look at gross all we want, but --

COMMISSIONER BROAD: Well, I'm willing to look at other factors. I'm just trying to get to that first.

COMMISSIONER DOMBROWSKI: He's trying to find -- if you take your gross revenues, and you had to break it down to what -- where does the money go, that's what he's trying to hear from you. That's what he's trying to hear from you.

MR. OLAGARAY: I understand.

MR. MUÑOZ: His operation would be different from my operation, and --


MR. MUÑOZ: -- if you're working in the desert --


MR. MUÑOZ: You know, it's diverse.

COMMISSIONER DOMBROWSKI: Go ahead, Barry. Proceed. I mean --

MR. MUÑOZ: And the costs are diverse too.


MR. MUÑOZ: So, to say -- I give you a given of $20 per head (inaudible), it would be wrong to say that, because thirty or forty people in this audience can give you a different picture. Their operation and costs run different, depending on, again, the pasture conditions.

MR. OLAGARAY: Exactly. And I want to add that. I mean, especially if you own your own property, you've got that capital investment, and it depends where that property is. It could have a value of -- of anywhere from $600 per acre to upwards of $20,000, if you're close to some development. So you've got to take that capital investment and spread it amongst -- you know, per head. That is part of what goes into producing sheep, versus a person that leases BLM ground. He's got less rent cost, but then, again, he's got some other higher costs --

MR. MUÑOZ: Hauling.

MR. OLAGARAY: -- herder, hauling, and such, permit costs and all those things. So it's -- we're talking with such a diverse state, with diverse grazing regions, that you're not going to pick a number that's going to hit the average. It's so diverse. Do you understand what I'm saying?

COMMISSIONER BROAD: Yeah. I understand that. I'm --

MR. OLAGARAY: Between the range of prices of expenses and everything.

COMMISSIONER BROAD: I totally understand that. I'm just trying to get a sense of what your labor costs are. And if you want to elaborate on the other costs, I totally understand that.

Obviously, you spend less as a percentage of your costs on the telephone, probably, than, you know -- or telephone costs than in my operation. But that -- so, obviously, costs vary. I don't -- I don't have to buy any land to run my business, or lease it, very -- very much of it, anyway.

And so, I'm just trying to understand that, because we do -- and I hope you appreciate this, that we're -- none of us are experts here in your business, and -- or in every business around. We may have significant experience in certain areas and certain things. So that's the purpose of these hearings, is for us to get to the facts as much as we can.

MR. OLAGARAY: Can I ask you a question? Have any of you had an opportunity to experience a sheep operation here in California recently? I'll welcome you to do that, and I'll be glad to show you our operation, and a number of growers, so you could better have an understanding of how the industry works and what it all involves. It's a little more sophisticated than a typical business, with the area span that we cover. I mean, a particular grower may have a radius that he operates the sheep of about an 8-hour radius from his home base --


MR. OLAGARAY: -- with a diverse --

COMMISSIONER BROAD: Let me ask you a question, assuming what you've said and what others have said. Let's say that some people are spending $20 per -- 20 percent of their cost on labor costs, and some people are spending 50 percent, as someone from the audience said, or 40 percent. What -- since your -- the labor costs are constant here, that part of it's constant -- what is it that's changing that increases the cost of labor as a percentage, from 20 percent in one operation to 50 percent in another?

MR. OLAGARAY: The cost -- cost of labor. You're asking what increases the cost of labor?


MR. OLAGARAY: One thing you have to realize is the cost of living is on the burden of the shepherds. We're the ones that have to live with an increase of food costs, housing, increase of fuel, whether it be propane or electricity for the shepherds and such, increase of fuel to get to and from the shepherd's trailer, and -- not so much

-- I mean, those costs aren't as exorbitant as other costs that are -- I'm speaking of the direct labor cost that you just asked.

COMMISSIONER BROAD: Okay. But see, what I'm --

MR. OLAGARAY: Other production costs are increasing.

COMMISSIONER DOMBROWSKI: I don't think that's -- I don't think that -- I mean, his question -- if you took two operations, and one had a 20 percent labor cost and one had a 50 percent labor cost --

MR. MUÑOZ: What would be the difference?



COMMISSIONER DOMBROWSKI: The question is why. That's what he's asking.

MR. OLAGARAY: I'm sorry.

COMMISSIONER DOMBROWSKI: If you had two -- just two theoretical operations, one had a labor cost of 20 percent and one had a labor cost of 50 percent --

MR. OLAGARAY: Okay. Now I understand.

COMMISSIONER DOMBROWSKI: -- why is there the difference? That's what the question is.

MR. MUÑOZ: Okay. It would --

MR. OLAGARAY: The main -- the main thing -- sorry about that, Frank.

MR. MUÑOZ: That's okay. I took opportunity to answer.

MR. OLAGARAY: There's -- yes, you did -- different operations -- again, it goes back to the grazing practice or terrain. For example, in our operation, we use a lot of extensive mobile fencing when it comes to salvaging crop residue. So we're constantly building electric fences and feeding, one block to another. I think it's fed down in five days, and then we tear the fence down and move to another premises, versus other growers who have closed, existing fenced-in pastures where there's no fencing required. So it's just a supervision of the sheep, whereas, with us, it's more -- more intense, so to speak, labor, of getting the fences there, moving the fences.

And then, during certain seasons, we'll have to hire additional herders, such as lambing, right now, to accommodate with the lambing.

COMMISSIONER BROAD: So what you're saying is that the rule of thumb for how many sheepherders you may have for 1,000 head of sheep actually changes from operation to operation.


COMMISSIONER BROAD: And some, you might have two.

MR. OLAGARAY: And it's season to season.

COMMISSIONER BROAD: And season to season.


MR. MUÑOZ: Distance and the mode of operation plays a big part there, sir.

COMMISSIONER BROAD: Cost of transportation.

MR. MUÑOZ: Costs of transportation, moving your units to those distances, the cost of fuel, again, possibly, if it's succulent pastures or if it's wild lands, volunteer type pastures --

COMMISSIONER BROAD: Do you -- is transportation typically done by livestock haulers in the trucking industry?

MR. MUÑOZ: Yes, commercial haulers.

COMMISSIONER BROAD: Okay. Not -- people generally don't transport their own herds?

MR. MUÑOZ: Right. Maybe a small portion of them, they would. But that's -- that was part of my presentation, on the hauling, the historically high hauling. And nobody's going to deny that, because everybody owns a car, right? The cost of fuel --



MR. OLAGARAY: And speaking of hauling, just to let you know, just you get a little -- put things a little more in perspective, I mean, California, you know, years ago -- I mean, we're down 45 percent in sheep numbers since ten years ago. And that's for a number of reasons. One -- one is with the urban encroachment. I mean, years ago, as a kid, I remember just right here around Stockton, we used to be able to move sheep down the road, just right on down the road, not a problem. That's not the case any more. I mean, you're -- you just can't do it. You get run over.

And so, I mean, over the years, we're having to haul more and more sheep because of that urban encroachment. It's become a real -- a real burden on us. We just can't move them down the road any more.

So, you know, it's just part of the cost of living, the cost of doing business in California.


MR. MUÑOZ: That's it?


MR. SOARES: Just so we can knock these issues off as we go, Commissioner Broad's question regarding the situation for the domestic sheepherder, and I think the thought was, is that once the compensation is established under H-2A, that the domestic sheepherder is somehow left behind, maybe not treated equally to the H-2A requirements.

We have someone who can speak to that issue, or we can provide you a written explanation. But I am told that the regulations in your possession now are meant to protect the domestic worker so that the domestic work is ensured to receive all that the H-2A worker receives, once the compensation is established.

