STATE OF CALIFORNIA

DEPARTMENT OF INDUSTRIAL RELATIONS

INDUSTRIAL WELFARE COMMISSION

 

 

 

Public Meeting

 

 

 

 

 

 

March 11, 2002

 

 

 

 

 

Hiram Johnson State Building Auditorium

455 Golden Gate Avenue

San Francisco, California

P A R T I C I P A N T S

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Industrial Welfare Commission

BILL DOMBROWSKI, Chair

DOUG BOSCO

HAROLD ROSE

 

Staff

BRIDGET BANE, Executive Officer

DOUG McCONKIE, Analyst

TRACI PILGRIM, Analyst

MARGUERITE STRICKLIN, Legal Counsel

 

 

 

 

 

 

 

 

 

 

 

I N D E X

Page

Proceedings 4

Proposed Amendments to Wage Order 1-2001, Section 11 4

Petition for Minimum Wage Review and Indexing 5

JULIANNE BROYLES, California Chamber of Commerce 5

MICHAEL PROSIO, California Restaurant Association 18

MICHAEL WEBB, Western Growers Association 22

TOM RANKIN, California Labor Federation 24

WALTER JOHNSON, San Francisco Labor Council 27

PATRICIA BRESLIN, Golden Gate Restaurant 29

Association

NORM DESAUTELS, emergency medical technician/ 31

paramedic

MARK SCHACHT, California Rural Legal Assistance 37

Foundation

Closed Session 42

New Business 42

Proposed Amendments to Wage Order 1-2001 (Continued) 42

Adjournment 44

Certificate of Reporter/Transcriber 45

P R O C E E D I N G S

--o0o--

(Time noted: 10:04 a.m.)

COMMISSIONER DOMBROWSKI: All right. Well, Iím going to call the meeting to order. Let the record show that Commissioners Dombrowski, Bosco, and Rose present, for a quorum.

Item Number 1 on the agenda is approval of minutes. But I believe the minutes are not ready, so we will skip that item.

Item Number 2 is ready, consideration of proposed amendments to Wage Order 1-2001 to modify Section 11 in order for a meal period to commence after six hours of work instead of five. That document is in your packet and has been circulated prior to the meeting.

Do I have any questions on that?

(No response)

COMMISSIONER DOMBROWSKI: Do I have a motion?

COMMISSIONER BOSCO: So moved.

COMMISSIONER DOMBROWSKI: Second?

COMMISSIONER ROSE: Second.

COMMISSIONER DOMBROWSKI: All in favor, say "aye."

(Chorus of "ayes")

COMMISSIONER DOMBROWSKI: All opposed?

(No response)

COMMISSIONER DOMBROWSKI: That proposed language is adopted.

Item Number Three, consideration of petition requesting the Industrial Welfare Commission to conduct a review to raise and index the minimum wage in California.

I will call Julianne Broyles.

MS. BROYLES: Good morning, Mr. Chairman, commissioners. Julianne Broyles, from the California Chamber of Commerce.

We are here to talk to you today about the petition requesting the Industrial Welfare Commission increase the state minimum wage as part of its biennial review of the adequacy of the state minimum wage.

Certainly, itís interesting to note that -- because the California Chamber does believe that the current minimum wage is adequate, the public seems to have responded the same way. Otherwise, I have seen so many hearings in the last several years where weíve had hundreds and hundreds of people present. To have just the few that we do, I find it extraordinarily interesting.

As for the review, we did submit written comments to the Commission, and my comments will follow them in some part, but I did want the opportunity to, one, respond to any questions the Commission might have, and then, also, to bring some additional points out.

The California Chamber is the largest and most broad-based employer organization in the State of California. We have 16,000 members, and our members employ over one quarter of all the workers in the State of California.

We do believe that having the ability to comment on the adequacy of the minimum wage is a very welcome one, and do want to provide our comments in order for you to understand why we believe the state minimum wage is adequate at its current level.

We do believe itís important for the Commission to understand that employers are committed to finding ways to find ways to provide the increased take-home pay and better job opportunities for our workers, and we support also those policies that help our workers gain additional skills so they can earn better wages and keep and retain the jobs that they have. And there are a lot of other ways that the California Chamber believes that it is possible to make California a better place for all workers, and not just those earning the minimum wage.

As you begin the biennial review of the adequacy of the state minimum wage, we would like to point out several items for you to keep in mind as you go through this review.

On January 1, 2002, the California minimum hourly wage rate increased to $6.75 per hour. At this $6.75 per hour, California has the second highest minimum in the state of -- in the nation.

Our economy here in our state has been particularly hard-hit by the recent downturns in the high-tech industry. We also have had a significant loss in tourism trade due to the aftermath of the September 11th tragedy.

California employers are very hard-pressed right now, because weíre contending with a lot of increased costs that there are associated with what wage rates we pay our workers. These things are items such as workersí comp, disability insurance, health insurance, the taxes that we pay, and weíre also dealing with the higher premiums that go along with that because of reserve issues, as well as the high cost of energy in the State of California.

We do want to also note that we are very aware of the statutory authority of the IWC to examine the adequacy of the state minimum wage. And it is as it pertains to a single worker. The statute does not permit you to go farther than that or look at it in a way that the proponents of an increase in the minimum wage would like to have you do that review, which is in regards to a family of four.

