U.S. Companies Increasingly Fish for Growth Overseas

Mon, 07/28/2014 - 10:10am

Michael Liedtke, AP Technology Writer

Major U.S. companies are starting to reap their most rapid growth in fertile lands of opportunity far from home.

Technology trendsetters Apple Inc., Google Inc., Facebook Inc. and Netflix Inc. all mined foreign countries to produce earnings or revenue that exceeded analysts' projections in their latest quarters. Prodded by the steadily rising demand for Internet access and online services in developing countries, these technology companies will likely be wading even deeper into overseas markets for years to come.

"The philosophy is to start your growth in the states and then take your fight overseas," says BGC Financial analyst Colin Gillis. "That's what the big guys are doing."

The intensifying international focus extends beyond technology. Century-old companies such as Coca-Cola Co. and Ford Motor Co. also are hoping to make more money in countries including China and India.

Few U.S. industries are tying their fortunes to overseas markets as aggressively as the technology sector, where new sources of revenue are often just a matter of equipping people with a computing device and an Internet connection.

Soaring sales of iPhones in China, Russia, India and Brazil during the April-June period helped Apple overcome softening demand for the device in the U.S. and Europe, where consumers seem to be more interested in waiting for the autumn release of a new iPhone that's expected to feature a larger screen.

Google generated 58 percent of its revenue outside the U.S. in its second quarter, the highest level yet for the Internet's most powerful company.

Facebook already gets 55 percent of its revenue overseas, and the growth in those markets is outpacing by what's happening in the U.S. The social networking service has attracted 1.1 billion users in foreign markets versus 200 million in the U.S. and Canada.

Netflix's Internet video service added 1.1 million international subscribers, nearly doubling the number it gained in the U.S during the April-June quarter. The company expects the trend to continue as Netflix enters six more European markets, including France and Germany, in September.

Corporate profits will probably need to keep rising to sustain the U.S. stock market's record-breaking run. The Standard & Poor's 500 index has already climbed nearly 8 percent this year, well ahead of its average pace historically, while analysts expect earnings to increase 8 percent this year. Low interest rates and an improving economy have helped to create a climate of optimism, said Brad McMillan, chief investment officer at Commonwealth Financial.

"Everything is going well right now," McMillan said. "That's what's driving the market up."

Like many other money managers, McMillan isn't convinced companies will be able to live up to investors' high hopes.

Overall sales have been slow, and profit margins are at record levels after years of cost-cutting. Those factors will make it tougher for companies to find ways to ratchet their earnings even higher.

The natural response for many companies? Look abroad because that's where most of the potential customers are. The U.S. population accounts for less than 5 percent of the world's roughly 7.2 billion people.

The U.S., though, still boasts the world's largest economy with a mass market of consumers who can afford more products and services than most other parts of the world. That means growth in other countries, especially in markets outside of Europe, Japan and South Korea, often isn't as lucrative as it is in the U.S.

Apple, which has always demanded premium prices, is discovering this as it sells more devices overseas. For instance, the iPhone's average selling price fell to $561 in Apple's most recent quarter, a 3 percent drop from a year ago and a 13 percent decline from $647 two years ago.

Google's growth in foreign markets outside Europe is one of the reasons that the company's average advertising prices have been falling for nearly three years.

Advertisers so far haven't been willing to pay as much to peddle their wares to consumers who don't have as much disposable income as people in the U.S.

Facebook is experiencing a similar phenomenon. The company reaped an average of $6.44 per user in the U.S. and Canada during the second quarter, compared with just $2.84 per user in Europe, $1.08 per user in Asia and 86 cents per user in the rest of the world.

Although the company remains profitable overall, Netflix still isn't making money on an international expansion that began nearly four years ago. The company's international losses have exceeded $800 million so far, with more likely to come with the move into France and Germany looming.

Most publicly held companies are willing to endure short-term financial pain in return for what they expect will be a long-term gain in growth. That's one of the reasons Ford Motor is building four plants in China and two in India. By 2020, the automaker hopes Asia Pacific and the Middle East will account for one-third of its sales. The regions accounted for 22 percent of Ford's sales in the latest quarter.