If someone has facts different than that, we can talk about all of that, but I'm advised that that's how the system works, and we can provide you more details if you need it.

COMMISSIONER BROAD: Well, I would like to know that because my understanding is that, in effect, what the H-2A program does is -- it, yes, at least in theory, is intended to protect domestic workers by taking a wage survey and establishing the wage rate based on that survey. But there is actually no requirement under California law or federal law that workers not participating in the H-2A program receive any minimum wage, at all.

So, in other words -- I don't know how they base their survey -- I've seen the survey. There's, you know, however many people that they found that are domestic sheepherders, and they rank them as to how much they pay, and it ranged from, you know, $6 an hour to $10 an hour, and it was like, basically, a handful of workers, 10 or 12, 15

-- I can't remember -- I saw the document. But -- but there's no actually enforceable minimum wage standard for those workers, as I understand it.

So I -- that was my question. And it's not that we're leaving them behind, but that they, in effect, are not covered by the $900-a-month requirement, nor by any other state or federal law. And I just wanted to ascertain whether that was, in fact, the case.

MR. SOARES: Again, Commissioner Broad, you're using the term minimum wage, but I think I understand what you mean when you use that term. You're talking about equal compensation for the domestic worker as compared to the H-2A worker.

I've given you the advice that's been provided to me. I'm happy to discuss it further with the Commission, with others who have a different point of view, and also provide you with supporting documents we have in that regard. We can do it today, or we can do it after this meeting, whatever works.

I think we're all a little bit in a difficult situation here, because it's the equivalent, for those of us who work in Sacramento, of trying to write a bill in committee. And part of the process is learning what the facts are about the issue and then trying to put something together that may work for everybody. That's a difficult thing that we're engaged in here, but I understand --

COMMISSIONER BROAD: And that's why we've so strongly encouraged you to meet with the other side and come up with a joint proposal agreeable to the both of you, so -- because otherwise, that's probably what will happen.

MR. SOARES: And I certainly respect your advice, and you've offered it now at every occasion.

COMMISSIONER BROAD: Well, no one's ever accused me of subtlety.



MR. SOARES: My response each time -- and I'm obliged to offer it again -- we understand your advice. We continue to advise this Commission that we collectively have a problem here.


MR. SOARES: We do not think it's just the sheep producers and the herders that we hire. We think the members of this Commission have a problem because now -- now that you have approached the issue in this manner, rather than doing the work-up where we could flesh out many of these issues and then present a proposal, we have all been thrust into this narrow time frame to try to guess the spot that we all need to land on so that we can co-exist.

I think it's a very difficult task that the IWC has, as well as the industry, as well as anybody affected by this decision. I think it's terribly unfortunate, notwithstanding your admonition, that we're in this position.

COMMISSIONER BROAD: But, Mr. Soares, with all due respect, we have to -- as has been the case for us for an entire year as we've dealt with the thorny issues around overtime, and as we have to do with the minimum wage itself, at some point you have to make a decision about what to do, at some point. And this issue has been out there for several months. And your industry has had a lot of time -- certainly as much time as the healthcare industry had and others that had to deal with, in fact, more complex issues. I'm not saying that this isn't a difficult issue, but it's not -- it's not nearly as complex as many of the overtime and scheduling issues.

We're only here talking about the minimum wage, what it is. It's a dollar amount. And so, in the end, I think you'll agree with me a dollar amount is a dollar amount. You have to arrive at it on some basis.

If the industry and those pushing for an increase arrive at that amount together, it's likely to yield a number which reflects what you can live with, because, in the end, as you can see, I'm trying to get -- and I think we're all trying to get at the economics of this industry. But it obviously gives everyone a great deal more comfort if it's something that's arrived at together.

And so, I'm not -- I haven't pushed this in such an unsubtle way, you know, because I'd rather not make the decision myself or deal with it, because we've had to deal with, frankly, much thornier issues over the course of the last year, and we will deal with it. But it's, I think, what is likely to work best. And -- knowing -- and clearly, you don't have to follow that advice. That's, you know, the decision of you and your clients. And I understand, there's times when people decide, as a matter of principle, that they're going to stand pat, and I respect that totally, and that you're free to do that.

MR. SOARES: Commissioner Broad, we have found an area of agreement. I think you referenced that perhaps making the decision yourself or not -- we agree, we would not like you to make a decision by yourself on this issue.

(Laughter and applause)

COMMISSIONER BROAD: Well, I can tell you with absolute certainty --

COMMISSIONER DOMBROWSKI: He still needs -- he still needs three votes.

COMMISSIONER BROAD: Yeah. I can tell you with absolute certainty I will not be doing it myself. I'll be hanging right on to Mr. Dombrowski here.


COMMISSIONER DOMBROWSKI: Just a comment I want to make, though, related to that is the industry -- I have not seen -- we have not seen an industry turn out on any issue like we have on this issue, and especially today. And I feel bad because this process at the IWC is a very complicated -- it's probably the worst example of government in California -- I mean, the way we operate and everything, it's just -- it's like sausage-making.

And while we've had the healthcare industry and others, they have -- they have kind of been used to going through this wringer. I don't think -- I don't think the sheepherder industry has. And for that, frankly, I apologize.

But, having said that, as Commissioner Broad said, we are stuck with the time frame on the minimum wage, and this, unfortunately, part of that. And that meeting with the vote will be on October 23rd. And this is the last hearing we're going to have. We'll have, you know, some discussions on the side, as George knows, trying to see if we can come to some compromise. But we don't have a lot of time, and we don't have a lot of options. And we are where we are.

MR. SOARES: Mr. Chairman, thanks for those comments.

Understand what I said in San Francisco remains the case. There are areas of this matter that are very difficult, if not impossible, for us to deal with. There are other areas that we continue to focus on. I would like to emphasize those points right now, just so the thought is not lost.

First of all, regarding us being here today, I'm a big believer in people just picking up the phone when they've got a problem. I believe, if somebody had a problem with this industry, in addition to whatever self-policing we do, somebody should have picked up the phone, and we should have got together in meetings like this, in a setting not like this, and had a real opportunity for debate to go on and the compromise to be reached. The phone wasn't picked up, and the next thing that happens, this is in this public setting.

And so, while this industry is not perfect, I think it's important to note that we're here doing our best, but given enough time, maybe we could have all done better.

Secondly, it's been said too many times that all you can do is deal with numbers, and I understand that. But the problem is, is that some vast percentage of the testimony against the exemption has not related to numbers at all. You've been given pictures, you're going to be given videotapes soon, all to try to create a dynamic, a look for this industry, that is contrary to what this industry really is.

And so, what we have here is the dynamic that we talk about working conditions, but then when we get to the point of saying we'd like to work on that, then someone says, "But we can't do anything about that; all we can do is work on numbers." I think some people are trying to have it both ways.

I have offered to this Commission now, and I'm going to continue to work toward that end, to try to find ways with this industry to accommodate real problems. We want to separate fact from fiction and deal with real problems.

We have had economists testify already. We're prepared to subject those numbers to anyone's close scrutiny. And to the extent they're wrong, they're wrong and we'll admit it. To the extent they're right, we want that acknowledged too.

These people have a lot at stake, and I said at the last meeting we're not trying to run a sheep industry on the backs of sheepherders. What we are trying to do is find a way so that sheepherders and sheep producers and the surrounding community can all exist as one and move forward together.

So it remains our hope that we can accommodate the time frame. We will do our best.

