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A labor-backed bill moving through the Legislature seeks to impose a 5 percent payroll tax on temporary-employment agencies in California starting in 2004. It would raise about $500 million for local governments throughout the state.
Supporters say temps are much less likely than permanent employees to earn a living wage, receive health insurance or get retirement pay - and therefore they're more likely to rely on local governments for healthcare, housing and other services. The tax would help offset that cost.
Wrong, business leaders say: The tax would chill the staffing industry and hurt employers who use temporary employees, as well as low-skilled or entry-level workers.
"It's a brand-new payroll tax that singles out one industry," said Julianne Broyles, director of insurance and employee relations for the California Chamber of Commerce. "More than that, we are virtually certain this tax will be passed straight through to our members - particularly small-business members - because they frequently outsource and look to temporary-service people to cover busy times of the year."
Assembly Bill 880 by Manny Diaz, a Democrat from San Jose, was pending before the Assembly Appropriations Committee at press time.
The temporary-staffing industry in California has a gross annual payroll of $10 billion, organized labor estimates, so a 5 percent tax would generate $500 million a year.
"Most public policy assumes an...