STATE OF CALIFORNIA

DEPARTMENT OF INDUSTRIAL RELATIONS

INDUSTRIAL WELFARE COMMISSION

 

 

 

2002 Minimum Wage Board

 

 

 

 

 

 

September 5, 2002

 

 

 

 

 

Workforce Investment Building

750 N Street, Conference Room A

Sacramento, California

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

Chair

DANIEL ALTEMUS

Employer Representatives Employee Representatives

MATTHEW BARTOSIAK MAXIMO CARBUCCIA

PATRICIA BRESLIN SHANE GUSMAN

DOUGLAS CORNFORD ROGELIO LONA

JAMES POORBAUGH TOM RANKIN

MICHAEL WEBB MARIE WHITE

FANNY BROWN, Alternate

MARK SCHACHT, Alternate

Staff

BRIDGET BANE, Executive Officer

DOUG McCONKIE, Analyst

DAVID ZAHEDI, Analyst

 

 

 

 

 

 

P R O C E E D I N G S

--o0o--

(Time noted: 10:07 a.m.)

MR. ALTEMUS: Iíll call to order this meeting of the wage board this morning. My name is Dan Altemus. Iíve been asked to be the chairperson of this meeting.

For those of you who arenít familiar with how the wage boards have worked, or at least my limited experience

-- and I know there are some people at the table here who have a lot more experience than I do -- my primary role, Iím a nonvoting member of the board. I basically will act as a traffic cop. Iíll try to run the order, keep it -- run the meeting, keep it in order, allow everybody an opportunity to speak.

My experience on prior boards is that parties will present motions in the course of the meeting, which will then generate discussion. As that discussion is generated and goes on, Iíll try to make sure people have an opportunity to speak to whatever issue is before us. At an appropriate time, Iíll probably ask for a vote.

My understanding, unless the rules have changed, is that all the votes will be recorded by Ms. Judy, whoís our recorder. Weíll be recording even no -- even tie votes. If any vote carries by a two-thirds margin, which is seven out of the ten votes, that becomes then a firm recommendation to the IWC. Votes that cannot obtain the two-thirds vote will just be recorded as the vote on that particular motion.

I assume that everyone has read the charge to this wage board. It concerns the minimum wage, whether it should be increased; if it should be increased, by how much; and what impact any increase might have on other wage orders.

That -- Iím going to ask Cynthia to make the charge to this board part of the record so that we have it in the record.

A couple of -- just some ground rules. If people have cell phones, Iíd appreciate it if they turn them off.

We do have alternates. However, Iím only going to recognize the sitting members of the board to speak. If one of the five designated members, I believe on the employee side -- I donít know that the employer side has any alternates available today -- but the discussion will be amongst the five panel members on each side.

Any questions at this point?

Okay. What I think would help is if we start --

MR. SCHACHT: Let me ask a question as an alternate. In prior wage board meetings, all of the board members, including alternates, have been allowed to address the charge. They have not been permitted to vote, however, on motions. Iím wondering whether, because the alternates from the employee side have all shown up and some of us have materials that we want to present for the record, whether you would consider modify the rule you just articulated to allow us the same courtesies that were afforded us in the past.

MR. ALTEMUS: Well --

MR. CORNFORD: Mr. Chairman, I donít know that the recitation of the past history is correct. I -- having served in both capacities, I recall, when I was alternate, I could not speak.

MR. SCHACHT: Well, actually, on the last board, the last wage board involving sheepherders, George Soares, who was an alternate member of that board, made the same motion to Mr. Altemus. And in that wage board proceeding, alternates were allowed to address the board.

MR. CORNFORD: Iím only speaking with regard to the minimum wage board. I served on it five times.

MR. ALTEMUS: And my recollection is Mr. Soares had substituted himself as a member of the panel. But I donít want to recollect. My inclination at this point is to just allow the five members from each side to speak, because under the provisions of the Labor Code, weíre not to take testimony from the public. And alternates as alternates are not members of the board, and hence they become part of the public. And if we open it up to the alternates, weíd be opening it up to the public. So my ruling stands at this point.

MR. RANKIN: So, do you have a problem with a temporary substitute of an alternate?

MR. ALTEMUS: I donít want to get into us playing musical chairs.

MR. RANKIN: Okay.

MR. ALTEMUS: Yes, sir?

MR. POORBAUGH: Would it be helpful if we introduced ourselves?

MR. ALTEMUS: I was going to get to that, but Mr. Schacht preempted me.

So, why donít we start with Mr. Rankin, here on my right?

MR. RANKIN: Tom Rankin. Iím with the California Labor Federation, employee representative.

MR. LONA: Okay. Iím Rogelio Lona. I come from

-- representing the United Farm Workers.

MR. ALTEMUS: Just so you know, Mr. Lona has a translator here available to him.

Would you introduce yourself as well?

MS. GUZMAN: My name is Martha Guzman. Iím with the United Farm Workers as well.

MR. ALTEMUS: Martha will be translating for Mr. Lona throughout the proceedings.

MS. BROWN: Iím Fanny Brown, and Iím an alternate, member of ACORN.

MS. WHITE: Iím Marie White, and Iím on the board, a care worker from Sonoma County.

MR. GUSMAN: Shane Gusman. Iím an attorney at the Law Office of Barry Broad, representing mostly unions.

MR. CARBUCCIA: Max Carbuccia, United Domestic Workers.

MR. BARTOSIAK: Matt Bartosiak, Employers Group, employer representative.

MS. BRESLIN: Patricia Breslin, executive director for Golden Gate Restaurant Association, and employersí rep.

MR. POORBAUGH: Jim Poorbaugh, Monrovia Growers and California Farm Bureau.

MR. WEBB: Mike Webb, Western Growers Association.

MR. CORNFORD: Doug Cornford, representing the California Hotel and Lodging Association as well as the California Chamber of Commerce.

MR. SCHACHT: Mark Schacht, California Rural Legal Assistance Foundation, alternate.

MR. ALTEMUS: Does anybody care to open the discussion? I think Iíve heard some of the testimony thatís come before the IWC itself. Obviously, just from these people who have identified themselves as we opened this hearing, this issue touches on many different industries in California and many employee groups in California. And I think that there are strongly held feelings on many fronts, so I canít believe that this group doesnít have something to say to the issue.

MR. CORNFORD: Well, Mr. Chairman, I would make a motion relative to the charge of this board that the current minimum wage of $6.75 is adequate.

I base that motion on the fact that in 19 -- in the late Ď90ís, the State of California passed Prop. 210, which purpose was to raise the minimum wage to parity with the cost of living. And then, since that time, the minimum wage has been increased by -- actually, in this state, by a dollar. So, in about the last three and a half years, weíve had an increase of about $1.60 an hour in the state minimum wage. So our position is that we feel that the state has addressed the issue of the adequacy of the minimum wage, both through the ballot as well as legislative action.

Secondly, given the current economic conditions of the State of California, with one of the highest unemployment rates in the nation and one of the highest -- probably the second highest minimum wage, that any increase in the minimum wage would be to the detriment of the working people of the State of California.

MR. POORBAUGH: I will second.

MR. ALTEMUS: Mr. Poorbaugh seconds it.

Discussion? The motion is to hold -- to not move on the minimum wage at all, leave it at $6.25.

MR. CORNFORD: $6.75.

MR. ALTEMUS: $6.75 -- excuse me.

Mr. Rankin.

MR. RANKIN: Yeah. Well, the -- unfortunately --

MR. CORNFORD: Good to see you again, Tom.

(Laughter)

MR. RANKIN: Unfortunately, the amount of $6.75 is far from adequate to provide, as the statute calls for, "the necessary costs of proper living." There have been survey after survey done about the inadequacy of the minimum wage, and also many studies done which show that increasing the minimum wage does not have a marked detrimental effect on employment.

And, you know, we will have some motions which I think will reflect what it takes to live on these days, far more than $6.75. Housing costs have gone way up. And keeping up with the cost of living is an interesting concept. It all depends on where you start. And if you start in 1968, for instance, and if you would look at the increase in productivity since that time, which is whatís provided for by everyoneís work, where has it gone? We would be having a minimum wage of, I believe, $14 an hour if it were to keep up with productivity.

Where itís going, of course, is the CEOís. We used to have a 42-to-1 ratio of CEO pay to worker pay. We now have a 530-some ratio of CEO pay to worker pay. This economy has gone nuts. The rich are getting richer, the poor are getting poorer. And one of the ways to deal with that problem is by increasing the minimum wage, which lifts up the bottom.