Coca-Cola is looking abroad for growth largely because it's becoming tougher for beverage makers to increase revenue in a U.S. market already awash in soda and other refreshments. Things look much different in some large overseas markets where billions of people only recently have begun to develop a taste for the company's products. In 2012, for instance, the per capita consumption of Coca Cola's beverages was 403 servings of 8-ounce drinks annually in the U.S., compared with 39 annual servings in China and just 14 in India.

An increasing thirst for Coca-Cola products in China, India and the Middle East helped boost the company's international sales by 3 percent in the second quarter while volume remained flat in North America.

Even large U.S. companies that are growing faster domestically realize they need to keep pushing in countries where many consumers may not make enough money to buy their products yet. That's one reason General Motors CEO Mary Barra told analysts on a conference call last week that her company remains bullish on China, even though car sales there have been slowing.

"As the market grows, we need to participate in that growth, Barra said.

Factory Output Rises For 5th Straight Month

Wed, 07/16/2014 - 10:27am

Christopher S. Rugaber, AP Economics Writer

WASHINGTON (AP) -- U.S. factory output increased for the fifth straight month in June as manufacturers cranked out more aircraft, chemicals and furniture. The modest gain underscored manufacturing's role in helping return the economy to growth after a grim first quarter.

Factory production rose 0.1 percent last month, the Federal Reserve said Wednesday, down from a gain of 0.4 percent in the previous month. May's data was revised slightly lower, but April's reading was revised much higher.

Despite June's small increase, manufacturing output rose in the second quarter at the fastest pace in more than two years, providing a critical boost to the economy after it contracted sharply in the first three months of the year. Factory output climbed 6.7 percent at an annual rate in the second quarter, the most in more than two years and up from just 1.4 percent in the first quarter.

Overall industrial production, which includes manufacturing, mining and utilities, edged up 0.2 percent in June, down from a 0.5 percent gain in May.

Mining output, which includes oil and gas drilling, surged 0.8 percent. Utility production fell 0.3 percent, mostly reflecting weather patterns. Industrial production rose at an annual rate of 5.5 percent in the second quarter, the best showing in nearly four years.

"The industrial economy is in reasonable shape but the recovery is steady rather than spectacular," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Most economists are optimistic that factory output will keep rising. The Federal Reserve Bank of New York said earlier this week that its regional manufacturing index reached a four-year high in July.

Americans are buying more cars and businesses are spending more on steel and other metals and computers. Auto sales reached an eight-year high in June. Auto production slipped last month, the Fed said, but that followed several months of strong gains.

Petroleum output fell, but mostly because of a temporary disruption at a large refinery, according to the Fed's report.

The government's jobs report earlier this month showed that factories added 16,000 positions in June, the most in four months, and the average work week for manufacturing employees remained at a post-recession high.

A survey earlier this month by the private Institute for Supply Management, meanwhile, found that manufacturing expanded in June for the 13th straight month, though at a slightly slower pace than the previous month. Growth was broad-based across nearly all the 18 sectors that the survey covers. The ISM is a trade group of purchasing managers.

The economy shrank 2.9 percent at an annual rate in the first quarter, the worst showing in five years.

But most economists expect growth returned in the April-June quarter. On average, analysts forecast the economy grew at an annual pace of 3 percent in the second quarter, according to a survey by the National Association for Business Economics. While healthy, that's down from a 3.5 percent forecast a month earlier.

Report: iPads May Cause Rashes

Mon, 07/14/2014 - 10:24am

Lindsey Tanner, AP Medical Writer

CHICAGO (AP) -- Unexplained rash? Check your iPad. It turns out the popular tablet computer may contain nickel, one of the most common allergy-inducing metals.

Recent reports in medical journals detail nickel allergies from a variety of personal electronic devices, including laptops and cellphones. But it was an Apple iPad that caused an itchy body rash in an 11-year-old boy recently treated at a San Diego hospital, according to a report in Monday's Pediatrics.