The increases in the minimum wage will have a wide range of economic consequences, regardless of whether any type of a government agency wants it to have one or not. But we do want to, again, have that to keep in mind.

Now, with the increase of the state minimum wage to $6.75 per hour, we also have to point out that California employers are dealing with a large number of new laws, new liabilities, that -- and new mandates and very burdensome regulations that have been placed on the employer community in the last several years, the last three years in particular. Thereís more paperwork, more reporting, certainly more lawsuits.

Weíve had the highest number of class action lawsuits in the history of the State of California filed in one year. In fact, with the number of class action suits in the last twelve month alone, that number equals the entire number of class actions that have been brought in this state in its entire history. Itís over 230.

We do think that the explosion of the new regulations since í98 has raised an employerís labor and capital costs in a very significant fashion. And we think that creates a very large barrier to the formation of new companies, particularly small businesses, which are usually the engine that drives an economy out of a recessionary period. We do also believe that the small business community has been particularly hard-hit by this trend.

Employers are fully aware, even if government is not, that the consequences of even well-meaning mandates raise our costs, and that when you slow productivity and you diminish the competition, you will always limit real wage growth.

We donít operate as employers to keep the wages of our low-skilled or inexperienced workers at unfair, low levels. But the reality is that employers as well as workers, we operate in a competitive market, wherein we believe that, in essence, wage rates reflect worker productivity. That is what we have, minus the cost of operating in a particular area -- in this instance, California -- and the cost of the mandates that government might impose, and the taxes associated with employing those workers.

Now, proponents of the minimum wage increase usually make an appeal to economic justice as the reason for increasing any minimum wage. And they argue for a fair minimum wage as though government could simply order wealth into existence. And again, we have to point out, as employers, as much as government may not want to admit it, you cannot create wealth simply by passing a law.

Employers know that when mandates affect the price of goods -- in this case, it would be our labor costs -- and put it to a level that is higher than its market value, the demand for that good will fall. That means fewer jobs for Californians in this case. Sadly, in the case of minimum wages, the unused goods ends up being our people, our unemployed California workers. And we would rather have them on our payroll and working rather than having them unemployed because the cost of the government mandate has driven their price out of our reach.

Now, Iíve noted the statutory authority, but I do want to point out that in current law, the legislative mandate that the IWC has to follow in terms of its statutory authority, is that:

"It is the intent of the Legislature in enacting this Act that the Industrial Welfare Commission interpret these provisions . . . which does not cause undue hardship and loss of employment opportunities in any segment of industry in California."

You want to make sure that that is also looked at again in the review of the adequacy of the minimum wage.

Now, the minimum wage in the State of California has increased 48.3 percent since 1996. Thatís a very large increase in just six years. In terms of what normal wage growth is in any business in California, they have been averaging anywhere from 3 to 4 percent across the board each one of those years. You never get close to that same type of increase as weíve seen in the state minimum wage.

And we also believe itís incorrect to portray minimum wage workers and minimum wage jobs as dead-end jobs. Even when you have an unskilled, inexperienced worker, they can expect that level of pay when they come in the door of a business. This is where they get a foot into the employment climate, into the employment world, and try to prove that they are reliable, that they are responsible, and theyíre worth the increased rates that they would get after just a few months on the job.

I know there are a lot of reports and things that have been submitted over the years to the IWC that indicate how fast a minimum wage worker might increase. But normally, they get their first increase within four months, and they have scheduled -- and they usually have regular increases even farther over the next year.

Those businesses that cannot or are unable to absorb these costs are some of the -- you know, at least illustrate some of the consequences that an ill-thought-out government mandate might have. Now, some businesses can pass off -- pass on any increased costs, or a lot of their increased costs, to the consumer. That happens quite frequently. But when you cannot, you have to look for somewhere else to cut, and that always ends up in your highest area of cost in a business, which is your labor cost.

It is the consumer who buys the service, who buys the product, that determines the cost or price of what a business puts out as its service or product in the State of California and, indeed, in the country. And they frequently decide, as we have seen over the years, that sometimes those products donít -- are not worth the price that the other items that go into its creation make it for the consumer, so they stop purchasing it and they look for a different one to purchase.

Government wage mandates make for very deep government -- or very deep inequalities, in our opinion. When those who are on the economic ladder are priced off of it, they -- in fact, they actually have to fall off that ladder. But on the higher rungs, they do climb up, because they have additional productivity or additional skills that the low-skilled or inexperienced worker does not have.

We do adjust our business plans. We do look at our costs. We look at whether we are going to expand in an area. We look at whether weíre going to build new facilities. We look at a number of items that make it possible or profitable, because thatís, again, why employers are in business, to make a profit, at least in some way. But we do believe that when you add in unnecessary costs, it does make it very hard to operate in an area, and weíll choose to move to other places.

A good example, again, is the number of K-Mart stores that are closing throughout the region. Their costs, the price of their goods, have priced them out of certain markets. And youíre ending up losing a very large job base because of some of the things that the state government has decided to place on them.

