Faced with a $19bn deficit, California Governor Arnold Schwarzenegger has ordered some 200,000 state workers to be paid the minimum wage because the state legislature could not agree a budget.
The order means most state employees will receive the federal minimum wage of $7.25 (£4.82) per hour as of Thursday, July 1st.
However, state controller, Democrat John Chiang, who issues the paychecks to state employees, has said he will not follow the order.
He also refused in 2008, when Schwarzenegger last ordered him to cut state employees’ wages. The matter is still before the courts.
Schwarzenegger’s order, if implemented, could cost the state billions of dollars because the action would violate employment law, Chiang’s press secretary Roper said.
He cited the federal Fair Labor Standards Act, which he says entitles a worker to ‘double damages’ if an employer cuts pay to the minimum wage.
A spokesman for Schwarzenegger, Aaron McLear, said the Republican governor was sending a message to the controller ‘to follow the law’.
The Service Employees International Union (SEIU) local 1000, the state’s largest employee union, declined to comment because SEIU lawyers are still reviewing the matter.
The American Federation of State, County and Municipal Employees (AFSCME) warned earlier this week:
‘Dire economic predictions turn to reality this week as states prepare for a new fiscal year without billions of dollars in federal Medicaid assistance, small-business tax breaks, and education funding that Congress has failed to pass.’
Thousands of AFSCME activists from across the country rallied on Boston Common on Wednesday to demand that Congress help state and local governments fill budget gaps to keep Americans working and protect vital public services that support our communities.
‘Right now, services and jobs are on the line. America’s workers, with families to support and bills to pay, just can’t wait for Congress any longer,’ said AFSCME International President Gerald W McEntee.
‘With each vote against the jobs bills in Congress, Washington is slamming the door in the faces of hard-working Americans wondering what they did to lose their jobs, cops, teachers and child-care.
‘States have reached the point of no return and are now facing economic crises of historic proportions. It’s time for Congress to pass a real jobs bill.’
More than 30 states counted on $24 billion in FMAP funds — money which helps states cover the cost of Medicaid, the health insurance programme for the poor — while drawing up their 2011 FY budgets.
Without this funding, states will be forced to siphon money from other programmes in order to close the gap. The results of this shifting will be devastating, and it is likely states will start to see the effects this week.
l 125,000 US jobs were lost in June, the Labor Department has said, the first time jobs were lost on a month-on-month basis since October.
The unemployment rate fell to 9.5 per cent in June from 9.7 per cent in May, as 652,000 people gave up on their job searches.
People no longer looking for work do not count in the US unemployment data.