Nickel rashes aren't life-threatening but they can be very uncomfortable, and they may require treatment with steroids and antibiotics if the skin eruptions become infected, said Dr. Sharon Jacob, a dermatologist at Rady Children's Hospital, where the boy was treated. Jacob, who co-wrote the report, said the young patient had to miss school because of the rash.

The boy discussed in the Pediatrics report had a common skin condition that causes scaly patches, but he developed a different rash all over his body that didn't respond to usual treatment. Skin testing showed he had a nickel allergy, and doctors traced it to an iPad his family had bought in 2010.

Doctors tested the device and detected a chemical found in nickel in the iPad's outside coating.

"He used the iPad daily," Jacob said.

He got better after putting it in a protective case, she said

Whether all iPad models and other Apple devices contain nickel is uncertain; Apple spokesman Chris Gaither said the company had no comment.

Microsoft also declined to comment on whether its devices contain nickel, said spokeswoman Ryan Bartholomew.

Amy Storey, a spokeswoman for CTIA-The Wireless Association trade group, said nickel isn't widely used in the industry's products' outer coatings because it can block radio frequency signals from reaching the devices. She said she didn't know which makers use it.

People with existing nickel allergies are at risk for rashes from nickel-containing devices. According to an advisory about cellphones on the website of the Nickel Institute, a global association based in Toronto representing nickel producers, the risk arises from contact with nickel-plated outer surfaces "over prolonged periods of time."

"The length of time required to elicit an allergic reaction will vary from 5 or 10 minutes to never, depending on the sensitivity of the individual," the advisory says.

Nickel rashes also have been traced to other common products including some jewelry, eyeglass frames and zippers.

Jacob said evidence suggests nickel allergies are become more common, or increasingly recognized. She cited national data showing that about 25 percent of children who get skin tests for allergies have nickel allergies, versus about 17 percent a decade ago.

Clare Richardson, spokeswoman for the Nickel Institute, said research shows as many as 17 percent of women and 3 percent of men in the general population have nickel allergies. She noted that the European Union has legislation aimed at limiting the amount of nickel that can be released from products that come in direct and prolonged contact with skin.

5 Manufacturing Business Benefits Of Shifting Paper Forms To Mobile Apps

Mon, 07/07/2014 - 11:05am

Jason Peck

Business adoption of new technologies often flows from the personal use of these technologies. This can certainly be said when it comes to mobile apps and devices; the ability to download an app in seconds, share photos and data via the Cloud in real-time, and communicate from any location at any time have evolved from “nice to have” to “need to have.”

These consumer-grade technology expectations are just beginning to spill over to the business world. Yet, despite increased adoption of mobile devices and technologies, paper forms are burying manufacturing businesses today. Consider that the average office worker goes through 10,000 sheets of paper each year, which means that at an estimated cost of $40 per case of paper, businesses are spending $80 annually on paper per worker.[1] The sheer volume of paper not only costs your business money, but it also grinds productivity to a halt. It takes 18 minutes on average to find a paper document, and a whopping 70 percent of businesses would fail in three weeks if they had a catastrophic loss of paper due to a fire or flood.

The costs and inefficiencies of paper forms are no longer lost on manufacturing businesses that are ramping up efforts to shift paper forms and manual processes to mobile apps — and to integrate mobility with key business processes. A 2014 survey Canvas conducted of more than 1,100 business and IT decision makers found that 63 percent of businesses see value in integrating core business applications such as Dropbox, Square, Salesforce, Evernote and Quickbooks with mobile devices and tools.

The Canvas survey points to an increasingly mobile manufacturing workforce that is looking to extend more day-to-day business processes to their mobile devices, and strongly suggests structured and unstructured data collection and collaboration apps are rising to the top of the business decision maker wish list. When it comes to specific tasks manufacturing businesses are using mobile apps for, respondents in the Canvas survey cited:

• Inspections (48 percent)
• Work Orders (36 percent)
• Surveys (23 percent)
• Invoices (21 percent)
• Checklists (18 percent)
• Inventories (6 percent)
• Other (23 percent)

Getting from paper forms to mobile apps is not without technology, business and cultural challenges. Part of the reason that businesses — particularly small to mid-sized firms lacking the budget or internal resources to undertake mobile IT projects — cling to archaic paper processes and Excel spreadsheets is a fear that developing a custom mobile app will prove costly and time intensive. With custom mobile app development often costing over $50,000 and three months of IT time and resources, this fear has merit.