In terms of looking at the adequacy, I think, again, you always have to be reminded of who actually earns the minimum wage. For the most part, theyíre teenagers, theyíre young adults, and theyíre people working part-time, usually working parents who want to be home half-time with kids or people who have retired and only want a small amount and are working to increase their -- or supplement Social Security income. Minimum wage employment does largely tie to their work experience. If you donít have skills, if you donít have work experience, you are not going to be considered the most -- the best option when youíre looking at a hiring. You will always look, as an employer, between the skills and non-skills and what you can afford to pay and whoís applied for the job.

Now, right now in California, about 3.2 percent of California workers are minimum wage workers. Thatís very dramatically different from where it was twenty years ago, where almost 13 percent of the stateís workforce was minimum wage workers. Compared to the hourly workforce in general, again, the minimum workers are nearly four times more likely to be young and inexperienced, and are far more likely to be single.

The California Chamber hopes that you do keep in mind that the minimum wage increases are, in fact, an implicit tax on employers of low-wage labor. And we do not believe that it is appropriate to increase that mandate at this time.

As youíre aware, Congress is currently working on proposals -- thereís, I believe, four different bills right now that are looking to increase the federal minimum wage, which is currently at $5.15 an hour, up to $6.15 an hour. Theyíre expected to take action on that before the end of 2002.

There are some items that we would like to have the IWC consider, and that is for you to actually think outside the box. You get the same data from the same sources time after time as we go through this review. There are a lot of other places that you can obtain information. We would like to suggest that you work at finding some new places where youíre not always getting data that one side or the other considers extraordinarily biased to one degree or another. We think that you could look at items such as Federal Reserve Banks as a source of information. We think that these banks -- and we know that they do studies that are not commissioned by any government, are not commissioned by any group -- they look at the economic conditions in the area that they operate, and they issue reports on what is actually happening economically, job creation, capital formation, venture capital being available. And all of these things would be very helpful, we believe, in your review of the minimum wage.

And you also have some other sources that you can tap. You have the Department of Finance. They also do an economic outlook. You have the Employment Development Department. They do occupational outlooks and surveys. They do a lot of economic development data that, again, might be helpful as you look at the adequacy issue. You have state tax boards. You can invite their representatives to come down and testify, and again, to provide economic data on what the state is actually going through right now, and you might get some projections on what we expect to go through in the next few years.

There are, again, as we pointed out -- there are corollary consequences to what any action has. There are increased costs, as we had noted, in unemployment taxes, disability insurance taxes, income taxes, workersí compensation insurance premiums, and a lot of other costs, again, that are assessed, first, based on the wage base of that employer, and then are increased farther on down the line. And there are ripple effects also associated, dealing with things such as the enactment of AB 60. AB 60 put in a managerial base salary -- first time -- of a very significant amount. It has said that twice the state minimum wage is what must be considered as the base salary for an exempt managerial type worker. And right now, thatís over $25,000. And any increases certainly would place that -- again, thatís nearly double what any other state has set as its base wage or base area for a managerial employee.

Again, because you are looking at these items and there are consequences, we do ask that you keep those in mind. And because small employers, who might not be able to have too many managerial employees -- because managerial employees do get, probably, a better benefit package because of the increased responsibility -- youíre also putting them in a Catch-22 situation, where youíre going to either not have as many exempt employees, or youíll take those who are currently exempt and make them nonexempt and move them to an hourly basis and reduce the benefit package along with it.

There are better alternatives. We do think that California has a lot of items that make it a very wonderful place to live and work. But when the cost gets out of kilter with what you actually have to supply, we do think that the IWC needs to think twice. We should be looking at things like reducing the cost of workersí compensation and health premiums. We should look at ways to increase small business formation and the associated job opportunities that these small businesses provide. We provide 80 percent of the jobs in the State of California. And to look at anything that reduces their job formation capability is going to probably diminish the very positive effect that proponents might try to find through an increased minimum wage. We do think itís important to increase the skills of the future workforce, as well as our current workforce. And we do think that the regulatory burden in the State of California needs to be reduced.

I am happy to answer any of your questions that you have, but we are committed, again, as the California Chamber of Commerce, to find ways to -- for our workers, to increase their take-home pay. But you can only do that if you increase the profits at the same time.

We think that we -- if we gain the ability to help our workers get better skills, again, weíre going to find ways that they are going to maintain and find even better paying jobs as the future -- but right now, $6.75 is definitely adequate, and we would oppose any increase at this time.

COMMISSIONER DOMBROWSKI: Any questions?

I would ask staff to explore the possibility of getting some third partiesí information, if nothing else economic information, as suggested, from the Federal Reserve and Department of Finance, Employment Development. If there are -- if there is information out there, Iíd like to -- if not just in writing, and maybe even have them come and present.

MS. BANE: Weíll be happy to do that.

COMMISSIONER DOMBROWSKI: Michael Prosio.

MR. PROSIO: Thank you, Chairman. Mike Prosio, with the California Restaurant Association.

I will try not to be too repetitive of what Ms. Broyles just stated. We concur with her testimony and what she said, and we would also -- I would start off by saying we do think the minimum wage at its current level is adequate.

Just to give a brief bit of background, to talk specifically about the restaurant industry and our particular interest in this, we employ approximately 925,000 people in this state. Many of them are at or near the minimum wage level.