And thatís basically what we think the purpose of this gathering is today, is to find a figure, and weíd like to find one we could agree on -- $6.75 is not going to be it -- that at least gives some recognition of the fact that people at the bottom cannot live on what theyíre getting on the minimum wage today.

MR. CORNFORD: Tom, Iíve always been interested in your views because they do represent a unique perspective. And Iím always intrigued by the ratio of what union presidents of international unions get in relationship to the rank and file, but I wonít bring that up.

MR. RANKIN: Go ahead! Go ahead! Cite them. I donít think itís the 500-to --

MR. CORNFORD: Well, be that as it may, I was intrigued by this document that was included in our packet, this study by David Macpherson from Florida State University, particularly the conclusions on Page 5 of that report. And it specifically states that -- he comes out with basically five conclusions. He says:

"Fourth, the minimum wage increase is projected to cause over 32,000 workers to lose their jobs, with more than one third of the job losses in the retail industry."

"And fifth, the cost to employers would be quite substantial. It would raise their labor costs by more than $1 billion per year."

This is not the time to monkey around.

MR. RANKIN: Are those California figures, Doug? Or --

MR. CORNFORD: Itís in the California -- yes, sir.

MR. ALTEMUS: Iím going to ask -- I know Mr. Cornford was responding to Mr. Rankin --

MR. CORNFORD: Iím sorry.

MR. ALTEMUS: -- but I would appreciate it if youíd let the chair recognize these different people who are putting their hands up.

MR. CORNFORD: Forgive me. Mr. Rankin and I have a long --

MR. ALTEMUS: I sense that.

MR. CORNFORD: -- deeply held regard for each other.

MR. ALTEMUS: Yes.

MS. WHITE: This is Marie White. I have a rather strange experience of being both an employee and, at times, an employer. Iím a care worker, and so I get the rate of pay which is basically set. I donít get to dally around with that. And just that to live on wouldnít be enough.

Now, when I come here today, I have to replace myself. And then Iím out there in the labor market having to hire somebody. Well, when I go to hire somebody, I have an entirely different experience than I do as an employee. Iím paid by the IHSS system; the State of California handles the paychecks. When I go out to the marketplace, I do what the employers do, put an ad in the newspaper, and I see who I can hire. And then I have to be able to bargain. But I find that when I come to replace myself, it costs $15. Now, $12 of that is direct pay to the person I hire, and then the other $3 goes in Social Security and all the other things that the employer has to pay. So Iím not unsympathetic to the employer in that regard. But I know thereís two different things, just like buying and selling are two different things.

And my experience, coming from Sonoma County, which Forbes magazine will tell us is one of the most wonderful places economically -- and itís a rising tide over there in that county, and that is reflected in that economy. Now, it may be quite different from what Ms. Breslin experiences in the restaurant business in San Francisco, but in Sonoma County, what weíre experiencing is some of the highest housing prices in the United States. What weíre also experiencing is that all the stores, who are supposedly doing so badly, are trying to hire people. And they cannot hire people at the rates of pay that theyíre offering.

If I go over to Taco Bell, theyíre hiring at nine bucks an hour. I actually canít find somebody to replace myself on nine bucks an hour.

So we have some very strange things going on in our society today. Thereís no question about it. Employers and employees are in a situation where weíve both got problems. But when I look at the charge that is given to us here, weíre talking about a level of subsistence, which simply does not fit with $6.75 an hour. And as I say, if I have to go out and I hire somebody, I have to be careful. I stay home and donít come out to a lot of meetings and share what I know.

But just the fact that I lived through times that were very bad -- I donít know what age other people are here, but Iím going to claim my 78 years -- I had a birthday this month -- so I was in the Great Depression.

And Iím going to tell you a story of some other people who were in the Great Depression who were my bosses at the time. They would tell me the story of the great business that they had. Right in the middle of the Depression, they were flourishing. And they had an ad out on the highway, and the people were coming in. They were doing very well. But they -- they were doing so well they sent their son off to college. And the son comes home from college now, heís a graduate with all this knowledge. And he says, "Dad, you know, youíre paying all this money for the sign out there on the highway. You really didnít put that money out -- or shouldnít put that much money out." And so he -- "All right, heís a knowledgeable son, he knows what heís doing." And he takes the sign off, and pretty quickly find out the sonís right. Thereís a depression out there.

Iím saying basically the same sort of thing. We cannot act as if things are so bad when, in point of fact, we have areas of California that are really flourishing. What is being experienced in San Francisco comes from a really specific happening in the United States. It was dreadful. Weíre all suffering from that experience. But we have to turn it around. Itís happening, it is going to happen. But we canít leave people living in cars. Some of the people that I have tried to hire, when Iím coming away and doing what Iím doing today, are living in cars.

San Franciscoís situation with their restaurant business is impacted by the fact that there are so many people on the streets in San Francisco who are living there, theyíre remaining there, making a very bad scene. This is whatís being addressed with minimum wage. You canít hire anybody because they canít live on it, and therefore, they canít get off the street. They canít live some decent place and live the way you and I believe they ought to live.

So, definitely, we do need another wage. The issue is not do we need one; itís how much should it be.

MR. ALTEMUS: Ms. Breslin.

MS. BRESLIN: Well, first of all, Iím pleased it appears that you had a chance to read the industry study that was enclosed in the notes --

MS. WHITE: Yes.

MS. BRESLIN: -- and it does tell a very devastating tale of the restaurant industry in the San Francisco Bay Area. And it is true, and it is related to numerous factors besides the tragic events of September 11th. Itís the dot-com bust, itís numerous factors.

But I also want to get to the heart of things. I think that we have to take a look at the fact we canít do blanket minimum wages any more, because in the restaurant industry, it doesnít lift up our employees. As a matter of fact, it becomes a moral dilemma for those in the back of the house who are above minimum wage but donít earn tips.

And I know Iíve sung that song over and over, and I know that the IWC itself at this time is not addressing the tip issue. However, I would like to address the fact that if a minimum wage doesnít serve the people we want to serve, and itís not even uplifting those individuals, that we have to take a look at the fact that itís harming the individuals, the employees, more than helping them.

And I think we ought to take a look at industry-specific wage orders. And I know thereís a motion on the floor -- and I donít mean this to override that motion at all -- but as long as weíre lumping tipped employees in with all other employees, I cannot vote for a tipped increase at all -- I mean, for a minimum wage increase at all.

MR. ALTEMUS: Mr. Rankin.

MR. RANKIN: Yeah. In terms of a couple of responses, first of all, I assume all this stuff is in the record that we have here before us. Is that --

MR. ALTEMUS: I donít know thatís itís made -- been made a part of this wage boardís records. Obviously, itís part of the IWCís records.

MR. RANKIN: Okay. Yeah, thatís -- okay.

Well, in terms of the study that Mr. Cornford referred to from the fellow from Florida, there are a number of other studies that contradict his findings. And the testimony that we have included here by Jeffrey Woods takes care of a lot of the arguments there, and it comes to a totally different conclusion.

Also, the studies of -- which we should actually

-- I donít know if we have them with us -- we have a study from -- we have a couple of studies here. The most recent one is from the California Research Bureau, that should be entered into the record, that also comes -- this is sort of a survey of different studies that we can provide.

Do we have copies of this?

It comes to a different conclusion on this issue of job loss too. And we have studies by Michael Reich from the University of California at Berkeley that also show that thereís no significant job loss.

And in terms of the tip issue, as you know, this is a matter of statute. The IWC has no power to change the statute on the tip issue. They tried a few years ago, and it was overruled by the Supreme Court.

And, you know, that may be something we could discuss, provided we have the minimum wage at the appropriate level. But as long as the minimum wage is at a level thatís at the lowest itís been for some years and is nowhere near what it was when the tip credit was put into effect, we canít talk about anything as far as a tip credit. The minimum wage is the basis for everyone. If itís high enough, maybe we can talk about a tip credit. But itís -- thereís no signs, especially from your side -- youíre talking about freezing it -- thereís no signs of any indication of recognition of itís inadequate.

MR. ALTEMUS: Ms. Breslin.

MS. BRESLIN: Yes, if I may respond.

When I took a look at all of the wage rates throughout the country and took a look at those that did not have tip credit, they usually had something to compensate the employer so that the employer doesnít have to let people go or go out of business.