With that, I would like to now defer to our next speaker.

EMILIO JUARTE: Hi. My name is Emilio Juarte. Forgive me if I'm a little nervous. I'm not used to speaking in front of an audience.

But I'm employed with Loscotti's Sheep Company as their foreman. And every day, I work with these sheepherders. Ours come from Chile. I mean, I eat with them, work with them, and, you know, talk to them all the time. And we've discussed this issue, as far as the job, you know, as far as wages going up. And basically, they're at the -- came to the same conclusion as I did, but each and every, you know, single sheepherder that I'm employed with, out of work.

And, you know, there's been rumors and media talk about how they're mistreated. And I've -- Loscotti's -- I've been around sheep all my life. My father was a sheepherder. He came here in 1960, and I've been employed with Loscotti for three years, and I've worked for other sheep ranchers in the past also. And I've never seen -- I honestly can say I've never seen any of them mistreated.

And, you know, the sheepherders I work with, they said, you know, they were happy with what they were making, you know, when they were making $700 a month two years ago. They never complained. They were happy when they got their raise, and then it went to $900. And now they -- they're happy with that. But they said themselves, they said, you know -- and if they could be here, they would all be here, but unfortunately, you know, we're lambing right now, so they couldn't make it. But they just feel the same way as I do, you know. We're all going to be out of work. I mean, there's a lot of other people I speak for, as far as when I say, if this does pass, it's going to really hurt us all, and especially, you know, I -- I'm young and I really love the industry, and I've been around it all my life, like I said. Hopefully, one day, I'd like to be in the sheep business myself, but I can't see how that's going to happen with this sort of thing going on.

But, you know, my job is to deliver their groceries and buy their groceries for them, move the sheep, and I, you know, switch them from field to field, and, you know, take care of the sheepherders as far as when they need to go to the doctor or anything like that. You know, that's basically my job. And it's -- just some of the stuff that I hear through the media, you know -- and I'm there, I see it, and I talk to the sheepherders every day, and I've never had any complaints out of them as far as the way they're treated, or their wages.

And I just -- I can't see how this wage deal, when they're happy with what they're making, why -- why go and, you know, change that? Where they live, where they come from -- I have men that work for me now tell me that, you know, in their homes, they have dirt floors. They come here and they get a trailer, and they -- you know, a little sheep camp that's -- you know, they're supplied with everything they need, clean water, refrigeration. Some of them, you know, they buy their own generators for the deal and have little TV's that they watch. They have a better life here than they do there.

What we're doing, we're just trying to send them all back. I mean, they think that they're going to help out the sheepherders by doing this, but, really, they're not. It's going to put them all out of work, and myself also.

So, that's basically all I can say as far as this. I mean, I'm there on hand with them.

MR. SOARES: I'd like to ask a question, though, and get your response. It has been said in my presence that if we just double the $900, make it $1,800, make it some larger number, that we wouldn't need H-2A, that we would find an ample number of domestic sheepherders to fill the bill. I -- you've been in it all your life. I'd like your reaction.

MR. JUARTE: That's totally false. I -- we can't find -- the reason we bring these men -- our men come from Chile, others bring them from Peru -- it's because they have experience of where they come from. I mean, they come from a livestock region where, you know, they know how to herd sheep when they get here. You can't pick some ordinary Joe off the street, just because he wants to learn how to herd sheep, because he's going to either harm himself or he's going to harm, you know, the owner, he's going -- financially, because I don't know if you've ever worked with sheep, but you have to have a lot of patience. And it's --



MR. JUARTE: Well, maybe you'll see -- you'll see where I'm coming from.



MR. JUARTE: But as far as -- as far as domestic sheepherders, and once they get out there, you know, the reason the men come here, because they're used to the lifestyle, they're used to being in a solitude place. I mean, where they come from, they might have to, you know, walk twenty, thirty miles to see somebody. When they come here and -- you know, it's -- they think it's a better lifestyle to them. They're making more money. You send them back to Chile, it takes them three months to make $200, which, in here, you know, they -- they save their money and they go back and they live like kings, they say. They buy their own ranch on the first contract that they're here, which is three years.

So --


(No response)




George, how many more speakers do you have?

MR. SOARES: Our last panel right now.

Mr. Chairman and members, we've done a lot of talking about sheepherders. We wanted you to meet some sheepherders. We're going to ask them some questions on our list, and we're going to invite you to ask them anything you want about this industry. These gentlemen right here are in the business every day.

So, Jose Calle, who you met in San Francisco, will interpret.

Jose, I'd like you to explain briefly, because we're running low on time now, the questions that we're going to ask, and then they can offer whatever response they have.

Please. Please go ahead.

MR. CALLE: Thank you. As you know, I'm the coordinator of Lima, Peru. I've been assigned today to help traduce the declarations of the sheepherders.

We have a group of eight sheepherders that represent different ranches. And all together, they represent around 45 sheepherders. They come from different countries. We have from Peru, we have from Chile, and we also have from Mexico.

They wanted to -- there were more sheepherders that wanted to come, but, unfortunately, we are short on time and we just decided for these eight people to talk.

And according to the issues discussed in a couple of hearings, we have three main questions which are the most important questions that I want them to address to you.

The first question is related about -- if they knew about the work conditions before they came to this country, if they understood the contract conditions, how do they feel about this.

The second question is what is their opinion about the proposal of a wage increase.

And the third, and I think it's also a very important question that they are going to address today, is about the work conditions. They're going to issue four main points: what do they think about the living conditions, which is their camper, water, food, as it has been told in many hearings; and also, about the time the dedicate to the job -- this is on a daily basis, which is the minimum and maximum amount of time they have to dedicate to this type of work; the other point is also about the health, how have the health problems been treated, how are they helped with this, fast or slow or whatever; and the last one is about their relationship with their grower and the member if they have enough freedom to move around with these people.

So what I'm going to do --

COMMISSIONER DOMBROWSKI: Wait, wait. One second. How many sheepherders are going to be answering all of these questions?

MR. CALLE: They -- they won't be answering all of them, like -- anyone that would like to address one of these questions, they will be sitting here and answering the question. That doesn't mean that all of them are going to answer. Maybe two herders will answer one question, and if somebody feels, answer more.

I'll be very glad if you could interrupt at any time and ask any questions to them. I'll be very glad to traduce. My English is not so good, neither is my Spanish, but I'll try.

Okay. The first question.

(Mr. Calle translates in Spanish)

MR. LAURIANO: (Through Mr. Calle, interpreting) I come from Benes Oliveri, and sheep company, and we are altogether very happy with the job we are doing.

COMMISSIONER DOMBROWSKI: Excuse me. Your name, again.

His name is Timoteo Lauriano. I'm sorry.

MR. LAURIANO: (Through Interpreter) We are happy with the treatment, the provision, and about everything they give us.

This is all that I have to say. Thank you very much.

COMMISSIONER DOMBROWSKI: I'm going to -- I'm going to --

MR. CALLE: Yes, sir.

COMMISSIONER DOMBROWSKI: -- try to ask -- I mean, I'm going to concede that they're all going to agree. In terms of trying to speed this up, because we're at 3:30 already and -- if you could just keep the remarks as brief as possible, for the record, I'd appreciate it.

MR. CALLE: You want me to do it as fast as possible.

COMMISSIONER DOMBROWSKI: Just briefly state their support, I guess, for your question.

MR. CALLE: Okay. Okay.

COMMISSIONER DOMBROWSKI: And we really -- we get the message, okay?

MR. CALLE: Okay.

