Goodbye Salary - Hello Minimum Wage

On July 1st, the date by which the state budget is supposed to be approved, the Governor of California ordered state workers’ salaries to be reduced to the federal minimum wage of $7.25 an hour until the legislature passes a budget. While this is legal for the Governor to do, it is not the right move for several reasons. State workers are already strained by the furloughs and can not handle another reduction in pay. Additionally, the domino effect would cause the state’s overall economy to turn down and it would cripple Sacramento where a large portion of state workers live. Lastly, it is possible that many state services will slow down or even come to a halt from low morale and workers leaving state employment.

Furloughs for state workers lasted from February 2009 through June 2010 causing each worker to lose about seven weeks of pay. This has had a serious negative effect on people’s lives financially. At the least, workers have reduced their spending and bills. At the worst, workers have lost their homes and the ability to provide for their families. Any further reduction in pay will push most people over the edge and ruin their lives completely. Those who make the least and those who have a two state worker income home will be hit the hardest by the minimum wage order and will most likely lose everything. Most people, regardless of where they work, do not have enough savings to pay bills for a single month without full pay. Considering that the budget has been late 18 out of the last 20 years and the latest a budget has ever been passed was in 2008 on September 19th, it is very likely that the budget stalemate will last several months. Some experts have commented that the current political divide could push the budget approval far into the fall. The inability of workers to pay bills for such a long time will have a domino effect on the economy.

The slowly recovering economy will hit bottom when over 250,000 state workers stop spending money. Though California has a population of about 36,961,664, state workers contribute quite a lot to the economy. 2009 was the worst year of the recession for California, which was partially due to the furloughs. In cities and counties that had the largest state worker populations, many businesses closed up shop while other businesses laid off workers. In the first, second and third quarters of 2009, a total of 387,121 people were laid off across California and the most common reasons for the layoffs were financial. Home foreclosures were up nearly 20% over 2008. Much of this happened because state workers lost almost 15% of their pay. Sacramento was one of the hardest hit places where small business downtown used to flourish. By the end of 2009, downtown was a ghost town with more empty storefronts than full and hardly anyone shopped or ate out. With minimum wage pay, state workers will be unable to pay mortgages, rent, utilities or buy food or gas. As a result, the entire economy of California is estimated to lose $1 billion per month and nearly 5,000 private workers will be laid off. As businesses small and large drastically downsize to compensate for the loss of profits, unemployment will rise, continuing the domino effect as even more people are unable to pay their bills. While this happens, state services will slow down or come to a halt as state worker morale drops and many leave state employment.

Being told that your work is only worth minimum wage when you were hired for salary is demoralizing. Furloughs have already drop productivity due to low morale and reduced work weeks. Minimum wage will drop efficiency even more. It will slow state services, some which are vital to the health of millions of Californians. Yet even more troubling will be those workers who can’t afford to continue working for the state. An Associate Governmental Program Analyst, one of the most common classifications in state employment, makes $4,400 gross per month before deductions. Federal minimum wage provides about $1,160 gross per month, but one of the issues is that most of the deductions will be the same amount that is taken out of full pay. With full pay, deductions are about 25%. So even on a best case scenario that deductions will be the same percentage, state workers would be taking home $870. That is less than what most people pay for housing, let alone any other necessary bills. Unable to pay basic living expenses, many workers will not be able to get to work. It’d be more affordable to quit and work at the fast food around the corner that pays California’s minimum wage of $8 per hour, which is higher than the federal minimum wage. At least the work is more equitable to the pay. Thus, as more and more people leave state employment, it will halt some services since there will be no one to replace them due to the hiring freeze. If the long lines for the DMV are bad now from the furlough effect, just wait till there are only a handful of people behind the counter.

The minimum wage order is the wrong way to go. It’s politics at its worst and it doesn’t just affect state workers, but all citizens of this once great state. It’s time for everyone to take a stand, to speak up and contact the legislature who are the real culprits behind the state’s budget mess. The Governor would never have chosen to do the minimum wage order if the legislators had done their job in the first place. It’s time to tell them to get back to Sacramento and work on the budget. Find out who your legislator   is and send them an email. Tell them how their inaction is hurting you. If you’re a state worker, SEIU Local 1000 has set up a special page   whereby you can send an email to your legislator, urging them to sign Assembly Bill 1699 which would provide continuous appropriations for state workers’ pay when there’s no budget. It takes only a few moments to make a difference and if everyone wrote to the legislature, they would have over 30 million emails. That’s sending them a message loud and clear that we won’t put up with them any longer. It’s time to take back California and make it great once more.