We have a state tax. Some of the states without tip credit donít have a state tax. We have the highest wage of any that doesnít have a state tax. And yet our -- and we donít acknowledge tips into the mix at all. And yet, here in California, California state tax gets the benefit of the federal government acknowledging tips. And the employer pays FICA on it, and the employer pays unemployment insurance on it, and the employer pays workersí comp premium on it. And the employee gets the benefit of it. They get the FICA put into their bucket, they get the workersí comp higher rate benefit, and they get the higher rate benefit for unemployment should they be out of a job.

I think it needs to be recognized that in the industry, the hospitality industry, there is not a low-wage earner who is not well compensated in tips. So we need to recognize that, and we need to take a look and say, "Well, perhaps the issue is to make -- create a separate wage order for those industries that have tipped employees," and not give a tip credit, because the IWC doesnít have that authority at this time, from what I understand from the history. But they have the authority to create a wage order and make an exception that, on that particular wage order, there is no increase.

MR. ALTEMUS: Mr. Poorbaugh.

MR. POORBAUGH: The studies that I think Dr. Woods and probably even the government ran show virtually -- felt there was no effect on the minimum -- on the minimum wage going up on employment. But I have to point out that those were during exceedingly good times in California, the late Ď90ís. Everything was a boom, you know. We all know that. Starting in 2000, things started to turn around a little bit, and I -- and this is when we had the increases in 2001 and 2002, at the time that our economy is going down. The fact that our economy has gone done is well documented by the fact that the State of California is in such financial distress right now because the tax revenues havenít gone in to keep up with the programs that we have instituted in the state.

Also, during the late Ď90ís, workersí comp was much more reasonable for employers than it is at the current time. And since that time, in the early 2000ís, a lot of insurers have gone out of business in workersí comp. Workersí comp rates have started to go up. And the governor this year signed a bill that is going to increase costs of workersí comp to employers even more.

And so, weíre sitting here looking at a situation where the economy is down, benefits -- cost of health insurance is up, wages have gone up the last few years by 50 cents an hour, and now workersí comp is going to go up additionally, as will health insurance, certainly, next year, from what we gather. And the employer is starting to wonder when heís going to be able to catch up with this.

And so, as wages keep going up, employers, unfortunately, have to save the money someplace, and they tend to cut benefits. I talked with a grower yesterday who had instituted health insurance for his employees. And when the second minimum wage went up, he found that he had to cut that out, after he had worked so hard to put it in.

And so, there isnít a bottomless pit. If the economy was strong enough that everything was going up as it appeared to be in the late Ď90ís, that might be different. But that isnít where we are today.

And I think the other thing that has happened is there were companies a couple years ago, they were paying more than minimum wage for people to start, and had people making a dollar more an hour more than minimum wage. Because you give a 50-cent increase in the minimum wage doesnít mean that everybody gets a 50-cent increase. And so, consequently, thereís a lot of compression.

So I would argue that now there are probably more people near the minimum wage than there were before we raised the minimum wage. And itís true that theyíre all making a little bit more, but how much have they really gained?

And so, along with what Ms. White indicated, that you canít hire people at the minimum wage, if people have skills -- and this was pointed out rather dramatically in Dr. Woodsí study, is that the people who tend to make the minimum wage are people with less education. And it doesnít mean theyíre not as smart; it just means that maybe they havenít had the educational opportunities that others have had.

And so, it seems to me that rather than coming in here every two years and increasing the minimum wage by a dollar, weíd be better trying to find out ways to offer training, to encourage employers to offer training, and to be able to make more money so that they can pay their people more.

MR. ALTEMUS: Ms. White.

MS. WHITE: Just in response to that alone, the cost of education has gone up. I have grandchildren who would love to have further education, and it is a real struggle. Part of education, of course, for most young people in California that I know of, they work their way. And if they are not making adequate wages to support themselves, they canít get the education. So weíre in a real bind between how do we get that education if youíre not making enough money to subsist. Certainly better education will bring you higher wages. How do you pay for it?

MR. ALTEMUS: Mr. Poorbaugh, then Mr. Rankin.

MR. POORBAUGH: Certainly college is difficult to go to, more expensive, but thereís a lot of employers that train. I know our company does a tremendous amount of training of its employees. If somebody acquires more skills and weíre not able to keep their wages up, they go somewhere else. So we have a choice: we can either let them go somewhere else and start all over and try and train somebody new, or we can raise their wages to compensate for the fact that they have more training, and, hopefully, are able to achieve more in their jobs, their productivity.

MR. RANKIN: Well, weíre all in favor of training. As a matter of fact, Iím on the Employment Training Panel that gives out about $90 million a year to employers to train their employees. Unfortunately, this country spends less money on training than -- far less than Europe and far less -- and employers, Iím talking about, pay less money -- and even less than Asia. We do not have a culture of training in this country, of job training. Itís unfortunate, and weíd like to change that.

But the fact is that most of the minimum wage jobs are not high-skilled jobs, necessarily. These are not jobs that require a lot of education, necessarily. Theyíre not jobs that necessarily require a lot of training.

If you look at whatís happened with productivity, which is the result of training, as I said, the minimum wage should be way up there. The workers have not benefited from, you know, exhibiting the results of more training and more education, which is higher productivity, because we havenít raised -- kept the minimum wage up to where it should be.

And thatís -- you know, you also have the ability, under the wage orders, to have a training wage, a lower wage. We could talk about that, you know. Again, if the wage level were high enough, maybe we could talk about tip credit stuff, maybe we could talk about training wages. But until it gets there, thereís simply no room to discuss that.

MR. ALTEMUS: Mr. Cornford.

MR. CORNFORD: I -- maybe I misunderstood what Mr. Rankin said, but what I thought I heard was that people that were getting trained werenít increasing their hourly rate of pay.

MR. RANKIN: No, you didnít hear me say that.

MR. CORNFORD: Okay. Well, I thought that that was what you were driving at.

I would submit that thereís a great deal -- contrary to your assertion -- that thereís a great deal of private effort going on, with the assistance of some federal monies. And Iím part of the Quad City program, on a career ladder situation, where weíre trying to raise peopleís expectations of what they can do in the hotel lodging industry, and trying to bring these people up from the minimum wage, if you will, giving them the skills and ability to move upwards.

And I would submit that thatís really what the employers are trying to do in this state. Thereís no desire to keep people in a particular job forever. People who commit their lives to an employer, the employer wants to see that person progress up, within the confines of that particular organization.

So, to say that the employers are not interested in training, or we donít have a culture of training, Tom, I would respectfully disagree.

MR. RANKIN: Compared to other countries, Doug, we just donít. Thereís no question about it.

We have -- I just got a report the other day for the ETP, because we asked that question. And the United States is way down on the bottom, in terms of training money.

MR. CORNFORD: And I havenít seen -- Iím sorry, sir.

MR. ALTEMUS: Thatís all right. Go ahead.

MR. CORNFORD: I havenít seen that report, Tom. I donít know what credit is given to the employers, whether youíre just looking at the federal dollars or state dollars spent --

MR. RANKIN: No, youíre looking at what the employers pay.

MR. CORNFORD: -- or internal dollars --

MR. ALTEMUS: Please, one at a time.

MR. CORNFORD: All right -- or internal training that the employer pays out of his own treasury.

MR. ALTEMUS: Mr. Lona.

MR. LONA: (Through Interpreter) Iím not in agreeance with that current $6.75 minimum wage. Iím going to give you a personal reason why that is. Weíre considered field workers. I work under a union contract at a mushroom farm. And we work at a piece rate. And on average, I earn between $10 and $11 an hour. I live right close to Silicon Valley, in Gilroy, and the cost of living is very high. I live in a low-income housing -- a low-income apartment housing. I have four -- a family of four. And my current salary isnít even enough to cover all my costs. If I were to receive a minimum of $6.75, I know definitely I wouldnít be able to provide for my family. My daughter is at the University of San Jose, which is more costs.

And there are various trainings, like the other side was saying, but weíre not -- weíre not all eligible for those trainings.

So, if I were earning that, I would definitely not have, even right now, the ability to transport myself. And with the minimum wage at $6.75, perhaps I would be like a lot of farm workers that I know that live under bridges.

One of the gentlemen mentioned that there are trainings for being able to move up in your industry. But thatís not the solution for the minimum wage, because thereís always going to be more people needed to do the work at the minimum wage. And it would be the same problem.

And this is why I canít -- the motion -- agree with your motion on maintaining that $6.75, and I could agree with any motion to raise it.

MR. ALTEMUS: Mr. Rankin.

MR. RANKIN: Yeah. Iíd like to call the question.

