More than 200,000 California state employees are now working for federal minimum wage, or $6.55 per hour.* And they're the lucky ones. Part-time and seasonal workers were fired.
All because the state legislature can't pass a budget, even though the last fiscal year ended on June 30. (And because Governor Arnold Schwarzenegger apparently doesn't care if California ever has another Republican governor. He signed the executive order bringing about this situation.)
Sure, the employees now receiving minimum wage will eventually be reimbursed the difference in their salaries. And the part-time and seasonal workers will probably get rehired.
But in the meantime, how many employees have an emergency fund that will see them through to the passing of a budget? I have no idea, but I can guarantee that not everyone does.
Where does that leave them? The Sacramento Bee State Worker blog reports that Golden 1 Credit Union will offer interest-free or low-interest loans to state employees. An interest-free loan sounds pretty good, but it's only available to members who had direct deposit set up before June 30. The low-interest loan at 4.99% is available only to members who joined before June 30 and signed up for direct deposit after June 30. All other employees must turn elsewhere for higher-interest loans.
That's a hefty penalty for an innocent state worker to pay. But just how innocent is the employee who doesn't have an emergency fund?
After all, an emergency can strike at any time, whether it's a catastrophic illness or your employer refusing to pay you what they owe. We all have an obligation to ourselves and to our loved ones to be prepared for such events to the best of our ability. It may be too late for California's state employees to build their emergency funds up before they need them, but their predicament should serve as a reminder to all us of to make sure that we are financially prepared for an emergency.**
*The state minimum wage is $8.00 per hour. (source)
**It's possible state employees will never miss a penny from their paychecks. State Controller, John Chiang, who issues the checks, has indicated that he will not comply with the governor's executive order. So if a budget is passed before the state runs out of money, all should be well. And this will all just have been a lesson learned. Until next year, when the legislature fails to pass the new budget in a timely manner . . .
8 comments:
I think it took guts for the governor to do that. Yes it sucks, but if there's no money there's no money.
Man, Cathy, that's some state you live in - and they sent Pelosi to Washington to "lead us" - lead us to the national poorhouse, but hey it's leading us!
I think the Governor (sorry, not going to try to spell his last name) took a step to force the legistlature to act. Will it work - who knows? I'm glad I'm not one of these workers...
I think the move is ridiculous and clearly a political one, but it's a good point - this is a great reason why you should have an emergency fund. There's no way you could've seen this coming (before the initial news reports).
Emergency funds can come in handy even when your pay doesn't change.
We were hit by a tornado in 2005 and didn't receive a satisfactory settlement offer from our insurance company until summer 2007.
We were fortunate to have savings as well as family and community support so we could get necessary repairs without having to accept the insurance company's paltry offers. I shudder to think how many people HAD TO accept the insurance company's low-ball settlements just to repair or replace the roofs over their heads.
You are right, emergency funds are a neccesity.
Sadly the most affected would the ones more likely not to have one. (like the minimum wage people you have talked about.)
I am sure there are lots of other fat in Government budgets that can be cut but salaries of the lower workers are usually the first cut.
You are right, emergency funds are a neccesity.
Sadly the most affected would the ones more likely not to have one. (like the minimum wage people you have talked about.)
I am sure there are lots of other fat in Government budgets that can be cut but salaries of the lower workers are usually the first cut.
@CCS - Yes, it's a statement-making move, but I think that's what he's really going for. Surely there were other ways of saving the state money.
@Mar - Schwarzenegger was elected some years ago when then Gov. Davis couldn't get the Legislature to pass a budget, so I do think he feels this is something he was elected to do. But as I said, I find it hard to believe this was the only alternative.
@Jim - Yup, everyone needs an emergency fund!
@Adrienne - Good point and great illustration about the necessity - I'm so glad you weathered it well. (Sorry for the bad pun.)
@Father Sez - I totally agree with you.
Yup.. I agree that it's a sad situation for all the state workers. But it could be a lesson for others to build up their emergency fund. I'm glad we did just that when we got the tax stimulus check. Now we just have to be disciplined not to dip into our piggy bank. :)
-Amy @ The Q Family
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