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Santa Clarita Valley response mixed on minimum wage hike

Local businesses, groups say move could have unintended consequences; legislators split

Posted: September 13, 2013 5:51 p.m.
Updated: September 13, 2013 5:51 p.m.

SANTA CLARITA - The recent decision by the California Legislature to boost the state’s minimum wage might be a boon to low-wage workers, but local businesses and advocacy groups say the economic consequences of the move could outweigh its benefits.

Under the terms of the legislation, Assembly Bill 10, the California minimum wage will rise to $10 per hour by 2016, compared to the current federal minimum wage of $7.25 per hour.

The bill has yet to be signed into law, but Gov. Jerry Brown has indicated he will do so.

Proponents say the increase, if approved, will give a much-needed boost to those at the lower end of the economic scale.

“You can have a family of two people working full time, but if they’re working minimum-wage jobs it’s not enough really to pay your rent,” said state Sen. Fran Pavley, D-Agoura Hills, who voted in favor of the measure.

Pavley also said Friday the move would benefit local economies, as additional income means people would have more money to spend.

But opponents of the move say it’s not quite that simple.

“The real issue here is that this kind of action hurts the people it is intended to benefit: the folks at the lowest end of the social scale,” said Rob Montgomery, the owner of Wendy’s Restaurants in the Santa Clarita Valley.

Raising the minimum wage can lead to businesses eliminating positions or reducing hours to cut costs, Montgomery said Friday.

“The bottom line is if you can’t make a buck, you’re no longer in business,” Montgomery said. “If you’re no longer in business, you can’t offer any jobs.”

Chris Angelo, CEO and president of local landscaping company Stay Green Inc., said the bill will not immediately affect his company’s employees, as they make more than the minimum wage. But the bill could lead to further wage increases for higher-paid employees, he said.

“You have some indirect pressures as it relates to the new law,” Angelo said Friday. “For instance, there will be employees that will have the impression that they should be proportionately raised above the minimum wage.”

Assemblyman Scott Wilk, R-Santa Clarita, who voted against the increase, said the move was another example of what he characterized as a business-unfriendly climate in California.

“California business owners are already paying the highest taxes in the nation and they’re already overregulated,” Wilk said Friday. “So what this does is put an additional squeeze on them.”

That point was echoed by advocacy groups who represent businesses in the Santa Clarita Valley.

Holly Schroeder, the president and chief executive officer of the Santa Clarita Valley Economic Development Corporation, said the increase in wages will lead to increases in costs for businesses, a cost that may then be passed on to customers.

“While we understand the Legislature’s desire to increase pay for workers, it also needs to recognize that an increasing amount of financial burden is being placed on the private sector,” Schroeder said. “Businesses have experienced escalating taxes and fees during the recession and are bracing for the oncoming health care bill implementation.

“The Legislature should be evaluating how all these policies reduce California’s competitiveness.”

Stuart Waldman, president of the Valley Industry and Commerce Association, said the bill was a “stupid” idea.

“I think it’s a novel concept for someone who clearly doesn’t understand economics,” he said Friday.
On Twitter @LukeMMoney



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