MR. ALTEMUS: Does anyone else have -- want to address this issue? Weíve heard from three of the employer representatives.

Mr. Webb.

MR. WEBB: Yeah. Iíll just touch on that.

We definitely feel that the $6.75 minimum wage is an adequate number. Since 1996, the minimum wage in California has increased 48.3 percent.

From agricultureís perspective, we have to look at can the farming industry afford another minimum wage increase on the heels of a dollar increase over the past two years. Agriculture in California is in a unique position. We are, for the most part, price takers, not price makers, meaning that the market sets the price that we receive for our crops. We canít pass along any of these costs on to the buyers of our product. As a result, any increase is going to have negative implications on our employees.

I talked to a potato grower that we have in the Bakersfield area. And after the last round of the minimum wage increase, he was faced with a big dilemma, of whether he could afford to keep his staff on board or he was forced to mechanize. He looked at the cost, and it just -- it didnít make sense for him. And as a result of the minimum wage increase, he had to lay off over forty workers and mechanize his operation.

The minimum wage, to increase it even more, does have negative implications upon our industry. And at this time, we think itís an adequate wage.

MR. ALTEMUS: Just a second, Mr. Bartosiak.

Anybody from the employee side?

Mr. Gusman, Mr. Carbuccia, we havenít heard from you yet.

No?

MR. GUSMAN: No.

MR. ALTEMUS: Mr. Bartosiak.

MR. RANKIN: Well, thereís a motion on the

floor --

MR. BARTOSIAK: Iíd like to tag on this comment.

MR. ALTEMUS: As soon as weíve heard from Mr. Bartosiak.

MR. RANKIN: Iíll represent thatís not parliamentary procedure.

MR. BARTOSIAK: I represent the Employers Group. We have over 4,000 member companies, and this is from all sizes, from large to small, all different industries. The department I particularly manage is Helpline Consulting. But we answer questions, day in and day out, from our members on human resources, and especially compliance issues.

I have to be honest and tell you Iím getting increasing calls about staffing, work shift questions, layoff questions, alternatives to layoffs. Iím about to go into a briefing of a health seminar thatís going to examine how to control health costs. More and more companies are seriously grappling with being able to provide basic health coverage to employees. That is just one of the myriad of costs that employers are experiencing.

Indeed, we see deductibles going up, prices going up. And we may very well go into a situation where employers will just give out money and let employees fend for themselves. This is really a dangerous issue.

That coupled -- and I repeating some of these comments -- with the workersí comp increase, which is astronomical, is really bearing down hard on the employersí ability to employ people and to keep people. Thereís another bill -- I forget the name -- regarding unemployment insurance, which probably will pass, and if passed, will change the base period calculation and pass more unemployment insurance costs to the employers. I just donít know how many costs the employers can provide and keep the staff it has or add to the staff.

And we talk to people at companies every day that are very, very tentative about the economy, that are still holding back, especially on staffing. And to stay in business, provide jobs, provide basic healthcare, itís really, really a problem area. And thatís why Iíd encourage the rest of the employer side about keeping the minimum wage where it is at this point.

MR. ALTEMUS: We have a motion on the floor and a request to call the question. Absent further discussion, all in favor of the motion to keep the minimum wage at its current level -- why donít we go around and let Ms. -- Cynthia record the votes.

Mr. Bartosiak?

THE REPORTER: Iíll start with the employer representatives.

Mr. Bartosiak.

MR. BARTOSIAK: I --

MR. ALTEMUS: "Yes" is in favor of the motion.

THE REPORTER: "Yes" is your vote?

MR. BARTOSIAK: Yes, I favor the motion. Yes.

THE REPORTER: Mr. Cornford.

MR. CORNFORD: Yes.

THE REPORTER: Ms. Breslin.

MS. BRESLIN: Yes.

THE REPORTER: Mr. Poorbaugh.

MR. POORBAUGH: Yes.

THE REPORTER: Mr. Webb.

MR. WEBB: Yes.

THE REPORTER: Now for the employee side.

Mr. Carbuccia.

MR. CARBUCCIA: No.

THE REPORTER: Mr. Gusman.

MR. GUSMAN: No.

THE REPORTER: Mr. Lona.

MR. LONA: No.

THE REPORTER: Mr. Rankin.

MR. RANKIN: No.

THE REPORTER: Ms. White.

MS. WHITE: No.

MR. RANKIN: I move to increase the minimum wage to $12 an hour, beginning January 1st, 2003.

MR. GUSMAN: Second.

MR. ALTEMUS: Mr. Gusman seconds.

MR. RANKIN: This is the level which has been recognized by Santa Cruz County as a living wage. As you know, many localities have stepped into the arena of legislating living wages because the state has failed in its duty to keep the minimum wage at an adequate level to supply the necessary costs of proper living. We have a growing number of local ordinances around the state called living wage ordinances which have been put in effect to deal with poverty in various places. And cities and counties have recognized that $6.75 is simply inadequate.

What $6.75 does is puts a great burden on county and city services, social services, because $6.75 basically represents a huge subsidy by all of the rest of the taxpayers to those employers who are paying $6.75 an hour, because workers canít make it. They have to go to the county for health services. They have to go to the county for other services, or the city. And as someone has mentioned already, a lot of these people are living in their cars. $6.75 is simply inadequate.

This is a figure -- and I should mention that the figure, with health coverage, in Santa Cruz is $11 an hour. And again, we would offer that if we can come to a figure that is close enough to providing the necessary costs of proper living, then maybe weíd make recognition for employers who provide health benefits. And weíd be happy to work with all the employers who provide health benefits. As a matter of fact, itís going to be one of our key legislative priorities next year, is to create universal coverage, hopefully to hold down the costs, as well as to provide coverage for those who donít have it in California, which is a growing number of people.

We need to deal with the growing power of HMOís and the healthcare industry, who, on the one hand, like to employ people at the minimum wage, and on the other hand, like to pay their CEOís millions of dollars. And the cost of healthcare, as a result, keeps increasing. The one time that healthcare costs went down in this county in the last couple decades was when the Clintons had a universal healthcare bill in the hopper. And suddenly, the insurance industry and the HMOís decided, "Uh-oh, weíd better not charge so much, because we may be regulated."

We need to get together with employer who provide healthcare and see what we can do about that problem. Weíd be happy to do that. But right now, as I said, until we get the minimum wage up to a level that someone can sustain themselves on, thereís no way we can make recognition for employers who provide healthcare.

MR. ALTEMUS: Any response?

I didnít -- let me just say, just at the risk of not trying to cut off discussion, I donít know that weíre going to need to repeat our positions, or people need to repeat their positions that theyíve stated in support or opposition to prior motions, or weíre just going to hear a lot of repetitive words. But if we have something unique in response to Mr. Rankinís motion, feel free.

Mr. Bartosiak.

MR. CORNFORD: Was the motion seconded?

MR. ALTEMUS: Yes, I was.

MR. GUSMAN: Yeah. I seconded it.

MR. CORNFORD: Okay.

MR. BARTOSIAK: My response is that thatís an interesting idea of health credits for employers. But right now, especially at this time -- we know how bureaucracy works, we know how government works -- right now we have a lot of employers, and consequently, employees, in trouble. And with the skyrocketing health costs, I think thatís a gamble weíve just got to take at this point.

MR. ALTEMUS: Mr. Webb.

MR. WEBB: Mr. Rankin, I was just wondering if, in your proposal to almost double the minimum wage, what is the projected job loss associated with this increase? Do you have numbers on that?

MR. RANKIN: I donít have any numbers on that. The boost to the economy would be tremendous.

And I would remind everyone here that the minimum wage was put into effect during the Great Depression in this country. And the whole purpose of the minimum wage is it not only helps those low wage earners, but that money goes immediately back into the economy, unlike the money that flows to the folks at the top of Enron and those other corporations who donít have the same need to put the money back into buying basic goods that help the economy improve itself.

MR. CORNFORD: Mr. Rankin may forget that the initial minimum wage applied to a single person, and not a family. And it applied particularly to a female. You might want to factor that in.

MR. RANKIN: The initial California minimum wage applied to a female. The initial national minimum wage did not just apply to females. The initial California minimum wage was done at the beginning of the century, not during the Depression.

MR. ALTEMUS: Ms. White, and then Mr. Poorbaugh.

MS. WHITE: Well, the cost of healthcare is obviously a cost of living, and it has been raised here and put on the table. And I know that if you have two people -- not just one -- if you have two people who are both working at the minimum wage, you have $13.50. And at $13.50, you simply still cannot buy healthcare in California today.

