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 . . .