COMMISSIONER DOMBROWSKI: I'm sure the other side is going to come up with their people as well, so we'll -- you know, let's just try to streamline this a little bit.

MR. JUICA: (Through Interpreter) My name is Silvio Juica. I represent Juan and (inaudible). We are four workers.

Okay. First of all, I want to talk about the work schedule, which they mentioned that it's 24 hours. And I want to say this is a lie. From November to September, 10 hours; January to April, 7 hours; May to September, from 3 to 4 hours.

With the work treatment, I don't have any complaint. And this could be shown with the 14 years I have been working with these people.

Thank you.

This is everything. Thank you.


MR. MALPARTIDA: (Through Interpreter) My name is Joel Marcos Malpartida. I work with the company -- with Etchamendy Sheep Company.

I want to make two main issues, according to my other fellow members that I represent. This is the first time I know, and San Diego, that is the first time I know that we have a sheepherders representative.

I think this is surprising. This is a democratic country, and I think the election of a representative should be democratic -- democratically. It should base on a population vote, and he cannot appear like that saying that he represents the union of the sheepherders.

To finish, the sheepherders that come to this country are people that want and have that opportunity to work for the benefit of our family, of the state we work, and of our family. This opportunity we have, because this is the only way to come to this country, but I don't want this to be badly interpreted as slavery, because I believe we come to a country that is very democratic, and we could tell whatever we feel.

If we have any type of problem with a member, it should be solved with him directly. And don't try to generalize it because I think the truth is always going to come after. But you cannot take advantage of a problem to look great yourself.

They want to do something for us. If you want to help us, you could do it in many ways, and one of the ways is like, for example, meet us with our family -- help us meet us with our family. But don't try to take advantage of a little problem we have.

Okay. Thank you.

MS. HUERTA: (Not using microphone) Selective translation!

AUDIENCE MEMBER: (Not using microphone) Not a complete translation!

MR. TOSCANO: (Through Interpreter) I am Victor Toscano. I work for I & M Sheep Company. I have been working 13 years in the same company.

Okay. The water, the same as the provisions we have, we use the same water and provisions that the members eat and drink.

There's a lot of testimony that they mentioned about that I -- we get bad food, raw food, and that is wrong.

We have come for the good of our family. And thanks to that, we could come up and help our families.

We are very thankful to the members, to the Western Range Association, and to this country that has changed our situation.

This is all. And thank you very much.

COMMISSIONER BROAD: Can I say one thing?


COMMISSIONER BROAD: I'd just like to say to the gentlemen, I hope when you're alone, working, if we happen to give you a raise, you won't be too sad about it.


COMMISSIONER DOMBROWSKI: All right. Let's move this along.

MR. SOARES: All right, yeah. Mr. Chairman --

COMMISSIONER DOMBROWSKI: Do you want to have their names entered for the record? How do --

MR. SOARES: Yes. We'll enter the rest of the names, and then we'll conclude.


MR. SOARES: Do you have all their names?

MR. CALLE: Yes. You want the list --

MR. SOARES: We'll give those -- we'll give those to the reporter in a while.


MR. SOARES: Let's stop right here.

Yes, go ahead.

You've been very generous with your time, Mr. Chairman.

And let me just take one minute to conclude. I'm tempted to resist the bait that's just been offered by Commissioner Broad, but I can't help myself. The comment about people receiving more money and they won't mind, I bet that applies to everybody in this room, including the commissioners.


MR. SOARES: Yes. But it's a point of view that I think I need to express. That is not the issue here. The issue is, can we keep an industry alive and adequately compensate the sheepherders? Everybody wants a pay raise. Can we afford it?

We have given you the economics and we've invited you to research the economics and challenge us on every number we've given you. If we agree to disagree after that, fine. We'd like you to give a look at the numbers. We think they're real.

Let me conclude by saying that we don't think the system is broken. We think any system can be improved. We're here today. We'll be here tomorrow, wherever we need to be, to try to improve the system. We believe that if we free ourselves up from all that binds us right now, maybe we can find a way to deal with any number of these issues. I'm committed to working toward that end, right up to the 23rd and thereafter.

This is an industry in decline. And when someone can prove it different, I invite them to show you otherwise. But it's in decline. It's not an industry going bankrupt. I haven't used the word. I understand the old argument about agriculture; it's always going broke, some years more than others. This industry is in decline and all the indicators prove it.

We have to be careful here that we do not hasten the decline. There is -- there are extreme swings in what these people do all day long. We're not arguing against that. They do put in long hours some days and short hours the other days. That's the reality of it. So, just know we're not arguing that those swings exist. That's why it's dealt with in this manner.

The 201 program has been described to me by too many people now as some sort of a windfall for the sheep producers of this state. It was said in San Francisco. It's as true today. It was a transfusion, not a windfall, a transfusion that has a three-year life. And even then, the money hasn't arrived at most of the mailboxes. It's to help with the impact of international trade.

The Living Wage Act has been represented to me as requiring you to do this. I invite the Commission to produce the legal opinion that supports that position. We've done our research, and I am certain that the Living Wage Act does not require this Commission to eliminate the exemption. But if you have a different opinion, we can have lawyers sit down and talk about that. So we do not see anything that requires you to do it.

COMMISSIONER DOMBROWSKI: It doesn't -- just -- it doesn't require us to eliminate it; we have to look at it. And the decision could -- if you have three votes, as I've said before, anything can probably happen.

MR. SOARES: I agree with that. I'm merely saying that the reason for three votes should not be the statement that's been made too many times that you have no choice because the Living Wage Act says you must eliminate the exemption. It does not.



COMMISSIONER DOMBROWSKI: We are not saying that we have to eliminate it.


COMMISSIONER DOMBROWSKI: That is one option. What I've been personally trying to convey, at least in these hearings and privately, is that I don't think right now there are three votes for taking that option, and that's what the problem is. So --

MR. SOARES: I understand. Thank you.

Let me conclude with that, but also say that there are people, as a result of the questioning of the witnesses, and just because they've now had some thoughts, there are at least two, and maybe more, people in the audience that would like to testify. But I do not want to be inappropriate on the use of time, and so perhaps others that you have programmed to testify can do so, and then we can add on with their comments at the end.

And I will -- and I will not ask to testify.

COMMISSIONER DOMBROWSKI: George, we're not going to be here till six o'clock.

MR. SOARES: No, I understand that.

Do you want them to come up now?

COMMISSIONER DOMBROWSKI: What else do they -- what do they have to add? I'd be more than willing to have people put their names to the record -- excuse me -- I'm just trying to control this --

MR. SOARES: I don't know. The request has been made. I understand.


MR. SOARES: Maybe we can do this in just five minutes.


MR. JARIDI: My name is Robert Jaridi. I'm just going to cover some of the things that were already covered. And I'm probably one of the youngest sheep men in here, so

-- in the youngest generation. I'm a second generation of sheepherders. My dad's from France. He came over here as a sheepherder.

I just wanted to clarify some of the things about the sheepherders' wages. At $900 a month, plus we have to pay for them to be here -- it'll be $300 a month on top of that, plus all their groceries and all their expenses. It's well over into $1,600 to $1,700 a month. So, that's well over -- exceeds the $16,000, $17,000 for the year.

The other thing is, on the expenses of sheep, that -- not only that there is the expenses of the herders that we were talking about, the 20 to 40 percent of the cost of sheep, but in the sheep business there's also about a 10 percent death loss in breeding ewes. That is also costed out, $100 to $140, depending on what you buy. Plus, to buy breeding rams, you also need -- for 1,000 breeding ewes, you need also anywhere from one per thirty to forty sheep, so I'm going to say about 25 sheep for those 1,000 ewes. And those 25 rams, they cost about $300 to $400. This year they -- they might even exceed $400 a head. So, right there alone, we're well over into the $40,000, not including our expenses, and the feed and trucking.