This is a joint problem for employer and employee. This is not something that is some esoteric thing out there. This affects everybody. So, with all of (inaudible), without healthcare, the cost flows down on all of us out there, as Mr. Rankin said. Itís a question of whoís going to pay so that we have a survival level for our population out there. What do we really have to do? We do have to raise the minimum wage.

MR. ALTEMUS: Mr. Poorbaugh.

MR. POORBAUGH: As someone that deals not only just with business in California, but we deal in business nationwide, and weíre faced with a national minimum wage that a lot of people could argue is way below what it should be, or certainly below what weíre paying. Weíre competing right now with states that have minimum wages at $5.15, and weíre at $6.75. And weíve seen the effect that this has on our ability to export our product out of California into other states, because the companies that grow the type of products we grow in other states are able to deliver it to the customers back there at less.

Now, if we were to go to something as was suggested by Mr. Rankin, we would become -- have to become a company that sold only in California or weíd just have to fold up our tents.

The other problem -- and probably Mike can -- Mr. Webb can -- is probably more qualified to comment on this than I am, but weíre also dealing in the world community. And part of the problem, apricots -- 100 percent of the apricots grown in the United States is probably grown in California. The apricot industry is almost finished because weíre getting dried and canned apricots from Turkey at a fraction of what we can produce them here.

Now, if you go raising the minimum wage up again, this is going to do one of two things: it will force other segments of agriculture out, at the expense of imports, or

-- I just donít see how we can continue to compete. And so weíre going to become a nation that depends more and more -- and weíre already becoming a nation that depends more and more on our food supply from other countries. Raisins are coming in from Greece and Turkey, less than we can produce them here. Dried garlic -- the folks from that area up there around Monterey ought to know that the imports on garlic are devastating the garlic industry. So, basically, all the things that come in that are dried -- pears, apricots, raisins, garlic, all these things -- are really diminishing in California right now. And itís causing -- these are all high-labor jobs. And so, farmers now are starting to figure out how theyíre going to be able to survive. And I understand, this year, that 20 percent of the raisins harvested will be harvested mechanically. This is really unprecedented.

And so, to say that the increase in the minimum wage has no effect on employment is perhaps more than just a little disingenuous. Itís having a huge impact on employment.

And itís not that we wouldnít maybe want to see more money for employees, but we have to do it through productivity gains, and not because of something the Commission decides on, you know.

MR. ALTEMUS: Mr. Carbuccia.

MR. CARBUCCIA: Two points. On -- going back to the healthcare issue, right now, I know there are employers who are offering healthcare in places like Santa Maria in San Luis -- in Santa Barbara County and San Luis Obispo County, but the employees cannot afford the premium because theyíre making minimum wage. Therefore, they donít take the healthcare issued. Now we have HMOís pulling out of those counties and a number of counties up north.

So, one, the minimum wage has shown that, because theyíre paid minimum wage, even though the employers are offering health insurance to those workers, they still canít afford it.

And, two, if weíre bringing -- like the gentleman said, thereís products coming in from other countries who are cheaper, does that mean that weíre going to let our people live in housings underneath bridges, just so we can sell it for five cents cheaper than someone else coming in?

So, weíve got to have the reality of -- this might be a little bit cheaper, but weíve got to have the quality of living for people in our country.

MR. ALTEMUS: Mr. Gusman.

MR. GUSMAN: I would just second the comments that were just made. You know, I certainly appreciate the concerns of our -- over trade and over issues related to competition. I think the folks on this side of the table certainly appreciate that. Thatís why we traditionally opposed NAFTA and other sort of free trade agreements that had a detrimental effect on workers and on your industries. And frankly, we felt alone in that fight for a number of years. So, we appreciate that, but we also have a concern about the workers.

And, you know, CRLA did a survey of workers, farm workers, on what they felt was adequate to survive, because theyíre talking about survival. Theyíre not talking about competition for the employees -- for their employers. And they felt, to an employee, that the current minimum wage was substantially inadequate. And the majority of them felt that the minimum wage needed to be raised as much as $5 an hour. And thatís just for survival. What would they spend this on? Theyíd spend it on housing. Theyíre not going to go out and buy cars. Theyíre not talking about, you know, spending this money on frivolous things. They just want to provide some decent housing for the families.

MR. ALTEMUS: Mr. Cornford, then Ms. White.

MR. CORNFORD: Are you finished, Shane?

MR. GUSMAN: Yeah.

MR. CORNFORD: I was reading this -- through this report by Dr. Woods that Tom referenced earlier, and I understand his orientation. But he talked about who was a typical minimum wage earner. And whether you agree or disagree, this is what you have offered in support of your position, Dr. Woodsí statement. And it talks about:

"The low-wage worker is likely to be female, and a teenaged, foreign-born Hispanic, without U.S. citizenship. Having never been married, she is, at most, a high school -- and she has, at most, a high school education. She is less likely to be a member of a labor union" --

-- which I find interesting --

" -- and her total family income is less than $20,000 per year."

So I think we have to identify, number one, who weíre talking about.

And even given your expert, Mr. Woods, heís identifying it as a single female Hispanic, foreign-born. Okay? Itís not this broad population group out there.

Number two, I live half-time in southern Nevada. There was an article this Monday in the Las Vegas Review Journal that was an appeal to California employers to come to Nevada. And it centered around SB 1661. But in the body of the article, it referenced the high cost of doing business in California. And it made this appeal, that Nevada is more of a friendly state to do business than California, so, the point being, that there are other states contiguous to California who are actively seeking employers to move out of the state.

I would submit, with all due respect, that a mushroom farm can be moved, agriculture can be moved, many industries can be moved out of this state. We do not want on our side to appear to be hard-hearted. Our concern is to keep jobs in the State of California, to keep people earning and living.

What weíre saying to you is that we do -- we are concerned that increasing this minimum wage, particularly with what Mr. Rankin proposed, would have a devastating impact upon jobs in California, and therefore exacerbate the current negative economic conditions that we have in this state. And so, at this point in time, we would respectfully disagree with the motion.

MR. POORBAUGH: I would call for the question.

MR. ALTEMUS: Mr. Rankin, you had your hand up.

MR. RANKIN: Yes, I did.

MR. ALTEMUS: I recognize Mr. Poorbaugh, and I extend the same courtesy that I offered your side.

MR. RANKIN: I think she had her hand up first.

MR. ALTEMUS: Thatís right.

Iím sorry, Ms. White. You were next.

MS. WHITE: As a group, itís the employers who have gone overseas. They have been looking for cheap labor.

Now, if, in fact, this has victimized the industrial -- or the agricultural industry, which I think it has, but you must recognize that the group who did this are, first of all, manufacturers. I can remember when typewriters went overseas, you know, back right after World War II. Employers sought cheaper labor elsewhere. Does that mean that we should sit here in California and allow the employee group at the lowest level to live like a Third World country? I donít think so.

MR. ALTEMUS: Tom.

MR. RANKIN: Yeah. I certainly would agree with that sentiment. I mean, partly, the whole question that weíre dealing with here is what kind of a society do we want to live in. Whatís the kind of state do we want to live in? Do we want to live in a state where people have to live under bridges and in cars, and then the people on the top are making millions and millions of dollars a year? I donít think so. Itís not going to be a good state. Itís not going to be -- itís going to get worse and worse unless we deal with the problem of poverty in California. And the minimum wage is the way to deal with it.

In terms of Mr. Cornford, you know, there are a lot of people -- I was actually citing Mr. Woods in terms of your argument that didnít have to do with who was getting the minimum wage, but who -- what the effect on employment would be. Let me cite you the study from the California Research Bureau, "Who Gets the Minimum Wage?" The number of people earning $7 or less, age 16 to 19, 486,000, 16 percent; age 20 to 24, 638,000 -- 639,000, 21 percent; 25 to 34, 700,000, 23 percent; 35 to 64, over a million people, 36 percent; over 65, about 2 percent, 60-some thousand.

And if you want to look at the proportion of those with dependents, almost 40 percent of those earning the minimum wage have one dependent. And then the rest of them have more than one dependent, up to seven.

So there are a lot of people making the minimum wage who have dependents to support. Thereís no question about it.

Thatís the old argument, "Oh, itís just students making the minimum wage." Thatís been debunked I donít know how many times. Besides that, students need money to live on.

MR. ALTEMUS: One more question, and then weíll call the question.