But itís important to remember, when talking about the restaurant industry, that many of those so-called minimum wage employees -- excuse me -- the employees that are at the minimum wage are tipped employees. And conversely, the non-tipped employees, the back of the house, bussers, and cookers -- excuse me, not bussers -- dishwashers and cooks -- tend to be well above the minimum wage when hired.

What happens when you increase the minimum wage is that -- letís a 50-cent increase goes to the tipped employees who currently earn minimum wage plus tips, and the non-tipped employees are essentially frozen out of a raise. Because restaurants, like most retail segment businesses, operate on such thin bottom lines, when those employers are forced to give a minimum wage increase to any of their employees, but most specifically the tipped employees, the non-tipped employees who make $8, $9, $10 an hour, are essentially frozen out of a rate increase for a period of time because the money, just quite simply, is not there to give them an increase, even if they have earned it based on merit.

As Juli mentioned and as I said earlier, we think the minimum wage is adequate, and we believe itís important, as the Commission considers the adequacy of the current minimum wage, to look at the factors that the IWC has traditionally used and that, as the law is written, that they should be using to determine adequacy. It may be tempting to look at other factors, based on families of four or cost of living indexes from around the state, but we do not believe that is what is called for and required under the law, and that is not the intent of the law. It is one worker -- one wage, one worker, as Ms. Broyles stated. And we think that as you look at the adequacy of the wage, those should be the factors that are utilized, as opposed to some of these other factors that you will be called upon to use.

Relative to todayís current minimum wage, itís very common to look at the high water mark rate of the minimum wage of 1968, and some of the proponents of an increase will ask you to look at that and compare the current minimum wage to that. We think itís more accurate to look at the 1956 -- the minimum wage from 1956 on, which is a date and a figure that has been used by numerous groups on both sides of the minimum wage debate. And if you use that 1956 point as a point of reference, youíll see that the current minimum wage has actually outpaced the inflation. And while we stand at $6.75, if that minimum wage from 1956 had been tied to inflation from that point on, we would actually only be at $6.54. And through the work of the Industrial Welfare Commission, we are actually about 5 percent ahead of the game right now.

That does not mean weíre advocating tying the minimum wage to inflation or to the consumer price index. We think that this forum that currently exists, of the IWC biennially reviewing the wage, is the proper vehicle. It allows the IWC to take into consideration all necessary factors, not just a few economic indicators.

Relative to the adequacy, as I was stating, the wage at its current level is adequate when you look at the history over the last forty years. It has kept up with inflation. There is no need at this point, we do not believe, to raise the wage from where itís at.

And if you also take into consideration a couple of recent acts -- in 1996, the people of California in an initiative decided that the adequate minimum wage was -- excuse me -- in 1988 -- let me get my numbers here in front of me -- I apologize -- looking at IWC action in 2000 and the í96 initiative, in í96 the minimum wage was increased to $4.75. Again, indexing from where that initiative called for increases, in í96 and í97, if you indexed from that point in time, you would only be at $6.04. Again, weíre ahead of the game using that. So we are adequate based on what the people thought was an adequate minimum wage in í96.

And also, based on this Commissionís last actions in the year 2000, we again are ahead of the game. If we had indexed that wage, we would still be at $6.75, higher relative to where the wage was increased by the Industrial Welfare Commission just two years ago.

So, relative to adequacy, we believe that the minimum wage has more than maintained its purchasing power based on the historical definition of that adequacy. And therefore, we think itís accurate. But again, as Ms. Broyles stated, we would encourage you to look at all third-party factors that are necessary and take as much testimony as you see fit. And we are glad to, as that process continues, to offer any input that we can along the way.

Iíll take any questions.

COMMISSIONER DOMBROWSKI: Questions?

(No response)

COMMISSIONER DOMBROWSKI: Thank you.

Michael Webb.

MR. WEBB: Good morning. My name is Mike Webb, and Iím with Western Growers Association. Weíre an agricultural trade association here in California. And collectively, our growers produce about 90 percent of the fresh fruits and vegetables that are grown here in California.

We agree with many of the comments that were just made. But I wanted to talk to you a bit more in terms of how the minimum wage increase will affect agriculture and our industry. The majority of our members are the small family farmers who are located throughout the State of California. Weíre still reeling from the last set of minimum wage increases. That really has a profound impact on the agricultural industry.

Agriculture, for the most part, are price takers, not price makers, meaning we donít set the price that we receive for our crops. The market sets our crops. So, any increase for any input cost in the way we do business, the farmers must absorb themselves. So whether itís an increase in workersí compensation, unemployment insurance, diesel, energy, or minimum wage, things that have gone up dramatically in the past few years, this goes into the -- this takes away from the farmerís already dwindling small profit margin. And thereís a point out there where the farmers canít take any more, and weíre getting very close to that point. Thereís a lot of people who are hurting out there, and the thoughts of another minimum wage increase is going to be pretty hard for these folks to take.

Early today on the phone, I was talking to a potato grower outside of Bakersfield, and he was talking to me about how the minimum wage, the last round of minimum wage, impacted his business. He, because of the high labor cost -- labor consists of about 40 percent of his output costs -- with the last round of minimum wage increases, he was forced to find a more creative way to do business. That resulted in him going out and looking for ways to mechanize his business. And thatís what he did. And his mechanization for his family farm resulted in the loss of 30 jobs for farm workers who had those jobs. And thatís -- he didnít want to have to do that, but thatís just the reality of what he faces.