Trucking, ourselves, we usually take them once to the hills and once back to the alfalfas. We try to walk them as much as we can because the expenses are so high.

And alone -- I'm sorry -- I'm kind of nervous, but alone, that we -- our trucking bills are close to $2,500 a van. If we just do it twice per year, it's about $1,200 to $1,300 for one van going both ways, or one way. And sometimes we have to move them. If it's a dry year and we're staying in the alfalfas, and we have to move them two to three times, and that all accounts. So right there, that adds on. We're well into the $40,000 range.

And on these -- on one band of sheep, we're only getting $70,000, $72,000, we figured earlier.

And as a young producer myself, I once was interested in trying to proceed (sic) my father in the sheep business, but I find it very hard to do this right now, the way the financial mess that we are in, because it is very hard to make this business work. We need all the help that we can get, with wool being worth nothing. Not to mention, we clip our wool, and it's not even worth selling because we -- we are also -- we have to pay a negative 6 percent or 6 cents tax on our tag wool, because when we sell it, it is not worth anything, so we have to pay our tariff or -- our checkoff is 6 cents on our tag wool, so we lose 6 cents, because we can't even get a penny for our tag wool. And it's very -- it's very hard for us to -- I -- even at 90 to a dollar a pound, it's pretty tough for us to come out.

Everybody thinks that we make money. I have -- we have a lot of ranches around us, and they say, "Oh, you got a dollar a pound for your lambs," but they don't see the bills that everything costs.


MR. ITURRIRIA: I am Paco Iturriria. I am from Bakersfield. I am the Kern County Wool Growers president for the last twenty years. I'm also the past president of the California Wool Growers Association.

I came to this country when I was 18 years old, 1952. I herd sheep for six years, and we did this work and I guess we tried very hard to do this work as best as we could. I went into partnership with two other brothers and -- the Mende Brothers, and founded I & M Sheep Company in Bakersfield. We started the business in 1958. We are here since then.

We had pretty good years, we had bad years, had mediocre years, but we survive. I -- honestly, everybody's telling you now the economics. Right now, our margin is very slim or none at all. So we need a little help. We can't go for this -- for this minimum wage. We can't afford to do that.

I fulfilled my dreams. I got married and I had two sons and a daughter, and they -- my two older sons, they already (inaudible), one with our business and one with (inaudible). My daughter that's going to be -- she's going to graduate in December, for -- with a teaching -- she's going to be a teacher.

As I say, right now, I fulfill my dreams. My son, my oldest son, he told me so many times, "I want to become a sheep man. That is -- Dad, that is my dream." But right now, I can't -- I can't -- I want to discourage him because right now, things are not -- they're not looking so good.

Mr. Commissioners, I know you've got big decisions to make, a big decision to make. Please look at -- look at the sheep industry. Like they say, you can help us or you can -- you can hurt us. And it's going to be all on your decision. I want you to make your conscience, but let's look to the California sheep industry.


All right. All right. Mr. Schneider, I'll just look to you to bring up your panel.


COMMISSIONER DOMBROWSKI: Whenever you're ready.

MR. SCHNEIDER: Good afternoon. And I want to thank all the commissioners for the patience that they've had on this issue and for giving both sides ample opportunity to hear from this. And there was a comment the other day that given the number of workers, the amount of time is really inordinate, but I think it's also important to remember that twenty-five years ago, when sheepherders were excluded from minimum wage coverage, no sheepherders were here to testify because they had to be out guarding the sheep. And it's very interesting that although the industry claims that they can never bring -- give workers the days off, that they have to be there seven days a week, they can bring them in to testify on their behalf.

We're going to continue today putting a face to the sheepherders. I'm not going to just ask a couple questions; I'm going to have these sheepherders testify. So, the first worker that we're going to call is Lorenzo Mosquera.

MS. BULGOS: Good afternoon. My name is Carmen Bulgos, and I'm here to translate for Mr. Mosquera.

COMMISSIONER DOMBROWSKI: Into the microphone, please.

MS. BULGOS: Sorry. Okay. Good afternoon. My name is Carmen Bulgos, and I'm here to translate for Mr. Lorenzo Mosquera, and I promise to be as truthful in my translation as the knowledge of my English allows me to.

MR. MOSQUERA: (Through Ms. Bulgos, interpreting) My name is Lorenzo Mosquera. I am from Peru. I am married and have four children. My family lives in Peru.

I arrived to the United States the 10th of October, 1996, to a contract that I obtained from Western Range Association, who is my current employer at this moment. I began to work for Mr. Benes Oliveri, who is an associate from Western Range, whom I worked for since January the 28th of 1999.

My work consisted in caring for the sheep, 24 hours a day and seven days a week. I worked under these conditions for two and a half years without having the right to have visits or talk to other people who were not employed or had a relationship with this company.

I was not allowed to have a radio, nor a television, neither magazines or newspapers, under the instructions of my employer.

Many times I was humiliated by my employer, who told me that Peruvians were good for nothing, to the point where he compared -- to the point where he said that five Peruvians would not equal one of his dogs. Even with this

-- even under these conditions, I continued to work because I needed to support my family.

The 15th of November of 1998, I suffered in an accident because of not having the tools, the basic tools to work, that are required to carry for the fence material. I notified my employer of my physical conditions, but instead of taking me to the doctor or providing me medical care, he told me that Peruvians invented things, made up things, so that we don't work. Since then, I suffer the consequences of the stress of the work.

I work under these conditions because my employer made me to, until January the 28th of 1999, because I could no longer endure the pain. My employer told me, or his decision was at that time to fire me, and his argument was that he no longer had a job for me. He took me to a motel and he denied -- did not give me my passport nor my permit to stay in the United States, which substantiated the right for me to stay in the United States legally. He told me that I complain to whomever I wanted, but no one would pay attention to me because I was only a Peruvian starving.

I asked then for the support of Western Range, and they too denied their support. For this, I make them responsible, and my employer, because as a result of their doings, I ended up in jail because they -- because while they knew that I had a legal right and documents to be in the United States, they reported me to immigration. They thought that by doing this, and my accident from work, denying me the right -- denying me my rights by deporting me will be easier for them to assume their responsibilities. They made the immigration know that I was undocumented, and that I was violating the law, because I was unable to prove that I was legally in this country, when, in fact, the ones that were violating the law were Western Range and my employer.

While I was in jail, time went by, and I was affected psychologically and emotionally. I was able to prove that I was legally in this country in front of an immigration officer in court, and at the same time, I was able to prove that I was in no violation of no law.

I'm going to go ahead and describe what my typical job is during the winter, which is when -- you know that is a time when the sheep are having -- delivering. My day will begin at four o'clock in the morning. I would usually help the sheep deliver, usually only with the aid of a flashlight. Then I would continue my work by having to separate them, then feed the others that were -- had not delivered. And then I would continue to care for the ones that have delivered, from nine a.m. to ten a.m.

Afterwards, I would have to pick up the fences and transport them, to place them -- to place them again somewhere else. At the same time, I was always being careful of keeping an eye on the sheep that were still delivering.

Approximately, I would do this until four o'clock in the afternoon, sometimes not even have time for a meal. And then I would continue to check on the sheep until the evening.