MR. POORBAUGH: I donít doubt that there are people making the minimum wage that live under a bridge. But I think to characterize all minimum wage earners in that situation, I think, is --

MR. RANKIN: Iím not trying --

MR. POORBAUGH: -- certainly not accurate. And I think itís -- I think it kind of clouds the issue to keep bringing this up.

The other thing is, a lot of the employers that pay minimum wage are not your large corporations where you have high-paid CEOís. Theyíre mom-and-pop companies that are out there trying like heck to survive.

And the last point I would make is, if weíre not competitive in the international market, and even in the national market, at $6.75, how in the world will be ever be competitive at $12 an hour?

And NAFTA, you can argue that all you want. But we are where we are, folks. Weíve got the situation weíve been dealt, and weíve got to play the cards weíve got. And going to $12 an hour and raising the minimum wage up is not going to allow a lot of companies to continue to operate in the state and is going to put more people out of work. Itís a reality of life.

MR. ALTEMUS: All right. Iím going to call the question.

Cynthia, would you call the roll please?

THE REPORTER: Yeah. Iíll start with the employee side. This was the motion --

MR. ALTEMUS: Excuse me. Iíll just -- I can just -- the motion is to raise the minimum wage to $12 an hour.

THE REPORTER: Okay.

Mr. Carbuccia.

MR. CARBUCCIA: Yes.

THE REPORTER: Mr. Gusman.

MR. GUSMAN: Yes.

THE REPORTER: Mr. Lona.

MR. LONA: Yes.

THE REPORTER: Mr. Rankin.

MR. RANKIN: Yes.

THE REPORTER: Ms. White.

MS. WHITE: Yes.

THE REPORTER: Now for the employers.

Mr. Bartosiak.

MR. BARTOSIAK: No.

THE REPORTER: Mr. Cornford.

MR. CORNFORD: No.

THE REPORTER: Ms. Breslin.

MS. BRESLIN: No.

THE REPORTER: Mr. Poorbaugh.

MR. POORBAUGH: No.

THE REPORTER: Mr. Webb.

MR. WEBB: No.

MR. ALTEMUS: The record shows a tie vote. The motion did not pass.

Well, so weíve agreed we donít have agreement to freeze the minimum wage, we donít have agreement to raise it to $12 an hour. I suppose, then, the question is, is there somewhere in between where the parties can talk to the issue? Maybe there isnít. I just throw that out. We seem to have set the parameters of the discussion at this point.

I donít know whether it would be worth taking just a five-minute break right now while people stretch. And weíll reconvene at 11:15.

(Thereupon, a short recess was taken.)

MR. ALTEMUS: Back in order, please.

Iím advised by Mr. Rankin, in a brief off-the-record discussion, that he has some more motions. So, to avoid a pun, weíll go through the motions.

(Laughter)

MR. RANKIN: Maybe the employer side has more motions too. I donít know.

MR. ALTEMUS: Well, the floor is open if anyone has a motion.

Mr. Gusman.

MR. GUSMAN: Iíd like to make a motion, since the $12 an hour seemed so popular, that we move to -- move the minimum wage to the purchasing power level that it was at at the minimum wageís highest purchasing power, which was in 1968. If you -- if you made the minimum wage the purchasing power that -- for that year, it would be at a level of $8.92, according to the California Budget Project, using the Department of Financeís data. So Iíd move that we make the minimum wage $8.92.

MR. CARBUCCIA: Second.

MR. RANKIN: Second.

MR. ALTEMUS: Two seconds on that.

Discussion?

Mr. Bartosiak.

MR. BARTOSIAK: I think one important point we need analyze or relate the minimum wage to the purchasing power in 1968, again, is, you know, what were those households like in 1968 versus what they are today. Certainly, with the advent of women in the workforce, Iím sure you are looking at a lot more single-wage homes, households, if you will, than you are today. So, to say to the purchasing power of one individual, who was probably the single wage earner, much more so in that year than it is today, is really not a good correlation comparison.

MR. ALTEMUS: Mr. Gusman.

MR. GUSMAN: Yeah, but weíve heard from your side that youíre accepting the figures that most of the minimum wage earners are single household people. So --

MR. BARTOSIAK: No, we didnít accept that. With all due respect --

MR. GUSMAN: Well, thatís --

MR. BARTOSIAK: -- I was just commenting upon Mr. Rankinís use of Mr. Woodsí position.

MR. RANKIN: Well --

MR. ALTEMUS: Mr. Rankin.

MR. RANKIN: -- hereís the chart, and Iíd invite you to look at it. You know, the minimum wage has gone way down, reached a low point, I think, in 19 -- right before the initiative was done to raise it because it hadnít been increased in so long -- in so many years. And it now has gone up somewhat, but itís still considerably below where it was from the whole period from -- in most of the Ď60ís up to -- up to the early Ď80ís.

And what, of course, has happened also during this time is the disparity between the rich and the poor has basically mirrored this. The poor have gotten poorer, the rich have gotten richer. Itís time to do something about that.

And Iíd call the question.

MR. ALTEMUS: Just before we do, just for perhaps my own benefit and maybe anybody else here that uses records, Mr. Gusman, could you just briefly define what you mean by purchasing power?

MR. GUSMAN: Iíd defer that to Tom.

MR. RANKIN: Well, the purchasing power would reflect the increases that are calculated by the Labor Department in the costs of living. And thatís based on a certain market basket of goods, which they do every year. I mean, and -- there it is.

MR. ALTEMUS: So itís a standardized --

MR. RANKIN: Itís a standardized formula thatís used in labor negotiations. Itís used in Social Security increases and so forth.

MR. ALTEMUS: Okay. Mr. Bartosiak.

MR. BARTOSIAK: Yeah. Tomís talking about the Consumer Price Index, because -- to measure the purchasing power of individuals. But -- and I know itís widely used by government and unions.

There are inherent methodological, statistical problems in using it: one -- itís well discussed -- to perhaps overstate inflation. You have seven or eight major components which are measured in the Consumer Price Index, many of which are not actual costs to individuals, such as medical care.

MR. ALTEMUS: And I donít want to get off on a discussion of the methodology of purchasing power. I just wanted to --

MR. RANKIN: We could do that. Iíd be happy to.

MR. BARTOSIAK: I just want to make the statement that --

MR. ALTEMUS: I appreciate that.

MR. BARTOSIAK: -- that that has inherent problems and reflects rises in costs that many employees do not actually have to pay.

MR. ALTEMUS: Fair enough.

MR. RANKIN: I would like to make the point that, actually, thereís another index called the California Necessities Index that really more accurately reflects the costs of inflation to poor people. And maybe we could use that, and weíd come up with a higher figure.

MR. BARTOSIAK: Iím not familiar with that.

MR. ALTEMUS: Okay. And thatís -- but thatís not part of the motion right now. Weíll call the question, then.

Ms. Judy, would you call the roll, please?

THE REPORTER: Yes. This is on the motion to increase the minimum wage to $8.92 to reflect the purchasing power back in 1968.

I will start with the employees.

Mr. Carbuccia.

MR. CARBUCCIA: Yes.

THE REPORTER: Mr. Gusman.

MR. GUSMAN: Yes.

THE REPORTER: Mr. Lona.

MR. LONA: Yes.

THE REPORTER: Mr. Rankin.

MR. RANKIN: Yes.

THE REPORTER: Ms. White.

MS. WHITE: Yes.

THE REPORTER: Now for the employers.

Mr. Bartosiak.

MR. BARTOSIAK: No.

THE REPORTER: Mr. Cornford.

MR. CORNFORD: No.

THE REPORTER: Ms. Breslin.

MS. BRESLIN: No.

THE REPORTER: Mr. Poorbaugh.

MR. POORBAUGH: No.

THE REPORTER: Mr. Webb.

MR. WEBB: No.

MR. ALTEMUS: Let the record show that the motion did not pass.

Mr. Cornford.

MR. CORNFORD: Yes, sir. Thank you.

As part of our charge, we are to look at the adequacy of the amount that may credited against the minimum wage for meals and lodging in Section 10 of all the IWC wage orders.

Mr. Chairman, I would move that we enter into the record that this board vote in favor of maintaining the IWC traditional determination that if there is -- there is a rise in the minimum wage, that the percentage increase in the meal and lodging credits would go up proportionately.

MR. ALTEMUS: Is there a second?

MR. POORBAUGH: I second that.

MR. ALTEMUS: Mr. Poorbaugh seconds it.

Discussion?

MR. RANKIN: This has been the traditional approach, and I donít have any problem with it.

