Labor policy issue highlights importance of manufacturing in California

By CMTA Staff

Capitol Update, Sept. 29, 2006 Share this on FacebookTweet thisEmail this to a friend

The most recent labor policy debate between Governor Arnold Schwarzenegger and the California State Legislature hasn’t factored-in the most important ingredient for long term success – a robust manufacturing economy.
 
While policymakers were preoccupied with a three year debate about raising the minimum wage in California, CMTA argued that a high wage for employees can be accomplished by creating good jobs rather than arbitrarily raising the floor on wages.  An increase in the minimum wage doesn’t come along with a benefit on the value of production:  costs just go up and productivity stays the same.  
 
Some businesses may be able to increase the price of their products – as in some restaurants, service and retail companies. But the result is inflation on products and services which will most harm the minimum wage workers who spend a high percentage of their disposable income on those products and services.  Other companies with out-of-state and global competition do not have the luxury to raise prices on consumers.  They just become weaker and more vulnerable to competition.  Fewer workers will have the chance to get good jobs with healthy California companies.  And so it continues&ldots;.
 
This downward spiral can only be reversed by the retention and creation of good jobs in California. The state is doing a poor job in this regard.  According to the Employment Development Department (EDD) the average wage for growing sectors of the economy is $40,000. The average salary of declining sectors of the economy is $66,000.  About half of that loss is in manufacturing – 375,000 fewer jobs now than in 2001. Instead of adopting policies that make California less competitive and raising prices for low wage workers, we should be working to rebuild a healthy business climate for manufacturing and other high wage businesses. 
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