If weíre faced with an industry where weíre still receiving the same price for our products today as we did twenty years ago, we need to be creative in order to keep going here, to keep California as the number one ag state. And it was just devastating, and Iím afraid that increasing the minimum wage even more is going to increase the difficulty for our growers.

When weíre looking at the minimum wage, weíre not opposed to a minimum wage; we just think that it should be handled on the federal level, and not the state level. With Californiaís minimum wage already incredibly higher than the federal minimum wage, it creates a pretty big competitive disadvantage for our growers when theyíre competing against growers from other states, and not to mention growers from other countries. We have a lot of produce now being shipped in from Central America and South America because itís just a lot cheaper to grow the product down there.

So Iíd just like you to consider the impact that increasing the minimum wage has on agriculture when you make your considerations.

Thank you.

COMMISSIONER DOMBROWSKI: Thank you.

Tom Rankin.

MR. RANKIN: Good morning. Tom Rankin, California Labor Federation.

Well, I think weíve heard these arguments many times before.

Iíd like to start out by saying, if the Chamber wishes hundreds of people, maybe they will come. The -- and I wouldnít, if I were you, take the absence of great numbers of people here as any indication that people arenít interested in a minimum wage increase. I can assure you that they are, because if youíre trying to make ends meet on $6.75 an hour and youíre a single person even, youíre having a hell of a time doing it.

If you want to use the single person criterion, do it. Minnieís budget, if you want to update that which historically has been the standard for raising the minimum wage with the IWC, we would have a minimum wage of $8.80 an hour. So, go ahead, look at Minnieís budget, and see what it takes for one person to live on.

I would like to remind everyone, in terms of the testimony that you just heard, that the original minimum wage was legislated during the Depression. Here we are now, on our way out of a recession. I wouldnít be too worried about the economic arguments.

You have study after study that shows that raising the minimum wage does not have an effect, a bad effect, on unemployment. The problem we have here and in the rest of the country is that the gap between the rich and the poor has grown astronomically. The Chamber doesnít seem to think that the government should intervene here. I think itís time that the government intervenes in a much stronger way.

Twenty years ago, the average CEO was making 42 times what his or her average worker made. You know what it is today in this country? 541 times. They talk about the increase in minimum wage going up so many percent in the last few years -- calculate that percentage!

So, what we want you to do today is to take action to put out a call for a minimum wage board so that this process can get started as soon as possible, and to have a meeting as soon as legally possible to name that minimum wage board, so that this process can be started, so that the minimum wage increase can go into effect on January 1st of next year.

Itís sorely needed. It will stimulate the economy. And those hundreds of thousands of people who are making the minimum wage are looking for you, once again, to do the right thing for those workers. Basically, thatís your mission. Your mission under the statute is to look out for the interests of those workers who donít have anyone else to look out for them.

So, do your job. Put out the call for the wage board, and letís get this process started so that those people can get a little more close to what it takes to live on in California. You canít do it on $6.75 an hour.

Thank you.

COMMISSIONER DOMBROWSKI: Walter Johnson.

MR. JOHNSON: Well, as usual, I could probably say "Amen" to what Tom said. But before I do that, I must also express my deep concern, as I view our committee and Tom, that Iím the only person here with a tie clasp on. America is going downhill completely.

(Laughter)

MR. JOHNSON: And, you know, we sometimes have to express our feelings on there, but --

COMMISSIONER DOMBROWSKI: I personally wish more people would buy them.

MR. JOHNSON: Pardon?

COMMISSIONER DOMBROWSKI: I wish more people would buy them, representing the retailers.

(Laughter)

COMMISSIONER BOSCO: The only one I have is one my congressman gave me, but I didnít wear that.

MR. JOHNSON: You ought not to wear it, because itís very seldom a congressman gives anybody anything.

(Laughter)

MR. JOHNSON: Getting down to business here, I think, if we really look at, the need for a new wage board is a necessity in life. $6.75 is still a poverty-level wage. We need a new wage board to deal with the reality of the world in which we live.

Many years ago, I read a book called Winning Through Intimidation, and I threw away most of it -- about 99 percent. But what I did save is the theory of reality: what others do not hope for maybe could be. And this is what we have to determine in todayís world, what is the theory of reality, not for our own individual situation, but for the people out there.

And many years ago, I -- one of our business agents came in, and he said, "I heard the cry of the wounded out there, and nobody is even hearing them." And so, we canít deal with what is, could be, or anything like that. I think if we looked at about -- we talk about money, people on the minimum wage cannot -- theyíre not able to eat in the restaurants these days because the cost is high.

And this is from my point of view, which, of course, I value very highly, is the issue of conscience.

And I remember Bobby Kennedy once saying -- and you heard it many times, Iím sure: "Some people say, and we say ĎWhy not?í" And Iím saying now, "Why not?" Why shouldnít we have a new wage board? Because what is going on today is the basic battle between the corporate citizen against the individual citizen. And so, we have a responsibility, you have a responsibility, to have a new wage board to examine the present economic world, to make sure that we understand -- and this is not your final decision -- but the important thing is -- itís like going to the doctor to see whether youíre well or ill. And thatís the responsibility here that you have.