MR. ALTEMUS: Any further discussion?

Call the question on Mr. Cornfordís motion.

THE REPORTER: Okay. Starting with the employers, Mr. Bartosiak.

MR. BARTOSIAK: Yes.

THE REPORTER: Mr. Cornford.

MR. CORNFORD: Yes.

THE REPORTER: Ms. Breslin.

MS. BRESLIN: Yes.

THE REPORTER: Mr. Poorbaugh.

MR. POORBAUGH: Yes.

THE REPORTER: Mr. Webb.

MR. WEBB: Yes.

THE REPORTER: Employee representatives.

Mr. Carbuccia.

MR. CARBUCCIA: Yes.

THE REPORTER: Mr. Gusman.

MR. GUSMAN: Yes.

THE REPORTER: Mr. Lona.

MR. LONA: Yes.

THE REPORTER: Mr. Rankin.

MR. RANKIN: Yes.

THE REPORTER: Ms. White.

MS. WHITE: Yes.

THE REPORTER: It looks like ten to nothing, a unanimous vote.

MR. ALTEMUS: Mr. Rankin.

MR. RANKIN: Well, weíll try it once more -- maybe a couple times more if weíre comfortable. This time, we would propose to increase the minimum wage by 75 cents an hour on January 1st for each of the next three years, which would bring it to $9 an hour on January 1st, 2005, which would -- this is an effort to maintain the goal of reaching the purchasing power, approximately, that the minimum wage had in 1968, but phasing it in over a period of three years, ultimately reasonable.

MR. ALTEMUS: Is there a second?

MR. CARBUCCIA: Second.

MR. ALTEMUS: Mr. Carbuccia.

So the motion is now to raise the minimum wage 75 cents an hour, effective January 1st, for a period of three years.

Any new and insightful comment on this motion?

MR. CORNFORD: No. Iíd just like to comment, I appreciate Mr. Rankinís growing reasonableness in this debate, from his previously staked-out position.

MR. RANKIN: We would appreciate reciprocity here, Mr. Cornford.

MR. CORNFORD: Iím sure you would.

Again, without boring everyone, the position is that this is not the time to be raising the minimum wage in the State of California. The economy is in too delicate a condition. Thereís too much competition. It is just not the right moment.

MR. RANKIN: Call the question.

MR. ALTEMUS: Great. Any further comment before I call the question?

(No response)

MR. ALTEMUS: Great. Cynthia, would you call the roll, please, on Mr. Rankinís motion?

THE REPORTER: Okay. This is the motion to raise the minimum wage by 75 cents on each January 1st of the next three years.

Mr. Carbuccia.

MR. CARBUCCIA: Yes.

THE REPORTER: Mr. Gusman.

MR. GUSMAN: Yes.

THE REPORTER: Mr. Lona.

MR. LONA: Yes.

THE REPORTER: Mr. Rankin.

MR. RANKIN: Yes.

THE REPORTER: Ms. White.

MS. WHITE: Yes.

THE REPORTER: Now for the employer representatives.

Mr. Bartosiak.

MR. BARTOSIAK: No.

THE REPORTER: Mr. Cornford.

MR. CORNFORD: No.

THE REPORTER: Ms. Breslin.

MS. BRESLIN: No.

THE REPORTER: Mr. Poorbaugh.

MR. POORBAUGH: No.

THE REPORTER: Mr. Webb.

MR. WEBB: No.

MR. ALTEMUS: Let the record show that the motion did not pass. Tie vote, 5-5.

Mr. Rankin -- oh, Iím sorry. Wait a second. We have another hand here.

Ms. Breslin.

MS. BRESLIN: Well, actually, I would like to, at this time, make a motion in the interests too of taking a look at the whole picture of the industries that are involved. Iím getting a little concerned that, even though thereís a little bit of give-and-take, Iím not -- Iím hearing that, at the risk of all of these individuals who are struggling to provide employment for employees, that individuals here are willing to risk those employments just to lift the minimum wage at this time.

My motion, however, is this, that -- I would like to make a motion that the IWC consider looking at industries in the light of their specifics, and, to that end, that they create a new wage order for the hospitality industry addressing the adequacy of the wage of that hospitality industry.

MR. ALTEMUS: I would only raise as a point of order whether thatís an appropriate motion for this wage board. Our wage board, I think, is charged with a very specific issue on minimum wage. The issues you are raising really go to possible amendments in other wage orders. And I donít know -- and Iím only offering this as my own comment -- that I think that your motion may be outside the scope of this wage boardís authority.

MR. CORNFORD: Mr. Chairman?

MR. ALTEMUS: Mr. Cornford.

MR. CORNFORD: With all due respect to your insight as to the charge, I would refer to you to Item Number 3 of our charge:

"You may also consider any other provisions in the current wage and hour laws of California that may be impacted by a change in the minimum wage."

I would submit that the motion falls within this charge.

MR. ALTEMUS: Well, if weíre not changing it -- we havenít changed the minimum wage, itís tough to indicate whether there was an impact on other wage and hour orders.

MR. CORNFORD: I appreciate that, but weíre getting it into the record that if the IWC, in its infinite wisdom, were to see, or the legislature, in its infinite wisdom, that it does tinker around with the minimum wage, this should be looked at.

MR. ALTEMUS: Well, appreciating your comments and realizing that I donít have the -- not in a position to control the debate, I -- you know, Iíll raise it for the record. You can discuss it. I have some question as to whether itís within the wage boardís scope, with all due respect for Mr. Cornford.

MS. BRESLIN: In support of that motion, then -- I know I havenít heard a second yet --

MR. CORNFORD: I would second.

MS. BRESLIN: Okay. Thank you.

In support of that motion, I also look to our responsibility to provide for the health and welfare of the employees of this state. And in this particular industry, everything -- every minimum wage has harmed the industry.

I just -- the restaurant that is right around the corner from me, I could -- I could point to the study, which everyone has taken a look at, and point to the fact that 228 more restaurants closed from June to December of last year than opened. And thatís unprecedented. I can point to the fact that employees, more employees, are looking for jobs in our workforce. It rose 50 percent this last year, whereas recruitment and advertising jumped 75 percent.

But what Iíd really like to point to is the morale issue in our industry that is being harmed by every minimum wage increase, and the fact that a restaurant around the corner from me had to, with the last minimum wage increase, it closed for lunch and laid off ten employees. And then, if another increase goes through without a tip credit, heís going to be forced to close for two more days and lay off another ten employees. These are working individuals that weíre -- weíre victimizing by raising the minimum wage without looking specifically at the issue that I understand youíre -- I heard youíre willing to talk about a tip credit, which means weíre all acknowledging that it exists, and that tips exist as part of the compensation package.

So, to that end, I think itís relevant to address a separate wage order. I hope that falls within the scope.

MR. RANKIN: Well, Iíd just like to restate the position I stated earlier, is, you know, if we get the minimum wage up to an adequate level, these are things we can talk about. But until that time, thereís no point in even discussing it.

Unfortunately -- you said there was some give-and-take -- I think all the give has been on our side, including providing a unanimous vote on your motion. And we havenít had any give on your side. I would like to see some.

Iíd call the question.

MR. ALTEMUS: Any further discussion on Ms. Breslinís -- Ms. Breslin.

MS. BRESLIN: Yes. I would like to just respond that recognizing the need for this wage order is something so severe to the industry -- weíre killing the businesses off by not acknowledging it. And so, weíre at a high risk level at this point in time. We are not a Taco Bell that doesnít rely on tips. Weíre not. Iím talking about all of the little mom-and-pop places, all of the individual family-owned/operated places that really need the support of this wage board at this time.

MR. ALTEMUS: Then weíll call the question, if Cynthia could just repeat the motion so that weíre clear on what weíre voting on.

THE REPORTER: Ms. Breslinís motion was that the IWC consider looking at industry-specific wage orders and consider a separate new wage order for the hospitality industry.

MR. ALTEMUS: Call the roll, please.

THE REPORTER: Okay. Starting with the employer representatives, Mr. Bartosiak.

MR. BARTOSIAK: Yes.

THE REPORTER: Mr. Cornford.

MR. CORNFORD: Yes.

THE REPORTER: Ms. Breslin.

MS. BRESLIN: Yes.

THE REPORTER: Mr. Poorbaugh.

MR. POORBAUGH: Yes.

THE REPORTER: Mr. Webb.

MR. WEBB: Yes.

THE REPORTER: For the employee representatives, Mr. Carbuccia.

