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SAN FRANCISCO (Reuters) - California Gov. Arnold Schwarzenegger and state lawmakers reached a deal late Monday to hike the minimum wage to the highest level in the nation, aides said on Tuesday.


The agreement between the Republican governor and the Democrat-led legislature's leaders would increase California's minimum wage by $1.25 over the next year and a half to $8 an hour. The deal calls for an increase of 75 cents an hour next January and a rise of 50 cents an hour the following January.

The new wage would be 25 cents more than initially offered by Schwarzenegger, who vetoed previous bills to hike the state's minimum wage. In exchange, Democrats dropped demands the wage automatically adjust upward with inflation changes.

Schwarzenegger, a fiscal conservative and ally of business groups concerned about the cost of doing business in California, said the state economy had recovered and companies could afford to pay minimum-wage workers more.

"I have always said that when the economy was ready, we should reward the efforts of California's hard-working families by raising our minimum wage," he said in statement.

The agreement would benefit low-paid workers, said Assembly Member Sally Lieber, a Democrat who had advanced a minimum wage bill earlier this year. "We have a moral obligation to ensure that the minimum wage keeps pace with federal poverty guidelines. This bill does that," she said.

Business groups and labor unions were not pleased by the agreement, which Democratic lawmakers can pass without votes from minority Republicans.

"We appreciate the governor's opposition to indexing the minimum wage and not walking into automatic increases, but we still oppose increasing the minimum wage," said Michael Shaw, an officer of the National Federation of Independent Business, a small-business advocacy group. "It takes away resources from business owners, who are in the best position to decide how to invest in their companies."

Art Pulaski, secretary-treasurer of the California Labor Federation, said the state's AFL-CIO could live without an inflation-adjusted minimum wage over the near term.

"We realize that from a Republican governor who is so close to big corporations ... that we would never get him there," Pulaski said. "Fortunately, it's an election year, so we leveraged that to push him to do something."

Schwarzenegger is running for re-election against Democratic challenger and state Treasurer Phil Angelides, who is favored by unions, and is moving to improve his standing with Democrats and independent voters who turned against him in a controversial special election he called last year.

The Hollywood icon signed a bill on Monday that aims to make California one of the world's biggest producers of solar energy and is in talks with lawmakers on a bill to cap industrial emissions of greenhouse gas, popular ideas in a Democrat-leaning state where environmental issues rank high with voters.

Angelides said in a statement he would back an inflation-adjusted minimum wage.

"After three years of denying Californians the minimum wage increase they deserve, Governor Schwarzenegger is now trying to save his own job by giving minimum support to the minimum wage," Angelides added.

Tikker wrote:raising minimumw age accomplishes nothing

people who are trying to raise a family on that kind of money already deserve to be wiped from the gene pool

Martrae wrote:You think local businesses rely on labor in China for their prices? All raising minimum wage does is make it harder for small businesses to stay competitive. They have the choice of raising prices (so no one will shop there), cutting staff (so no one can get service) or going out of business.

But who cares....there's a Wal-mart going in down the road....

Martrae wrote:Yes, because no one starts a business on a shoestring or is hanging on by a thread. For all your hype about "buy local" you really have no clue how many places are a month away from closing their doors.

Yes, because no one starts a business on a shoestring or is hanging on by a thread. For all your hype about "buy local" you really have no clue how many places are a month away from closing their doors.

Ginzburgh wrote:

Yes, because no one starts a business on a shoestring or is hanging on by a thread. For all your hype about "buy local" you really have no clue how many places are a month away from closing their doors.

In most cases it has little to do with how much they are paying their employees because most of them don't have employees. Every person I know that just started a business does pretty much everything themselves, they work 24 hours a day.

Martrae wrote:Yes, because no one starts a business on a shoestring or is hanging on by a thread. For all your hype about "buy local" you really have no clue how many places are a month away from closing their doors.

Diekan wrote:There's really no legit reason for not raising the min wage. The prices on everything from milk to gas to rent and everything else in between has gone up considerably. To not require greedy businesses to pay more is rediculous...

Diekan wrote:There's really no legit reason for not raising the min wage. The prices on everything from milk to gas to rent and everything else in between has gone up considerably. To not require greedy businesses to pay more is rediculous.

You gotta consider the mindset of most business types... they're greedy and gluttonous. If you don't make them take care of their employees - they wont - they're all about themselves.

As for small businesses - well as you all know - I hate big business with a passion, but I'm not exactly a fan of the small guys either. Generally speaking, they're over priced and provide shitty service.

Just noticed Ginz's post earlier about starting a business...just thought I'd add I know exactly what he means. 4 years back my Dad started a business rebuilding mining machinery, and I didn't realize at the time how much work we were going to have to put into it, I knew it was going to be tough, but godamn...there are still days we work 18 hours trying to get established. This business is so cutthroat (like a lot of business) it just never fucking stops. Now we are up to 18 employees and can breath a little more, but its been one HELL of a road. Then comes yesterday morning and our best mechanic/fabricator decides to take an offer we can't match from another company...one thing after another.

I guess to the point, 200 dollars can mean a LOT to a small business that is scrapping for every penny.

As for small businesses - well as you all know - I hate big business with a passion, but I'm not exactly a fan of the small guys either. Generally speaking, they're over priced and provide shitty service.

Jay wrote:

Diekan wrote:There's really no legit reason for not raising the min wage. The prices on everything from milk to gas to rent and everything else in between has gone up considerably. To not require greedy businesses to pay more is rediculous.

You gotta consider the mindset of most business types... they're greedy and gluttonous. If you don't make them take care of their employees - they wont - they're all about themselves.

As for small businesses - well as you all know - I hate big business with a passion, but I'm not exactly a fan of the small guys either. Generally speaking, they're over priced and provide shitty service.

I'm a business type. Most people I associate with are business types. I wouldn't go as far as calling them most them greedy and gluttonous. Money hungry would be a more accurate way to describe it. I'm all about sharing the wealth as long as I keep accumulating it, I'm not trying to take anymore than anyone else that's also in my position. Greed commonly refers to wanting more than your peer and wanting to pocket the money as opposed to reinvesting it to grow your company.

Also, I find that small businesses provide the best service. They're more personal and they take better care of you because you're worth more to them than to a multi national corporation. It's true they charge more, but if they're willing to jump through more hoops to deliver me a result I'll gladly pay the extra.