Now, we understand the real effort for low-wage people to survive. And as I said, itís a matter of conscience. And we cannot rest -- I remember, many years ago: "Words on the plains of hesitation breach the bones of thousands, who, upon the eve of victory, rested, and while resting, died." We canít rest in todayís economic world, especially where we live.

And Mr. Rankin gave me a new responsibility, and that is these letters, right, Tom? So, who do I give the letters to?

Thank you very much for the time and --

COMMISSIONER DOMBROWSKI: Questions?

MR. JOHNSON: -- if any of you need a tie clasp, you can call.

(Laughter)

COMMISSIONER DOMBROWSKI: Thank you.

Patricia Breslin.

MS. BRESLIN: Good day. Iíll be brief, because Iíve been here before you many times with the same issue to say. I just do want to go on the record again to say that the years of giving a blanket minimum wage increase are over. Industries vary, and the way theyíre compensated, the employees are compensated, vary. And I donít think that any minimum wage increase can be addressed without addressing the fact that there is a need to take a look at what type of compensation an individual gets.

I am solely supporting helping individuals who are lowly compensated. But in our industry, once again, I must say, we have an inequitable wage structure. And that inequitable wage structure is because employees receive tips that are regulated about distribution by the state, so that it cannot be given to a nontipped employee. And that regulation is causing us to have a morale issue, between the front of house, the tipped employees, and the individuals in the kitchen, who are not affected by any minimum wage increase, but are affected because the compensation goes to those who are earning much more above it, who we call minimum wage earners, but are truly tipped employees earning $40,000, $50,000. And I am not talking about the coffee shops, and Iím not talking about considering this tipped issue for those who are not earning a good amount. These are tips that are declared, that are paid taxes on, FICAís on.

Again, I wonít waste your time about this. This is an issue of great concern. Weíre doing an economic study of our industry right now. Itís a random study. We did the random study from a list from the Health Department and the Tax Collectorís Department. The preliminary results show that the restaurants are down between 30 to 50 percent in sales from last year. Now, last year was a banner year. However, that does mean job losses, and it does mean the belt is tight. And we do need to consider that.

And then, just in closing, I again want to offer myself -- my application is in -- for a wage board, should you consider putting one together. I would very much like to offer my services on that.

Thank you.

Any questions?

COMMISSIONER DOMBROWSKI: Thank you.

Iím sure Iím going to butcher this one. Norm Desautels.

MR. DESAUTELS: Very good. Thank you.

I got to speak with you the last time. Iím an emergency medical technician and paramedic in San Joaquin County. Iím not a professional lobbyist. Iím nobody special. Iím the minimum wage person that people see, though Iím not at minimum wage because Iíve been there twelve years. But our starting people do start at minimum wage.

I was just listening to some of the comments that I heard the Chamber of Commerce and other people talk about. And just in my experience with the people that I work with

-- I wanted to comment sort of on what they said -- I heard talk about single person versus four-person family establishments of wage. And I know that, at least based on a report by the California Budget Project, to make ends meet in California, a single adult needs about $20,000 a year, with our cost of living.

Our emergency medical technicians, working a 56- to 72-hour workweek at minimum wage, make $22,000 a year, just barely above what at least one projected report says.

I know that, you know, the average ambulance run in our county, if you call an ambulance and you get transported, itís going to be about a $1,000 charge, on the average. $6.75 of that goes to my partner, whoís an emergency medical technician; $12.00 of it goes to me. Iím not exactly sure where the rest goes. I know about $300,000 of it goes to our CEO. That seems to be a big discrepancy between what I make and what my CEO makes. I know he has a tremendous amount of responsibility, but I have the responsibility for peopleís lives when Iím there.

Tying something to the cost of living just seems to be a reasonable way to go. I heard talk about federal versus the State of California and the cost difference and the imbalances. But California certainly has a higher cost of living; it needs to be higher than the standard. You know, what I can do in North Dakota, I canít buy a house in California for what I can buy a house in North Dakota.

And the bottom line, and like I talked about the last time, is it affects patient care. Our people are not unskilled personnel. And maybe thatís the big problem with minimum wage, is it covers a wide variety of people, from unskilled to people who do have skills and are out there, but yet theyíre tied in to the minimum wage system. Weíre having a hard time keeping emergency medical technicians. In San Joaquin County, for the organization I work for, Iím the field training officer. We were just at a meeting the other day -- and we do 90-, 180-day, one-year reviews -- and we were looking at our list of current emergency medical technicians. We have 82 emergency medical technicians that work for us. Sixty of them have less than a year experience. We canít keep them, at minimum wage.

People come in with the ideal of saving lives, making a difference, doing a good job, but they find that they just canít continue on. They canít make a living at it. And again, our workweeks, like I said, average 56 to 72 hours.

It just seems reasonable that a board should be appointed and that we should look at all avenues. And I donít know if thereís a way to separate out unskilled from skilled, and thatís probably a legislative thing that has to be done in a lot of ways. Unfortunately, right now, itís all tied together. But itís certainly worth getting aboard together and looking at all the factors and coming to a reasonable decision.

Thank you.

COMMISSIONER DOMBROWSKI: Any other speakers?

