Minimum wage set to increase next month

By CMTA Staff

Capitol Update, June 20, 2014 Share this on FacebookTweet thisEmail this to a friend

In just a couple of weeks, California’s minimum wage will increase from $8 an hour to $9 as a result of AB 10 (Luis Alejo, D-Watsonville), which was signed into law last year.  AB 10 calls for two increases over the next three years – the first beginning this July 1st followed by another $1 increase on January 1, 2016, at which time California will become the highest minimum wage state in the country. Overall, these two hikes represent a 25 percent increase in labor costs.

Not only does this increase affect hourly wages, it also raises compensation for salaried employees. In order for an employee to qualify as “exempt” under any of the state’s six exemption categories, they must meet the salary-basis test, which is two times the monthly minimum wage.

Even as this wage increase takes place, the Legislature is considering another measure to raise it even higher. SB 935 (Mark Leno, D-San Francisco) would drastically increase the minimum wage to $11 an hour in 2015, $12 in 2016 and $13 in 2017. Combined, this represents a staggering 62 percent increase over three years. After hitting this peak, the minimum wage would continue to increase annually based on an inflation formula. The bill also allows locals to impose increases higher than the state minimum. 

CMTA supports economic policies that allow California to become a better place to grow middle-class manufacturing jobs that do not rely on minimum wage protections – like the sales and use tax exemption (http://www.boe.ca.gov/sutax/manufacturing_exemptions.htm#Overview) on the purchase of manufacturing equipment that also goes into effect this July 1. We are hopeful that the rise in the minimum wage will not unduly discourage the growth and expansion such pro-manufacturing policies can bring.

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