Then, when this work ended, I was finally able to go to my trailer and prepare my meals for that day and the following day, but always keeping an eye on the sheep that were still delivering or maybe that could be attacked by coyotes or wild dogs. This work is a job that requires constant and arduous work, even during the evening, because sometimes I would get up in the middle of the night to make sure that everything was fine.

All this would occur between the months of November through March. After March, then I would be in charge to take the sheep up to pasture, from the months of April, May, and June. And then, for the months of April, May, and June I was in the desert, and for the months of July, August, and September I would be in the mountains. To do this job, all I was provided was a donkey to help me transport the tent, clothes, some utensils, and some food for myself.

COMMISSIONER DOMBROWSKI: Quiet in the audience, please. Quiet in the audience, please.

MR. MOSQUERA: (Through Interpreter) In order for me to conduct this job, I would have to walk five to six miles caring for the sheep, and wherever the evening fell, I would sleep along with the sheep.

I would prepare my food one time only during the day. Sometimes the only tools that I had were the twigs that were available in the fields, because I couldn't carry much. I was only able to carry a spoon, a plate, a cup, and a pot. During -- for six months, the provisions that I was given, it was the same, without variation for the climate, which we suffer, because when it rains, there's not even twigs available to cook. When there is warm and heat, the water is not sufficient. When it's cold, I'm not even provided enough clothes, sheets to endure the cold. And for these reasons, a lot of times I became ill. And by myself, nobody could see this.

Without being successful, I complained to my employer, and all I got was his getting upset at me. Be sure that you will impart justice. I today deny all the declarations that the employers have done when they -- when they say or declare that we only work three hours in the summer and eight hours during the winter.

I ask myself, if this is true, commissioners, if they feed their sheep, if they water their animals during the day and during the night, and if they walk five or six miles every day through the mountains, and they prepare their foods on the soil, and their bathroom is a shovel all the time, if they do all this, then why hire us for three hours?

I ask you today to please -- I ask you today to please intercede for us, to change the conditions of our life and our work, and also to improve our salaries, since what we make is a misery.


COMMISSIONER DOMBROWSKI: I would -- I would reiterate, this is a minimum wage hearing. And our authority is to look solely at the exemption. If you want to talk about working conditions, you're talking about a different IWC procedure.

MR. SCHNEIDER: I understand that.


MR. SCHNEIDER: But I think it's also important, since the ranchers put on so much testimony saying that everyone -- well, they --

COMMISSIONER DOMBROWSKI: Everybody's had every -- both sides -- I'm sorry -- both sides have had ample opportunity -- and I'm not cutting you off --

MR. SCHNEIDER: No, I understand that.

COMMISSIONER DOMBROWSKI: -- I'm giving you a chance. I'm just pointing out the testimony we're listening to is on the exemption.

MR. SCHNEIDER: I understand that.

I want the record to reflect that when this witness talked about how he was treated by the grower, what was said, and what was said about Peruvians, many members of the audience laughed. And I find that highly disturbing.

I also find it very disturbing that earlier this morning, when I saw some of the workers who were going to be testifying that were brought by the growers, I went over and said hello to them, "How are you doing? I'm glad you're here. What time did you leave Bakersfield or whatever area you came from?" And immediately, several growers ran over and started yelling at me, saying, "What are you doing talking to our workers?" I said, "Are you afraid of what they might say to me?" And the response was, "No, Mr. Schneider, we're afraid of what you might say to them."

And this is the attitude of the growers, that they have complete control, 24 hours a day, seven days a week, 365 days a year. And the reason they have that control is because sheepherders are exempted from minimum wage, and so they can get away with having them work however many hours or as long as they want. So these issues are relevant.

And it was also -- I was also told -- I want to make the record clear on this -- one of the persons said -- I said, "You know, I'm not trying to put you folks out of business," and they said, "Yes, you are." I said, "No, I'm really not." And they said, "Well, Mr. Schneider, maybe you were abused as a child; maybe that's why you're so angry." I want to put on the record I was never abused as a child.

And when an attorney who is working with me is called a word that I cannot repeat on the record, she's told by the same person who said that perhaps I was abused as a child, that she is a -- word I cannot say on the record -- for working with me. That, I find very disturbing. And I think it's very --

AUDIENCE MEMBER: (Not using microphone) I called you no word -- she said she --

COMMISSIONER DOMBROWSKI: Quiet, please. Quiet, please. Quiet.

We're not going to go back and forth here.

MR. SCHNEIDER: And I think it's reflective of the attitude.

So I know we're talking about hours, we're talking about wages, but also, we have to understand the conditions that people are subjected to and how -- you know, the growers made a big show at the beginning that there were 100 or so growers here. Well, if the workers didn't have to be out there working, there would be a lot more workers here.

The next worker that I want to have testify is a worker who doesn't want to give his name because he's afraid of retaliation for speaking out. Also, he's an injured worker who is undergoing surgery today -- or tomorrow, so he has videotaped something which I would like to submit. But in the interests of brevity for this hearing, if I could just submit that for your consideration, submit copies of that, with a translation, I would like to do that. And I think we can move things along by that.


MR. SCHNEIDER: Now Victor Flores will address you briefly.

MR. FLORES: (Through Interpreter) My name is Victor Flores. I want to thank you for giving me another opportunity to explain the problem of the sheepherders in California.

The arguments manifested today by Western Range and their associate employers, I can see that some things are true, but the majority, they have said pure lies, trying to surprise the Commission.

Just like the employers have stated marvelous things that workers, the sheepherders are, they wouldn't be suffering psychological maltreatment, humiliations, retaliations, discriminations, and a salary that is a misery for the work of 24 hours, seven days a week, 365 days per year, without having a day's rest.

We are here not to surprise anybody, but to tell the truth. We don't want to lie to the Commission. Commissioners, members, how much I would have loved or liked to bring ten or twenty sheepherders so they could say their truth, what is happening. If in this moment we don't have any, the sheepherders, it's because they're working, living the 24 hours in the mountains, in the foothills, in the deserts, controlled by their employers, caring for thousands of sheep under their responsibility, because they can't abandon their work, less go out, because they don't have a free day. If they leave, then they're fired, because they abandoned their jobs, or maybe they return to their countries.

They bring the sheepherders to testify here because they have in their power the control of all the sheepherders to say everything is there in their favor. If everything that the sheepherders have said today is true, then I'm sure that he has a good employer, because there are some that know the value of their employees. But they don't mistreat them, without humiliating them.

To your knowledge, we're not lying. To your knowledge, there are newspapers, news reporters, television, the radio, they have actually seen our working conditions, how hundreds of employees live, like the slaves of the century past.

I have so many things to say. I know that we don't have the time to give our testimony today. I just want to say, in the month of June of 1999, the Commission of the Human Rights from Peru, they came to investigate and to actually see our living conditions, the sheepherders.

Because I have just been told that we don't have more time, I understand, and I comprehend.

COMMISSIONER BROAD: What we'd like you to do is just summarize your remarks rather than reading them, and just tell us what you -- tell us what you want to tell us. And we don't want to cut off your testimony.

MR. FLORES: (Through Interpreter) Thank you very much. Thank you for giving me that opportunity.

It's true, I'm embarrassed to say, for many years the sheepherders received a salary of zero ninety-nine cents per hour, for 24 hours, $700 per month, for physical labor and security. During this year, or beginning this year, 2000, beginning in the month of April, they're paying $1.25 for 24 hours, which equals to $900 per month.