MR. CARBUCCIA: No.

THE REPORTER: Mr. Gusman.

MR. GUSMAN: No.

THE REPORTER: Mr. Lona.

MR. LONA: No.

THE REPORTER: Mr. Rankin.

MR. RANKIN: No.

THE REPORTER: Ms. White.

MS. WHITE: No.

THE REPORTER: Five to five.

MR. ALTEMUS: Let the record reflect the motion did not pass.

MR. RANKIN: Well, I think --

MR. ALTEMUS: Mr. Rankin.

MR. RANKIN: -- maybe weíll try one more time. We might have tried a couple times, but since thereís no give

-- or maybe if thereís some give, weíll try a couple of times, but we havenít had any success so far.

And this motion is to increase the minimum wage by one dollar, effective July 1st, 2003.

MR. ALTEMUS: Is there a second?

MR. GUSMAN: Second.

MR. ALTEMUS: Mr. Gusman.

Okay. The motion is to increase the minimum wage to $7.75, effective July 1, 2003.

Any discussion?

Mr. Webb.

MR. WEBB: Yeah. What is the projected cost to employers of a one dollar increase in the minimum wage at this time?

MR. RANKIN: I donít have the figures exactly, but the cost would be, obviously, I believe, the number of minimum wage workers, the number of hours they worked, multiplied by a dollar an hour.

MR. WEBB: The last time the minimum wage was increased by a dollar, it was projected that it could over 32,000 workers to lose their jobs. I assume that that number would still be accurate. How do you --

MR. RANKIN: Who made that projection?

MR. WEBB: This is Dr. Macphersonís study.

How do you think that this projected job loss at this time would affect Californiaís economy?

MR. RANKIN: I donít project any job loss. Iíve made these arguments before regarding job loss. There have been numerous studies on this. The benefits to the economy by increasing the minimum wage are clear. Thereís going to be that much more money going immediately into the economy in California, not going outside the state, to purchase necessary goods like food and housing. And itís going to actually take a load off -- to some extent, off the taxpayer because they wonít be -- the people at the minimum wage wonít be quite as dependent upon public services, perhaps, as they are now.

Iíd like to again make the point that what weíre doing right now with the current minimum wage is a massive subsidy by California taxpayers to those employers who are paying the minimum wage to their workers.

MR. ALTEMUS: Mr. Webb.

MR. WEBB: I think youíre assuming that all employers can afford the increased costs that will result from an increase in the minimum wage. If you canít afford it, if thereís nowhere else to go, if you canít pass those costs on to others, then youíre looking at three alternatives: youíre looking at cutting jobs, youíre looking at cutting benefits, or youíre looking at going out of business altogether. And thatís the state that weíre in in agriculture right now. Right now is not the right time to increase the minimum wage.

MR. RANKIN: For all the years Iíve been doing this, I must say, thereís never been a right time to increase the minimum wage. Not once in the twenty-some years Iíve been doing this have the employers said, "Yes, we want to increase the minimum wage." Every time, itís been deadlocked.

And the fact that you come in here today with an original motion that says no increase in the minimum wage shows an absolute lack of sensitivity to whatís going on in the workforce of this state and whatís going on in the society of this state.

And, you know, the way it works is you stonewall us here, weíll go elsewhere.

MR. CORNFORD: With all due respect, Mr. Rankin, I really take umbrage at that characterization of the employer members of this board. I would submit that we care a great deal about the workers of the State of California. Weíre concerned about their earning a living. Weíre concerned about retention of their jobs. I would submit that I could equally argue that your proposals jeopardize the earning power of the employees in the State of California by putting more people out of work.

So, I appreciate your comments, but I reject them and I consider them out of order.

MR. ALTEMUS: Mr. Poorbaugh.

MR. POORBAUGH: A question was asked after the motion as to what the cost would be. It would be more than the number of minimum wage earners times a dollar, because everybody would have to be brought up to $7.75. And so, then, once everybody is brought up to $7.75, those that are -- were making $7.75 before arenít going to be satisfied to work at $7.75 now, because thatís the minimum wage, and they donít want to work at the minimum wage.

So, to say that thatís the cost, I think, is misunderstanding it.

MR. RANKIN: Youíre correct. Thatís good. Thatís a good effect of the minimum wage. It raises all those boats at the low tide.

MR. ALTEMUS: Okay. Ms. Breslin.

MS. BRESLIN: I would like to add that that effect is also guaranteed to cost jobs, because there are many individuals in the industry where there are two people employed. In fact, I know so many restaurateurs who have just hung onto their employees and said, "Okay, letís try to be flexible with your hours; I donít want to have to let you go." But when it comes to paying $10 or $12 or $13 to two individuals and you have to lift up the bottom that are already well compensated because theyíre earning tips, then youíre forced to let individuals go. You close your doors. You close your doors because thatís the only way you can regulate the business. You canít regulate the business by raising prices. People wonít dine out if you raise the prices too high.

You know we rely on the tourist economy, and you know thatís not there right now. Now is not the time to do it, especially without consideration of wage orders or a tip credit.

MR. ALTEMUS: Iím going to call the question.

Cynthia.

THE REPORTER: Okay. This is Mr. Rankinís motion to increase the minimum by one dollar, effective July 1st, 2003.

Iíll start with the employee representatives.

Mr. Carbuccia.

MR. CARBUCCIA: Yes.

THE REPORTER: Mr. Gusman.

MR. GUSMAN: Yes.

THE REPORTER: Mr. Lona.

MR. LONA: Yes.

THE REPORTER: Mr. Rankin.

MR. RANKIN: Yes.

THE REPORTER: Ms. White.

MS. WHITE: Yes.

THE REPORTER: Employer representatives.

Mr. Bartosiak.

MR. BARTOSIAK: No.

THE REPORTER: Mr. Cornford.

MR. CORNFORD: No.

THE REPORTER: Ms. Breslin.

MS. BRESLIN: No.

THE REPORTER: Mr. Poorbaugh.

MR. POORBAUGH: No.

THE REPORTER: Mr. Webb.

MR. WEBB: No.

MR. ALTEMUS: Let the record reflect the motion did not pass.

MR. RANKIN: Before we adjourn -- and it looks like thatís where we are -- Iíd like to enter this survey into the record, entitled "Minimum Wage Workers Believe that the California State Minimum Wage Should be Closer to a Living Wage." Itís a survey of numerous raisin harvest workers, conducted by the California Rural Legal Assistance.

MS. BRESLIN: A point of order, please.

MR. ALTEMUS: Yes, Ms. Breslin.

MS. BRESLIN: I have been notified through a conversation with the IWC office that I was not allowed to bring any materials that were not considered by the IWC first to the discussions at this table.

MR. RANKIN: You were misinformed, Iím afraid. I mean, we donít --

MS. BRESLIN: Well, no. I take it as the fact that the IWC has put this before us as all the testimony that they wanted us to consider.

MR. RANKIN: Well, itís sort of academic because youíre free to give stuff to the IWC. As you know, they have three more -- they have three hearings now to determine what to do.

MS. BRESLIN: Then I would go through the proper channels.

MR. RANKIN: And so, we -- you know, if you have some objection to this, weíd be happy just to introduce it there.

MS. BRESLIN: That would -- I think that would be the correct procedure.

MR. RANKIN: Okay.

MR. ALTEMUS: Do you withdraw your motion?

MR. RANKIN: Sure.

MR. ALTEMUS: Okay.

MR. RANKIN: No, I didnít make a motion -- I just wanted to put it in the record.

But Iíd move to adjourn.

MR. CORNFORD: Second.

MR. ALTEMUS: Any discussion?

All in favor?

(Chorus of ayes)

MR. ALTEMUS: Okay. Before people all leave, first of all, I want to thank people for their participation. Obviously, this is a difficult issue for both sides. And I think, you know, the differences and difficulties were raised this morning.

The staff would like -- David would like to speak to the entire group real quickly about reimbursement.

And with that, Iíd like to again thank you all for your participation.

The meeting is adjourned. Thank you very much.

(Thereupon, at 11:42 a.m., the wage board

meeting was adjourned.)

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CERTIFICATE OF REPORTER/TRANSCRIBER

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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 meeting of the 2002 Minimum Wage Board, held on September 5, 2002, in Sacramento, California, and that the foregoing pages constitute a true, accurate, and complete transcription of the aforementioned tape, to the best of my ability.

Dated: September 19, 2002 ______________________________

CYNTHIA M. JUDY

Reporter/Transcriber