California Labor Seek $13 Minimum Wage as Brown Runs Anew

Hundreds of union leaders and Democratic lawmakers listened as Governor Jerry Brown took the stage at the Sheraton Grand Sacramento, which overlooks California’s domed capitol.

He thanked them for supporting his voter-approved tax increase in 2012 and a bill that improved benefits for injured worker. And even though he had signed almost 40 union-supported bills in four years, he knew they wanted more.

“If you didn’t get your bill signed in the first term, don’t worry, I’m going to be around for the next five years,” said the 76-year-old Democrat, who is running for re-election and leading his nearest Republican rival by 40 points in polls.

Organized labor has given at least $60 million to Brown’s causes since 2010, according to the nonpartisan National Institute on Money in State Politics. Brown signed laws boosting the minimum wage, negotiated raises for state employees and allowed domestic workers to collect overtime pay. Labor leaders are now readying efforts to raise the minimum wage for a second consecutive year, increase paid family leave and institute better pay and benefits for retail and service workers.

Union leaders say victory is far from certain. Brown has vetoed bills they assumed were sure to win his signature and has clashed with labor over public-employee pensions and pay increases.

“He simply isn’t going to sign a bill because one of his allies wants him to do it,” said Art Pulaski, chief officer of the California Labor Federation, which includes 1,200 unions. “He is going to challenge you and ask why is this important to you? What is so good about this and what are the consequences of this?”

Highly Organized

California, the world’s ninth-largest economy, has had its credit rating raised by both Standard & Poor’s and Fitch since Brown took office and is poised for another increase as a resurgent stock market has poured $2 billion more into state coffers than projected. Job growth since the start of 2011 has outpaced the nation.

The state has 2.4 million union members, more than any other. About 1 in 6 U.S. members are in California, according to the Bureau of Labor Statistics. In 2013, 16.4 percent of wage and salary workers in California were unionized, compared with 11.3 percent nationwide.

Dishonor Roll

The legislative agenda for the largest state worker group, the 95,000-member Service Employees International Union Local 1000, includes a bill that would require Brown’s budget office to produce an annual list of companies such as McDonald’s Corp. (MCD) and Wal-Mart Stores Inc. (WMT) that have workers on welfare or other public assistance and the cost to taxpayers.

SEIU and other unions are pushing a bill that would grant paid sick leave to California workers with at least 90 days on the job. Employees would earn one hour of time off for illness for every 30 hours worked. Employers could cap leave at three days per year.

Brown in September signed a law that increased the state’s minimum wage 25 percent to $10 an hour by 2016. Democrats, who control the legislature, are now pushing for a union-backed bill that would boost it to $13 by 2017 and link future increases to inflation.

Signing a second increase so soon, and in an election year, might be a dilemma for the governor, Pulaski said.

“Most people would say it is politically unwise to sign, but I wouldn’t put it past him, because he has the courage to say, ‘It may look funny, but the reality is that it is a longer-term solution,’” Pulaski said.

Workingman’s Hero

Brown, who served two terms as governor from 1975 to 1983, has been a hero to labor since he enacted the Agricultural Labor Relations Act, a 1975 law that granted collective-bargaining rights to farm workers. He also signed a bill that made such agreements binding even if a company is sold.

He later extended bargaining rights to state and local government workers, teachers and state college employees. He granted disability insurance payments to workers during a strike.

In 2010, when Brown decided to seek a return to the governor’s office, he faced billionaire Meg Whitman, the former chief executive of EBay Inc., who now leads Hewlett-Packard Co.

At least $144 million of her own fortune went into the $178 million campaign, four times the $40.6 million Brown raised, according to state filings.

Brown’s Backers

Groups such as the California Nurses Association put $23 million into support for Brown, according to filings. While state law limits contributions to candidates, there’s no ceiling on independent expenditures as long as they’re not coordinated with a campaign or candidate.

“Brown did rely heavily on union support,” said Rob Stutzman, a Republican political consultant who worked for former Governor Arnold Schwarzenegger. “That’s who funded the independent expenditure campaign for him.”

Efforts to stop California’s unions from using funds derived from payroll deductions, such as dues, for donations have been defeated three times since 1998.

Even with Brown’s union support, Stutzman said, “he’s turned around and governed in a way that has at times shown independence from those same unions.”

Maverick Path

Brown riled labor in 2011 when he proposed cutting pension costs by shunting new public workers into a hybrid of conventional and 401(k)-style coverage. Unions were able to convince lawmakers to scuttle that portion of Brown’s plan.

In 2012, he sought to temporarily raise income and sales taxes to erase a deficit. At the time, the California Federation of Teachers, the state’s second-biggest educators union at 120,000 members, was pressing its own plan to boost taxes on earnings of more than $1 million to finance schools.

Brown said having two measures asking for higher taxes would harm both their chances. He struck a deal with the teachers to merge the initiatives. It passed 55 percent to 45 percent.

Deals don’t always transpire. When the California Association of Professional Scientists, a union representing 3,000 state workers such as highway engineers, asked for a larger raise than what most others negotiated last year, Brown refused. The union is still without a signed contract today.

“The persona that he is easy on labor is ridiculous,” Christopher Voight, staff director for the association, said in a telephone interview. “He continued mandatory unpaid furloughs for state workers. He implemented substantial, costly to employees, pension reform. He’s no bosom buddy with labor. But we are expecting him to make up for some of the tough things that we have had to swallow in the past.”

To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Pete Young

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