Some also harbor concerns around moving hard data that exists on paper to the Cloud, maintaining control and security of customer and business data, and introducing new processes to employees who are set in their ways.

But these obstacles continue to fade; today, mobile business apps are accessible to manufacturing businesses of any size due to the benefits and economics of the Cloud and Do-It-Yourself app builder tools that eliminate traditional costs associated with custom app development, reduce the need for internal IT and development resources, and speed time to market from app creation to deployment across your workforce.

As a result, your business can now rapidly and affordably shift from paper forms and experience five key cost saving, productivity, and customer experience benefits that a cloud-based mobile app solution delivers.

Mobile time cards enhance workforce visibility

Manufacturing businesses with mobile workforces often struggle to see in real-time what workers are doing on a daily and even hourly basis, where they are at any given point in time, and if they are being as productive as they could be. Paper forms compound this problem because it can often be several hours or even days before a mobile worker returns to the office, files paperwork and enters customer and project information into your system.

Cloud-based mobile apps provide greater visibility into workforce productivity in several ways. For example, businesses with workers who rely heavily on mobile devices are fully aware that time cards are crucial for tracking employee time worked and thus, labor costs for projects. Traditional time cards present their own challenges, but by creating a time card mobile app, businesses can have the time automatically entered to ensure accuracy, and that information can be sent in real-time via the Cloud to the office. Greater accuracy means fewer issues, and allow you to spend less time tracking employees and more on their actual work performance.

Mobile work orders improve workforce productivity

For businesses with mobile workers, tracking how many jobs each employee does in a week can be cumbersome and time consuming with paper work orders. They can also be hard to read, inconsistently returned to the office, lost or damaged, and impossible to get in real time. At a more granular level, fields often aren’t filled in fully or correctly, and pricing is entered or calculated incorrectly.

The result? Your sales cycle grinds to a halt as a result of these delays. For a business owner, paper forms make it time consuming to know which employees are productive and which ones aren’t. Mobile work orders create a system that's reliable, accurate, and accessible in real time. Companies are able to use time and date stamps to show an accurate timing of when the job occurred, while built-in GPS capabilities can confirm a worker was at a job site or customer location when he or she is supposed to be there. Manufacturing businesses also have the flexibility to customize the work order form fields to their specific requirements, pre-populate pricing for parts and have all of the information captured in the mobile work order form transmitted immediately via the Cloud to the office, as well as to customers if required.

Mobile GPS capabilities streamline vehicle routing

A cloud-based mobile app solution can also improve routing efficiency as you dispatch workers to job sites and customer locations. With GPS location capture, business owners can visualize routes on a map, consolidate two routes into one, or even calculate date and time. A light dispatch service also allows companies to send delivery information to remote or field workers, and a careful review of routes can save hundreds of gallons of gas, as well as wear and tear on vehicles.

Mobile inspections improve quality control

For businesses charged with conducting quality control, safety and compliance inspections at work sites, paper forms introduce several vulnerabilities and inefficiencies. Workers could report inspecting a site they never visited, and workers must rewrite the same information over and over, use expensive carbon copies that are hard to read and easily lost, and are limited to text-only data.

Mobile inspection apps allow your business to build in time and date stamps – as well as GPS location – to ensure inspections are being done correctly and in accordance with company and industry regulations. Mobile inspection apps also allow for multimedia (photos, etc.) to more easily report complicated issues and provide visual proof of issues.

Time and date stamps as well as GPS location assure you accurate and effective inspections.

Mobile apps transform data collection and storage

The Canvas survey left little doubt that manufacturing businesses are using or considering use of business applications for a number of processes that used to be paper-intensive or manual in nature.