The sheepherders, during the winter time, they work from four o'clock in the morning until seven o'clock in the evening, which totals to about 15 hours daily during the six months from October through April. From May to October, they go to the mountains, deserts, foothills, mountains, where they have to work from five o'clock in the morning, taking the sheep to pasture until nine o'clock in the morning, which amounts to four hours. Then we have to fetch water and give them water, because they need water. Then we finish. Then we have to go back, fetch more water, to get more water, when we have to drive eight to fifteen miles with the water tank of 2,000. And then that takes us about an hour and a half. By eleven o'clock in the morning, then is finally when we get a break to prepare our food. That's five hours, five and a half hours of labor, there in the morning, in the summer.

In the afternoon, when the sheep get up and want to eat, four o'clock in the afternoon, then we have to take them out to pasture until nine o'clock p.m., because it's still summer, so the daylight's still out and they're still eating. That's another five hours, which totals ten hours during the summertime.

This is not fair, the big lie, that we only work three hours and then -- then we go to sleep all day and all night. Then who takes care of their sheep if we only work three hours? This is absurd, what they say, that their dogs care for their sheep, that the sheepherders, that they -- we don't work, we don't do nothing. If that dog scares, and then why do they hire us? And then they bring us over here.

Because we are here to better ourselves and our families economically, they take advantage by telling us things, bad things. They talk about their dog. I know that it's a white dog. In fact, this dog just creates more work for us because we have to care for them, and that the dog doesn't go astray or another place, because we've been warned from our employer that the dog better not get lost.

COMMISSIONER BROAD: Sir -- sir, I'm going to have to ask you to conclude.

MR. FLORES: (Through Interpreter) -- because a dog is worth $500.

To end, I want to tell you, we are here in good will. We invite Western Association to negotiate by -- with or through Mr. Calle. I don't if he's let them know. We never got a response. When we said goodbye, when we talked and said goodbye, he only told me, "You're only creating a problem that the sheepherders are no longer going to go to the United States." He says, "Bye, and take care." Then I think, "Why does he tell me 'take care of yourself'?" I know that I've been threatened.

And I want to thank you very much.

MS. BULGOS: And I just want to make sure that translation -- "cuidade," the attorney reminded me that that's "watch out." That's what he -- was meant.

MR. SCHNEIDER: We'll be submitting the tape. And there's one document I would like to have put into evidence.

This is a letter from a member of Congress -- the Peruvian Congress, which was faxed to me this morning, contradicting the claim that the Peruvian Commission -- the congressional commission that came here didn't find any problems. Jose Calle testified the other day that that commission found no problems here. This is a letter from a member of -- one of the members of that commission saying that that is not true, that they did find many irregularities and that they're willing to come and testify, if need be.

Next, I would ask Dolores Huerta, founder of the United Farm Workers union, to speak.

MS. HUERTA: Dolores Huerta, co-founder of United Farm Workers.

Just a very short statement I wanted to make. First of all, at one time, there was a sheep shearers union -- one of the offices and many members were here in Stockton, California. That union is no longer in existence, and primarily it was dismantled after -- because of the H-2A program, where many of the H-2A people now do sheep-shearing.

But the other thing I wanted to mention is that, over the years, we have had sheep shearers -- I mean sheepherders -- that have come to our offices of the United Farm Workers escaping conditions of indentured servitude. And this is not unusual. It's happened periodically, and it's always just surprising that that is still going on.

I think there's been enough testimony in terms of the types of -- the wages and what it amounts to. And although we've heard a lot of testimony here from the industry saying that it will break them if these workers are covered by a minimum wage, that reminds me very much of the testimony of the agricultural industry when we, the United Farm Workers, had our first strike, when workers were only earning 70 cents an hour. After that first strike, the wages went up to $1.25. After our first contracts, they went up to $3.00. And, of course, we now know that most farm workers are covered by the minimum wage. Even though they should be covered by more than the minimum wage, they at least get that.

And the industry has flourished. The agricultural industry has flourished, and, of course, I don't know all of the economics of the sheep industry. But the other thing that really concerns me, after working with farm workers over the last forty years, is that it is -- and I think that the Commission really needs to weigh the testimony of the sheepherders that were brought here today by their employers. It is really impossible to expect a worker to say what is happening to him in front of his employer. It would just be very -- I think there's a credibility problem that happens there, because they're not going to testify against their employer, who may then fire them or deport them if they don't like what they said.

So I think that that really needs to be noted. And I'm saying that because this has been our experience, in terms of working with similar types of workers over the last forty years.

And -- but I did ask the workers that were up here, and I whispered to them, "How would you like a wage increase?" They said, "Yes, we'd like a wage increase." So, I think they're very much -- that question was never put to them, if they would like to see -- be covered by the minimum wage. And I think if there was any kind of a secret ballot taken, they would all unanimously -- unanimously vote yes, that they would like to have -- be covered under the minimum wage. Thank you.

MR. SCHACHT: Mr. Chairman, members of the Commission, the time has arrived. The industry has refused steadfastly to make a proposal to deal with the exemption, so we are, as George will understand too well from operating a committee system up in California, we have negotiated with ourselves, and we are about -- and I'd like to pass out to the Commission and the staff a proposal submitted by the Sheepherders Union, by Central California Legal Services, by California Rural Legal Assistance, by the CRLA Foundation, by the United Farm Workers of America, AFL-CIO, and the California Labor Federation, AFL-CIO.

While I'm -- while it's being passed out, let me just say that the industry is saying that they've had to pay increased expenses in all other areas, yet they claim they're not paying for the sheep industry on the backs of the workers. But they are. They're paying $900 a month for seven days a week, potentially 24 hours a day, eleven and a half months, for three-year contracts. If we justify the sub-minimum wage or working conditions on the fact that wages and working conditions are a lot worse in other countries of origin or due to foreign competition, we could justify importing workers from Thailand to work in athletic shoe factories for $2.00 an hour. But we're not going to do that, and it shouldn't continue in this industry.

The proposal basically has two elements. The first element is to deal with the allegations by the industry that they don't work workers seven days a week on a regularly scheduled 24-hour shift on-call. We're saying that if the industry doesn't have that standard of employment and pay, it has some other standard of employment and pay, then they ought to -- they ought to pay those that -- those that continue to insist on an H-2A job order that calls for a regularly scheduled 24-hour shift for all seven days in a week, that they ought to pay minimum wage for all of those hours, for all of those days, for all of those months.

But if they offer a contract in which the sheepherder is employed on any other basis, then the employer would be subject to a monthly minimum wage for sheepherders that would be substantially lower. We based that monthly minimum wage rate on the industry's San Francisco testimony about average work hours for lambers, and we adjusted that by what our sheepherder clients and members say is actually closer to typical, but it's still less than the actual hours worked.

The other element of the proposal is to index the monthly minimum wage in future years by the amount of the percentage increase in the state minimum wage. And we've provided statutory language, proposed statutory language, to the Commission, and we're more than willing right now to talk about the specifics of either aspect of the proposal. We're also willing at this point to give copies of the proposal to the industry so that they can begin to look at it.

And we also want to extend our willingness, from this point forward until the point at which you have to promulgate a rule, to discuss how our proposal might be amended or might be improved on.

COMMISSIONER DOMBROWSKI: You have copies right now, you said?

MR. SCHACHT: Yes, I do. I handed them out to you.

COMMISSIONER DOMBROWSKI: No. Do you have extras?

MR. SCHACHT: Oh, for the industry, yes.

COMMISSIONER DOMBROWSKI: Could you give Mr. Soares one?



MR. SCHACHT: Here are some extras.

