MOORLACH UPDATE — SB 3 Reverberations — April 2, 2016

The reverberations of the planned signing of SB 3 by Governor Brown on Monday continues. I have been on a number of radio stations this past week. A fun sample is the "John and Ken Show" on KFI AM 640, which is the first piece below. I stayed with the April Fools’ Day theme, and it worked quite well (see MOORLACH UPDATE — April Fools’ Day — April 1, 2016 april 1, 2016 john moorlach).

The Signal Tribune provides a fair description of how this fast week went. The public employee unions rolled our Governor and Legislature (again) and our job providers will bare the brunt (see MOORLACH UPDATE — $15 Minimum Wage — March 29, 2016 march 29, 2016 john moorlach). It is the second piece below.

In the third piece below, the Gosport Times provides the national impact of the minimum wage increase efforts. At least the New York legislature is being sensitive to rural areas of the state. It refers to my Floor Speech, which can be seen at

The fourth piece is a first. I’ve made it to the World Socialist Web Site. I’ll just assume that it must be the place where Bernie Sanders supporters go for their news. It addresses another effort to raise wages, but this time for Caltrans rank and file employees.

It clearly states that Gov. Brown has not made maintaining roads a high priority, as he has been reducing the Caltrans budget on a regular basis and relying more on the current gas tax funding scheme. It also paints Gov. Brown as disloyal to public employee unions, something that his actions this week clearly refute.

The last two observations is that if the unions would reduce the 3,500 excess architects and engineers, there would be sufficient funding for rank and file pay raises (see MOORLACH UPDATE — Caltrans Insubordination — March 18, 2016 march 18, 2016 john moorlach for a tutorial). The second is the display of abhorrence to outsourcing, even when California has the lowest usage of this strategy for any Department of Transportation in the nation (see MOORLACH UPDATE — SBX1-9 — July 18, 2015 july 18, 2015 john moorlach).

Assembly passes measure to

raise hourly minimum wage

to $15 by 2022

Brown, who announced the proposal Monday, is

expected to sign off

by Cory Bilicko– Managing Editor

California continued on its path this week to being the first state to commit to raising the minimum wage to $15 per hour.

The State Assembly on Thursday passed a measure 48 to 26 to raise the pay incrementally over the next six years.

“With cities like Long Beach and Los Angeles already adopting similar policies, I applaud the governor’s proposal to raise the minimum wage steadily over time,” said 70th District State Assemblymember Patrick O’Donnell. “A statewide approach to raising the minimum wage delivers a level playing field for our local business community and ensures greater economic opportunity for the hard-working men and women of California.”

Gov. Jerry Brown had announced March 28 a proposal that would raise the wage to $10.50 per hour on Jan. 1, 2017 for businesses with 26 or more employees and then each year until reaching $15 per hour in 2022.

The plan also allows additional time for small businesses– those with 25 or fewer employees– to phase in the increases.

“California is proving once again that it can get things done and help people get ahead,” Brown said. “This plan raises the minimum wage in a careful and responsible way and provides some flexibility if economic and budgetary conditions change.”

Brown was joined at the announcement by: Senate President pro Tempore Kevin de León; California Labor Federation president Kathryn Lybarger; SEIU United Long Term Care Workers’ Union president Laphonza Butler; Burger King employee Holly Dias; Senator Mark Leno; California Labor and Workforce Development Agency secretary David Lanier; United Domestic Workers of America executive director Doug Moore; Teamsters Union International vice president Rome Aloise; and United Healthcare Workers West executive board member Georgette Bradford.

“I’m pleased that we have a deal in place that will raise living standards for millions of Californians, while also spurring new demand for goods and services and helping businesses thrive,” Senate President pro Tempore de León said during the announcement. “This will benefit 5.6 million workers, 32 percent of the statewide workforce. It’s not just a higher wage, it’s a smart wage. And it will be implemented in a way that protects our budget and remains sensitive to economic conditions.”

According to a press release from the governor’s office, the intention of the plan is to increase the minimum wage over time, consistent with economic expansion, while providing safety valves– known as “off-ramps”– to put a hold on wage increases if negative economic or budgetary conditions arise. The governor can act by Sept. 1 of each year to pause the next year’s increase for one year if there is a forecasted budget deficit of more than one percent of annual revenue or poor economic conditions, such as negative job growth and retail sales.

Once the minimum wage reaches $15 an hour for all businesses, wages could then be increased each year up to 3.5 percent (rounded to the nearest 10 cents) for inflation as measured by the national Consumer Price Index, according to the press release.

The plan also phases in sick leave for in-home supportive services workers beginning July 2018.

Although the plan purports to take into consideration the state’s small businesses, one organization representing those entities– the National Federation of Independent Business (NFIB)– took issue with that section of the proposal.