• More than half (52 percent) of businesses are using file storage applications, and of those businesses using file storage applications Dropbox is the dominant choice (51 percent).
• 23 percent of businesses surveyed use note taking software or applications such as Evernote for their business.
• 33 percent use a CRM system in their business, with Salesforce commanding the most (41 percent) users.
• 47 percent of businesses surveyed use an accounting application, with Quickbooks (41 percent) the most heavily used.

Integrating mobility into core applications that your business uses every day places a premium on effective data collection that can be easily stored and shared across the organization. With mobile data collection capabilities, your employees can fill out information anywhere and have that data stored securely in the Cloud (a huge cost savings driver as each four-drawer filing cabinet costs a firm $1,500 annually. By using Application Program Interfaces (APIs), your business can easily integrate data collected via mobile apps with your own systems such as Salesforce and Quickbooks. Finally, with mobile data collection capabilities, your business can collect an expanded set of information beyond text through image capture, barcode scanning, e-signatures and GPS. 

Cloud mobile business app solutions are now simple and powerful to use, and lead to significant and immediate productivity gains and cost savings for manufacturing businesses with mobile workers that are reliant on paper forms.

5 Factors That Helped The U.S. Economy

Mon, 07/07/2014 - 2:29pm

Paul Wiseman, AP Economics Writer

WASHINGTON (AP) -- How does the U.S. economy do it?

Europe is floundering. China faces slower growth. Japan is struggling to sustain tentative gains.

Yet the U.S. job market is humming, and the pace of economic growth is steadily rising. Five full years after a devastating recession officially ended, the economy is finally showing the vigor that Americans have long awaited.

Last month, employers added 288,000 jobs and helped reduce the unemployment rate to 6.1 percent, the lowest since September 2008. June capped a five-month stretch of 200,000-plus job gains — the first in nearly 15 years.

After having shrunk at a 2.9 percent annual rate from January through March — largely because of a brutal winter — the U.S. economy is expected to grow at a healthy 3 percent pace the rest of the year.

Here are five reasons the United States is outpacing other major economies:

AN AGGRESSIVE CENTRAL BANK

"The Federal Reserve acted sooner and more aggressively than other central banks in keeping rates low," says Bernard Baumohl, chief global economist at the Economic Outlook Group.

In December 2008, the Fed slashed short-term interest rates to near zero and has kept them there. Ultra-low loan rates have made it easier for individuals and businesses to borrow and spend. The Fed also launched three bond-buying programs meant to reduce long-term rates.

By contrast, the European Central Bank has been slower to respond to signs of economic distress among the 18 nations that share the euro currency. The ECB actually raised rates in 2011 — the same year the eurozone sank back into recession.

It's worth keeping in mind that the Fed has two mandates: To keep prices stable and to maximize employment. The ECB has just one mandate: To guard against high inflation. The Fed was led during and after the Great Recession by Ben Bernanke, a student of the Great Depression who was determined to avoid a repeat of the 1930s' economic collapse.

Janet Yellen, who succeeded Bernanke as Fed chair this year, has continued his emphasis on nursing the U.S. economy back to health after the recession of 2007-2009 with the help of historically low rates.

STRONGER BANKS

The United States moved faster than Europe to restore its banks' health after the financial crisis of 2008-2009. The U.S. government bailed out the financial system and subjected big banks to stress tests in 2009 to reveal their financial strength. By showing the banks to be surprisingly healthy, the stress tests helped restore confidence in the U.S. financial system.

Banks gradually started lending again. European banks are only now undergoing stress tests, and the results won't be out until fall. In the meantime, Europe's banks lack confidence. They fear that other banks are holding too many bad loans and that Europe is vulnerable to another crisis. So they aren't lending much.

In the United States, overall bank lending is up nearly 4 percent in the past year. Lending to business has jumped 10 percent.

In the eurozone, lending has dropped 3.7 percent overall, according to figures from the Institute of International Finance. Lending to business is off 2.5 percent. (The U.S. figures are for the year ending in mid-June; the European figures are from May.)