(No response)

COMMISSIONER DOMBROWSKI: Commissioner Bosco?

COMMISSIONER BOSCO: First, Iíd like to thank you people that testified. And just -- Iíd like to make just a few random comments, because this will be the second time, at least on this Commission, that Iíve gone through this debate. And to some extent, thereís a déjà vu quality to it. In fact, many of the same people are in the room, as well as the same statistics and rationale for the statistics.

I will say that Iím glad that we raised the minimum wage as we did, and Iím glad we didnít wait for Congress. I know that the comment was made to us two years ago, as it was today, that Congress is in the process of raising the minimum wage. And theyíve been in that process a long time. Certainly, it would be better for agriculture, in areas where weíre competitive with other states, if Congress did set a minimum wage so that weíre not in a competitive situation.

I do think, though -- and also, we always have a number of years that we can look at, and the typical basket of goods that we can look, and the fact that the voters voted on it one year, and what the index is from that, and what CEOís make, and -- I mean, thereís no -- no lack of comparisons that we can make.

What I would like to do, I think, though, is try to analyze what effect the minimum wage that we did pass had on the state. And I think -- and I like the idea of trying to get some third-party, you know, fairly objective commentary on that, and then allow the people in the room to comment on that. I think thatís really the best way we can analyze where we should go from here.

Bridget Bane informs me that David Aroner, the chief of the Division of Labor Statistics and Research, and his staff have conducted a study of the impact of the minimum wage that went into effect January 1st, 2001. Iíd like to request that, hopefully, at our next hearing, that we invite him and whomever else he feels would be necessary to give us commentary on that report, and maybe, if, in addition, in advance of that, if that report could be distributed to some of the parties here in the room so they can comment on it as well.

Iíd like to see what effect the last minimum wage that we did has on the state.

COMMISSIONER DOMBROWSKI: A procedural question: do we need a motion to authorize the next hearing? Can we just schedule it,

or --

MS. STRICKLIN: You can schedule it.

COMMISSIONER DOMBROWSKI: Just schedule it. To satisfy the petition?

MS. STRICKLIN: Yes.

COMMISSIONER DOMBROWSKI: Can we just -- do we need a motion?

MS. STRICKLIN: You might as well, since youíre all -- since you do have a quorum, to go ahead and vote for the hearing.

COMMISSIONER BOSCO: I donít think we necessarily need a motion.

COMMISSIONER DOMBROWSKI: Okay.

MS. STRICKLIN: Just set it?

COMMISSIONER DOMBROWSKI: Just set it.

MS. STRICKLIN: So, 30 days.

COMMISSIONER DOMBROWSKI: All right. Okay.

Harold, any questions?

COMMISSIONER ROSE: I would like to make a motion to do the wage board.

MS. STRICKLIN: We need to have at least -- I think I misspoke to you at the last hearing -- at least one public hearing, as part of the investigation. And so far, weíve only had meetings. So we need to at least go ahead with one hearing. And at that hearing, I guess you will have the information from Labor Statistics and Research and whatever other people the --

COMMISSIONER ROSE: The maximum schedule would

be --

COMMISSIONER DOMBROWSKI: So, that hearing has to be scheduled with 30-day notice?

MS. STRICKLIN: 30-day notice.

COMMISSIONER DOMBROWSKI: And then, at that hearing, if the majority of commissioners choose, they could vote to go to a wage board.

MS. STRICKLIN: Exactly.

COMMISSIONER DOMBROWSKI: Okay.

Okay?

COMMISSIONER ROSE: Yeah.

COMMISSIONER DOMBROWSKI: Do you still want to speak?

MR. SCHACHT: Members, Mark Schacht, here representing California Rural Legal Assistance Foundation.

Iím sorry to be late, and I gather, from the general remarks, that the Commission would like to study whether or not the minimum wage should be increased. And I really feel that that is -- this is the appropriate activity of the wage board. Thatís really what the wage board ought to do, report to you on whether or not they believe that the minimum wage is adequate to meet the basic needs of Californiaís poor.

This will unconscionably delay the increase in the minimum wage for people who canít make it. Last time I was here, I presented you with the results of a survey of 1,100 farm workers. Ninety-four percent of those farm workers say that from $1 to $5 more per hour is required for them to meet their basic life necessities, and that the number one necessity is poor housing.

Even in the Central Valley, with moderate housing prices, housing is out of touch and out of reach for poor farm workers.

Weíd strongly urge you to reconsider, to put this on track --

COMMISSIONER DOMBROWSKI: Excuse me. We just -- maybe you werenít in the room, but we just got legal counsel that we have to schedule a hearing, and then we can go to the wage board.

MR. SCHACHT: Okay. Is the motion before

the --

COMMISSIONER DOMBROWSKI: There is no motion. Weíre going to schedule the hearing. And at that hearing, if a majority of commissioners decide, it can go to a wage board.

MR. RANKIN: How many daysí notice did you have for this event here today?

MS. BANE: The Commission meeting? We need ten days.

MR. RANKIN: How many days did you have for this one?

Why are you playing games between "hearings" and "meetings" is my question? This -- does not this gathering today qualify as a "hearing" because of the notice requirements?