In a press release issued Monday with the subheading “Voice of small business ignored in secretive deal with labor union leadership,” NFIB stated that Brown and legislative leadership demonstrated “a disturbingly clear disregard for the voice of small businesses in California.”

“At his press event, Gov. Brown claimed he and legislative leadership listened to and considered the small business perspective in crafting this proposal,” said NFIB/CA State Executive Director Tom Scott. “NFIB has yet to hear from Gov. Brown, Senate Pro Tem de Leon or Speaker Rendon. It is concerning that, in the 21st century, we are witnessing dark, closed-door deals with no public input or transparency.”

Shortly after Brown’s announcement, Senator John Moorlach (R-Costa Mesa) issued a statement that called the plan “flawed” and an “economic competitiveness killer.”

“California has the nation’s highest poverty rate,” Moorlach wrote. “One reason is because California has been rated the worst place to grow a business for 11 years straight. Instead of adding more road blocks for businesses, we must, first develop an overall plan for economic competitiveness that will rebuild our economy. But, absent that blueprint, we have no way of knowing if this minimum wage hike will help or hurt workers and the job growth which California families need.”

Moorlach said that, although it was reported that Brown was “flanked by labor leaders,” the governor was more likely held hostage.

“Labor threatened an expensive November ballot measure making California’s minimum wage the nation’s highest,” the senator wrote. “Instead, they’ll push that proposal through the Legislature.”

Shortly after the Assembly’s passage of the measure on Thursday, Moorlach released another statement indicating that the consequences of the decision will be significant.

“Statistics consistently show that raising the minimum wage will eliminate entry-level jobs,” Moorlach said. “Many workers hoping this change will improve their finances will be sorely disappointed because their job may actually no longer exist.” ✦

CALIFORNIA: Union halts minimum wage drive with law pending

New York Governor Andrew Cuomo and other legislative officials announced that the state would raise its minimum wage in New York City to $15 an hour by 2018, with other wage increases rolling out more gradually elsewhere in the state, such as Long Island and Westchester County.

Under the law, the minimum wage will rise to $10.50 per hour on January 1, 2017 for businesses with 26 or more employees, and then rises each year until reaching $15 per hour in 2022. The deal will impose a $12.50 minimum wage on areas outside of New York City in 2021, with future increases to be determined.

NY and California lawmakers have raised their state’s minimum wages to $15 an hour, but specifics in the laws as to how and where workers will be affected reveal what compromises may be necessary for other states trying to do the same thing.

The New York Senate today began debating the portion of the budget containing a measure that would raise the state’s minimum wage to $15, matching the top hourly pay approved by California lawmakers a day earlier.

State Sen. John Moorlach, R-Costa Mesa, speaks in opposition to a measure that would increase the California’s minimum wage Thursday, March 31, 2016, in Sacramento, Calif. The bill, SB 3, was approved by both houses of the Legislature and sent to Gov. Jerry Brown.

NY state already requires large food franchises to move toward paying its fast-food workers at least $15 per hour.

The legislation will boost wages for about 43 percent of California residents – or about six million people – and in NY would affect approximately two million people, according to the Associated Press.

California is set to become the first state in the country to approve a $15 minimum wage.

For upstate New York’s lowest-paid workers, it’s going to feel like 1970 all over again. "For a home health aide or a waitress who struggles to get by on $15,000 per year, that’s the difference between near poverty and a life with less stress and more dignity".

"California’s minimum wage must also be a living wage", said Senate President pro Tempore Kevin de León. Reich also noted that the average wages of occupations with some of the most low-wage workers typically differ less between regions than average wages as a whole.

"UFCW is proud to stand with working families across the state struggling to make ends meet on the current minimum wage", said Jim Araby, executive director of UFCW Western States Council.

The minimum will go up more slowly in the rest of the state, reaching $12.50 by the end of 2020.

"We take seriously the arguments on both side-both the minimum wage supporters and the minimum wage opponents, in looking at what happens when you raise wages", says Ken Jacobs, who chairs the Labor Center.

So it’s not yet known when upstate NY will hit $15. Further increases would be tied to inflation and other economic indicators. Starting in 2024, the California state minimum wage will be pegged to the consumer price index, with a maximum annual increase of 3.5 percent.

California’s budget to hit Caltrans workers

By David Brown

California Department of Transportation (Caltrans) workers, whose contract expired in July 2015, are facing a concerted effort by Democratic Governor Jerry Brown to force through another poverty contract. The last offer from the state included meager raises that are effectively wiped out by sharply rising retirement and benefit contributions. Brown’s proposed state budget reveals a much broader plan to cut public employee labor costs and double the use of private contractors.