Let me just talk briefly about the rationale for setting the monthly amount of minimum wages. In the October 3rd testimony, the industry representatives stated that the average work year was divided roughly into three periods, where lambers and others work varying hours, from three to thirteen hours per day. The work year as set forth by the industry totaled about 2,893 hours.

Our clients paint a very different picture of their work year. Their testimony in Stockton and -- San Francisco and here talks of 16- to 18-hour days during busy periods, and a minimum of 8 to 10 hours during lighter work periods. For purposes of the proposal, though, we took in all cases the lower range of the average hours in each period, as reported by the sheepherders.

Just so you understand the basis for -- the underlying basis for the monthly minimum wage that we set, we're taking the position that if -- if you're not going to apply well established California law to workers who are on call, under the control of the employer for seven (sic) hours a day and 24 hours a week (sic), then at the very minimum, they ought to get the minimum wage for every hour in which the employers are saying they're working. And if you apply the $6.25 minimum wage to the hours that the industry said workers actually, quote, "worked," unquote, worked, it comes to a wage rate of $18,000. They're currently being paid $10,400. So there is a direct subsidy of nearly $8,000 in minimum wages that the industry says the workers work that are not being compensated for.

Now, if you adjust those times to add in additional time, which our clients and members say they're working -- for example, during the heavy lambing period where the employers said 45 days for 13 hours, we added on one additional hour for half of those hours, and two additional hours for a fifth of those days. Similarly, for the light lambing period, we added an additional hour for half of the days, and two hours for a fifth of the total days. And then, for the remaining six months, we added five additional hours.

The sum total of additional hours that comprise the basis for our monthly minimum wage rate is an additional 1,063 hours in the average work year. This translates at $6.25 an hour to $6,643. That yields a total yearly minimum wage, at those hours, of $24,724. The average monthly minimum wage, then, would be $2,060.

Another feature of our proposal is to allow the employer that prefers to have the 24-hour, seven, on-call kind of job description serve as the basis for their H-2 or domestic worker recruitment and employment, is to allow those employers to deduct the full amount of meals and lodging. And we haven't talked about transportation reimbursement costs or other costs. But if the employer wanted to go the 24-seven, I think we'd be willing to talk about some additional costs that would bring that down.

If they go the monthly approach, we're also -- we're also giving them an opportunity to reduce that monthly rate by $100 per month if, as part of their employment of the worker, they offer one uninterrupted 24-hour day in each workweek off to the worker. They can reduce that monthly pay to $1,900.

Now --



COMMISSIONER BROAD: -- I just have a question here.

Okay. You're saying that if someone's on a 24-hour on-call basis, they're entitled to the minimum wage.

MR. SCHACHT: That's right.

COMMISSIONER BROAD: Then you're saying if they're on less than a 24-hour basis, they pay this monthly amount. Don't you mean to say that employers of sheepherders on less than a 24-hour, seven-day-a-week, on-call basis shall, as an option to paying the state minimum wage, hourly minimum wage for all hours worked, have this option.

MR. SCHACHT: Right. You --

COMMISSIONER BROAD: In other words, what if you decide --

MR. SCHACHT: That's the thrust of it, yeah. And if it's --

COMMISSIONER BROAD: Yeah. I mean, what if you intend -- what if you hire someone for just, you know, three hours a day during a heavy season? Obviously you wouldn't pay them a monthly salary of $2,000.

MR. SCHACHT: Well, in fact --

COMMISSIONER BROAD: You wouldn't pay that.

MR. SCHACHT: -- you know, when you look at the wage order and you look at the other provisions of the wage order that apply to all employers, for example, the recordkeeping section, in our proposal we're saying that all the other wage order provisions that relate to the minimum wage would be brought in under this proposal. But all other employers are required to keep accurate information about when the employees begins in each work period -- ends each work period. So, one of the consequences of this exemption is that these employers are not keeping those records.

So, I agree with you, that there's another category of employee, potentially, that could be put into this proposal that would be a straight hourly employee who

-- for whom the employer would be keeping the regular kinds of records and treated -- treat him like any other employee under the wage order.

COMMISSIONER BROAD: Okay. Thank you. I've got it.

MR. SCHACHT: Any more?

Okay. Well, thank you very much for your


COMMISSIONER BROAD: So you're at $2,060, they're at $900 holding firm.

COMMISSIONER DOMBROWSKI: And I don't think either of you have three votes, actually.

MR. SCHACHT: Well, at least we're willing to talk about it. And we would very much like to find some kind of middle ground. And I -- so far, we haven't seen any willingness to do that.

COMMISSIONER BROAD: We may find it for you.

Can I just make a concluding remark?


COMMISSIONER BROAD: I want to thank both sides here. I understand that emotions run high in these kind of issues. This is obviously an industry where there is actually -- this is a permitted, lawful form of indentured labor, which is rather rare in American society any longer. We don't generally have a system of indenture, but we do here. And the reason why it's a special circumstance is, obviously, the sheepherding industry -- and I don't have an argument with how that developed, except to say that the reason why we don't have indenture in other areas is because indentured labor, when it is exploited, creates conditions of possible extreme exploitation because the worker is isolated and alone and stuck under a contract.

That doesn't mean that the employers that are here are not fine employers that care about their workers. But the bad egg may be a particularly bad egg. And I'm sure none of the employers would deny that there are those kind of people. And I'm sure that the worker advocates here are not suggesting that every employer in this industry is a terrible person who is horribly exploitive of their


Nevertheless, and all that aside, obviously the truth generally lies somewhere in the middle. And it's been our job to try to pick through that. And we've heard a lot of testimony, and I think there's been a fair explanation of the point of view of both sides. And I think another truism is everybody's right and nobody's wrong. Everybody's truth is their truth, and it tends to reflect the reality that they've experienced. It doesn't always reflect the middle because it's not in the interests of either side to say, "Well, yeah, you know, it's not as bad as we think," or the other side saying, "Well, you know, there are problems here; we concede that, and, you know, let's -- we suggest such and such number," you know, "to raise the minimum wage."

Having said all that, we've probably delivered the message here as clearly as we can that we would like to see these two sides get together and reach a compromise. And the time frame is from now until October 23rd. And I'm sure I'm speaking for the rest of the commissioners here -- we offered to make ourselves, particularly Commissioner Bosco, who's not here today, available to facilitate those meetings if that's helpful to the parties -- you're certainly not required to avail yourself of that opportunity. But that -- that offer is still there.

And as you can see, for those of you who were here earlier today, we made that same offer to work out the remaining thorny issues in the construction industry, and that same process helped to work out issues earlier in the year with regard to the healthcare industry. So, we think, I think, up here, that that kind of cooperative approach yields a result, from a policy perspective, that is probably best for everyone.

So, with that, I'd like to make a motion that we adjourned.



COMMISSIONER DOMBROWSKI: And I would just -- actually, it's not even a hearing, so I don't think we have to -- I'd just offer myself. You can reach me, if you want to talk privately, through the Industrial Welfare Commission offices in Sacramento. They will get the message to me, and I'll be happy to talk to anybody one on one, if they want to have a conversation like that, as I'm sure the other commissioners would.

So, having said that, I believe we are


(Thereupon, at 4:45 p.m., the public

hearing was concluded.)












I, Cynthia M. Judy, a duly designated reporter and transcriber, do hereby declare and certify under penalty of perjury under the laws of the State of California that I transcribed the three tapes recorded at the Public Hearing of the Industrial Welfare Commission, held on October 5, 2000, in Stockton, California, and that the foregoing pages constitute a true, accurate, and complete transcription of the aforementioned tapes, to the best of my ability.

Dated: October 26, 2000 ______________________________