MS. BANE: It would qualify as a hearing and a meeting if we styled it that, and if we had observed the notice timelines. But the notice timelines are different for each one. But each one has to be --

MR. RANKIN: Well, how many daysí notice did this event today have, is what Iím asking?

MS. BANE: Well, we know that the requirement is 10 days. I think, Mr. Rankin, your question is how many days prior to this did we set this meeting?

MR. RANKIN: Look, let me be very clear. Whatís going on here is you are playing games with meetings versus hearings in order to delay setting up a wage board on the minimum wage -- I want this on the record -- so that it will not go into effect January 1st next year.

And Iím very concerned about that.

COMMISSIONER DOMBROWSKI: Thank you.

COMMISSIONER ROSE: If I may, the last meeting or hearing we were at, I, at that time, asked for a wage board, and I was told that we had to wait 30 days or whatever it is, so -- and then Mr. Bosco made a motion, and I believed that this meeting was the one that we could go forward with a wage board.

COMMISSIONER BOSCO: Could I ask a question? And maybe our counsel could tell me this. What would --

COMMISSIONER DOMBROWSKI: Excuse me.

COMMISSIONER BOSCO: What would the timeline be, say, if we intended to raise the minimum wage on January 1st?

MS. STRICKLIN: In terms of the least amount of time? I can just tell you what the time periods are; youíd have to fit in the dates.

COMMISSIONER BOSCO: Thatís all right.

MS. STRICKLIN: If you have a hearing in 30 days, you call a -- the least amount of time after that to have a meeting would be 10 days, to call a wage board. Youíd have to send out a 30-day notice for the wage board to meet. After receiving the wage board report, you can set the meeting to either accept or reject the recommendations of the wage board or to propose your own. You then would have to set at least three public hearings. You could do that within 30 days if you set them sequentially, within, you know, two or three days of each other, around this date. After that, you would have to set a meeting to either adopt or amend or whatever, whatever you chose to do.

So, from there, I -- I wasnít counting in actual days, but thatís the timeline.

MR. SCHACHT: And then 60 days --

MS. STRICKLIN: And then 60 -- well, it would have to be -- go into effect -- have to be published by November 1st, 60 days before the effective date of January 1st.

MS. BANE: By my calculations, itís still within the realm of possibility within those timelines.

COMMISSIONER DOMBROWSKI: Any other

questions?

(No response)

COMMISSIONER DOMBROWSKI: Okay. So, we will schedule the hearing. Iíll leave it up to you, Bridget, to come up with the proper date and follow through on the timelines.

And I assume itís the wish of the commissioners to try to schedule this so we do keep it in a January 1st time frame?

COMMISSIONER ROSE: Absolutely.

COMMISSIONER DOMBROWSKI: Thatís the sense Iím getting. So, try to do that.

MS. BANE: I will.

COMMISSIONER DOMBROWSKI: Item Number 4 on the agenda is a closed session. There is a summary report in your packet. Unless there are questions and unless counsel tells me we have to go into closed session, I would waive that and just leave the summary as the report on Item Number 4.

MS. STRICKLIN: Itís not necessary.

COMMISSIONER DOMBROWSKI: Okay. All right.

COMMISSIONER BOSCO: I think it was a pretty good summary. I mean, thereís nothing we can do about any of this anyway.

MS. BANE: No. The next court hearing is set on the 14th of March. I believe thatís indicated.

COMMISSIONER DOMBROWSKI: All right. Item Number 5 is any new business.

Seeing none --

MS. BANE: Mr. Chair, if thereís no new business, prior to any motion for adjournment, I would like to be allowed to go back to Item 2 to give a brief staff report on the wage board meeting. The summary minutes of that meeting, the report, are not available from the court reporter at this time. We had that meeting last Tuesday. But I would like to give a report, a brief summary, that would satisfy the requirement in the code.

On the March the 5th, there was a meeting held by the wage board to consider amendments and/or changes to Wage Order 1. At that meeting, representatives from labor and from business appeared, and a chair, Mr. Pool. The meeting was adjourned at approximately ten oíclock, and it lasted for approximately ten minutes. It resulted in a unanimous passing of the proposed language that you have already visited and moved upon.

There was a brief discussion about whether to open the amendments or to have the amendments cover all employees under Wage Order 1 or only those employees covered by a valid collective bargaining agreement. And the language, as you can see, is limited, by unanimous agreement, the amendment to employees covered by a valid collective bargaining agreement.

Thatís, I think, a summary which will allow you to have that in lieu and until you get a wage board report formally.

COMMISSIONER BOSCO: I move we adjourn.

COMMISSIONER DOMBROWSKI: Second?

COMMISSIONER ROSE: Second.

COMMISSIONER DOMBROWSKI: All in favor, say

"aye."

(Chorus of "ayes")

(Thereupon, at 11:00 a.m., the public

meeting was adjourned.)

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CERTIFICATE OF REPORTER/TRANSCRIBER

--o0o--

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 tape recorded at the Public Meeting of the Industrial Welfare Commission, held on March 11, 2002, in San Francisco, California, and that the foregoing pages constitute a true, accurate, and complete transcription of the aforementioned tape, to the best of my ability.

Dated: April 3, 2002 ______________________________

CYNTHIA M. JUDY

Reporter/Transcriber