Caltrans workers are entering their ninth month of working without a contract and the union claims the state called off negotiations until July. The current offer on the table includes a 7 percent raise over four years that mostly goes directly toward employees contributing 4.6 percent of their pay to retirement. The rest is more than covered by rising healthcare and housing costs. This comes after nearly a decade of concessions contracts; the proposed raises would bring pay in line with what it was eight years ago, not counting inflation.

The governor’s proposed budget shows that the attack on Caltrans workers extends far beyond the negotiating table. It combines an overall cut to Caltrans’ budget along with a $16 billion 10-year plan to increase maintenance projects. General fund expenditures for transportation will be cut by $45 million, or 17 percent, and only partially compensated with increases in special funding for a total budget cut of roughly $4 million to Caltrans. The executive summary of transportation spending calls for $100 million in “cost saving reforms” from “Caltrans efficiencies.”

The proposed efficiencies include “Staffing flexibility—Permit Caltrans to deliver projects funded with new revenue by doubling contract staff over the next five years” and an extension of the Public-Private Partnership program until 2027. According to the official Caltrans web site, that program offers private firms a “reasonable return on investment” for them to carry out infrastructure work traditionally done by state employees.

The economic goals of Brown’s proposal are twofold: first, to reduce the number of workers retiring in the Public Employee Retirement System (CalPERS) and, second, to make the public funds going to infrastructure directly available to business for private profit.

During the 2008 economic crisis, CalPERS lost $95 billion, nearly half its value. While the banks that caused the crash were bailed out by the Obama administration, pension funds were not. Across the country, defined benefit plans were attacked by both major parties as unfundable. In Detroit, the 2013 city bankruptcy was used to bypass the state constitution and tear up public employee retirement benefits.

Within California, Stockton and San Bernardino have used city bankruptcy, while San Jose, under former mayor Chuck Reed, used a voter referendum to break pension obligations. Statewide, Brown has pushed for “pension reform,” including his 2012 bill that raised the retirement age for new state hires to 67 and required larger contributions from all public employees to receive smaller payouts when they do finally retire.

In addition to lowering pension obligations, the governor’s plans for increasing the use of private contractors is a method of making public funds available for private profit. Much like public education or utilities, funding for Caltrans is an economic deadend for investment banks and hedge funds. Money goes in as taxes and simply comes out as finished projects without paying dividends to any shareholders.

Under the slogans of “innovation,” “flexibility” and “efficiency,” corporations are seeking access to that money through charter schools, deregulation and outright privatization. The private companies are not able to provide a cheaper or more effective service, but they can more effectively underpay their workers and cut corners and pocket the difference.

Brown’s proposals in this regard are in line with calls from Republican politicians for massive layoffs and increasing use of private contractors in Caltrans. The California state auditor issued a report in mid-March, which pointed to inefficiencies in Caltrans distribution of maintenance funding. The report came to the mild recommendation that Caltrans “implement a budget model for field maintenance” that factors in “traffic volume and climate.”

State Senator John Moorlach, a Republican, seized on the report saying, “This is more evidence that California’s road problems aren’t due to a lack of money, but rather a lack of competence at Caltrans.” Last December, Republicans in the state Assembly called for firing 3,500 engineers from Caltrans and contracting the work out to private firms.

In the push toward privatizing infrastructure in California, the Democrats and Republicans have a useful division of labor. The Republicans push for extreme and immediate measures allowing the Democrats to pose with union support as representatives of the working class. The Democratic governor and state legislature then implement over several years the same anti-worker measures the called for by the Republicans.

When Brown ran for governor in 2010 he was endorsed by the International Union of Operating Engineers (IUOE), which represents Caltrans workers. Citing budget deficits, Brown has implemented a broad program of furloughs, pension “reform” and other attacks on state workers’ conditions, all while supporting tax cuts for “job creators.” In the words of one IUOE worker, “Brown has attacked us since day one!” He has done so with the support of the IUOE leadership, which presented Brown’s cuts as necessary sacrifices.

Rank-and-file workers in the IUOE began calling rallies to pressure both the state and union negotiators. Afraid of losing control of dissatisfied workers, the union endorsed the rally at the end of February, but acquiesced to the state delaying negotiations until after the protest ended. The next rally will take place on April 8 in Sacramento, Fresno and San Bernardino.

The state has said they will delay negotiations until July, a full year after the last contract expired. In response the IUOE has filed a toothless unfair labor practices complaint. The union is unwilling to wage a serious struggle to defend workers because that would involve a political fight against the Democratic Party that is carrying out the cuts.

In order to win living wages, Caltrans workers must appeal directly to the working class—including teachers, bus drivers, refinery and other workers—who are facing the same stagnant wages and benefit cuts enforced by the two big business parties.


This e-mail has been sent by California State Senator John M. W. Moorlach, 37th District.

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