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January 03, 2002
Angst Over Calif.'s New Minimum Wage
Cal
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ifornia's minimum wage has risen to $6.75 an hour with the new year, and according to the Los Angeles Times, no one's very happy about it - for different reasons.

Employers, like restaurateur George Kookootsedes, complain that the new rate - one of the highest in the nation - will force layoffs. Kookootsedes, owner of a French restaurant in Irvine, plans to lay off five workers.

He acknowledges that an extra 50 cents an hour per worker isn't by itself a back breaker; his business, which currently employs 55, had $2 million in revenue last year.

But receipts have fallen 25 percent since Sept. 11, while energy and insurance costs have shot up. Add the new wage to all of that, he says, and it leaves him with few choices. "For me to keep my doors open, I've got to do this," said Kookootsedes, noting that these will be his first layoffs in his 42 years in business.

The Times, citing data from the state Employment Development Department, notes that California's restaurants and bars suffered a net loss of 8,700 jobs from September to November and now employ an estimated 949,000 workers.

The minimum-wage hike "could be the straw that breaks the camel's back for some restaurant owners," said Alec Levenson, a labor economist at the University of Southern California's Marshall School of Business.

California's new $6.75 minimum wage - $1.60 above the federal hourly rate - will match Massachusetts' as the second highest in the nation, behind Washington state's rate of $6.90.

For the estimated 600,000 Californians earning minimum wage, the increase couldn't come at a better time, the Times observes. Many restaurant, hotel and other low-wage service workers have seen their hours cut and their tips reduced after the Sept. 11 terrorist attacks devastated the tourist industry.

Rick Ireland, a 28-year-old waiter at Ristorante Rumari in Laguna Beach, has seen his weekly earnings slump to about $450 from about $600 since October, as customer tips have plummeted.

Ireland said he recently began working an extra shift at Ristorante Rumari and is looking for a second waiter's job to offset his lower income.

He figures he'll be taking home an additional $15 a week when the minimum wage goes up. But even a small increase "will definitely help," he said, adding that there's a good chance his wife will soon lose her $40,000-a-year job managing another restaurant because of slow business.

Even after the increase, $6.75 an hour is a woefully inadequate living wage in one of the nation's most expensive states, said Art Pulaski, head of the California Labor Federation. To match the minimum wage's purchasing power in 1968, the rate would have to be raised to nearly $9 an hour, he said.

"A lot of minimum-wage earners are working two or three jobs just to stay afloat," Pulaski said. "We have an obligation to get these people out of poverty."

The state's Industrial Welfare Commission, a five-member panel appointed by the governor, reviews California's minimum wage every two years. The commission, which approved both the 50-cent hike that went into effect at the beginning of 2001 and the new 50-cent increase, will meet in late January to discuss raising the wage again, spokesman Dean Fryer said.

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