A MORE FLEXIBLE ECONOMY

Economists say Japan and Europe need to undertake reforms to make their economies more flexible — more, in other words, like America's.

Europe needs to lift wage restrictions that prevent employers from cutting pay (rather than eliminating jobs) when times are bad. It could also rethink welfare and retirement programs that discourage people from working and dismantle policies that protect favored businesses and block innovative newcomers, the Organization for Economic Cooperation and Development has argued.

Prime Minister Shinzo Abe has proposed reforms meant to make the Japanese economy more competitive. He wants to expand child care so more women can work, replace small inefficient farms with more large-scale commercial farms and allow more foreign migrant workers to fill labor shortages in areas such as nursing and construction.

Yet his proposals face fierce opposition.

"Europe and Japan remain less well-positioned for durable long-term growth, as they have only recently begun to tackle their deep-rooted structural problems, and a lot remains to be done," says Eswar Prasad, a professor of trade policy at Cornell University.

China is struggling to manage a transition from an economy based on exports and often wasteful investment in real estate and factories to a sturdier but likely slower-growing economy based on more consumer spending.

LESS BUDGET-CUTTING

Weighed down by debt, many European countries took an ax to swelling budget deficits. They slashed pension benefits, raised taxes and cut civil servants' wages. The cuts devastated several European economies. They led to 27 percent unemployment in Greece, 14 percent in Portugal and 25 percent in Spain. The United States has done some budget cutting, too, and raised taxes. But U.S. austerity hasn't been anywhere near as harsh.

A ROARING STOCK MARKET

The Fed's easy-money policies ignited a world-beating U.S. stock market rally. Over the past five years, U.S. stocks have easily outpaced shares in Europe, Japan and Hong Kong. That was one of Bernanke's goals in lowering rates. He figured that miserly fixed-income rates would nudge investors into stocks in search of higher returns. Higher stock prices would then make Americans feel more confident and more willing to spend — the so-called wealth effect.

2 States Trail U.S. In Job Recovery

Wed, 07/02/2014 - 2:43pm

Paul Wiseman, AP Economics Writer

WASHINGTON (AP) -- Five years after the Great Recession officially ended, most states still haven't regained all the jobs they lost, even though the nation as a whole has.

In May, the overall economy finally recovered all 9 million jobs that vanished in the worst downturn since the 1930s. Another month of solid hiring is expected in the U.S. jobs report for June that will be released Thursday.

Yet 32 states still have fewer jobs than when the recession began in December 2007 — evidence of the unevenness and persistently slow pace of the recovery.

Even though economists declared the recession over in June 2009, Illinois is still down 184,000 jobs from pre-recession levels. New Jersey is down 147,000. Both states were hurt by layoffs at factories. Florida is down 170,000 in the aftermath of its real estate market collapse.

The sluggish job market could weigh on voters in some key states when they go to the polls this fall. A Quinnipiac University poll out Wednesday found that voters named the economy by far the biggest problem facing the United States.

The states where hiring lags the most tend to be those that were hit most painfully by the recession: They lost so many jobs that they've struggled to replace them all.

Nevada, which suffered a spectacular real estate bust and four years of double-digit unemployment — has fared worst. It has 6 percent fewer jobs than it did in December 2007. Arizona, also slammed by the housing collapse, is 5 percent short.

By contrast, an energy boom has lifted several states to the top of job creation rankings.

"North Dakota is the No. 1 example," says Dan White, senior economist at Moody's Analytics. "It's like its own little gold rush."

North Dakota has added 100,000 jobs since December 2007 — a stunning 28 percent increase, by far the nation's highest. The state has benefited from technology that allows energy companies to extract oil from shale, sedimentary rock formed by the compression of clay and silt.

Not surprisingly, the capital of North Dakota, Bismarck, has the lowest unemployment rate of any American city: 2.2 percent as of May.

Also benefiting from the energy boom is Texas, which has added more than 1 million jobs since December 2007, an increase of nearly 10 percent. For comparison, the nation as a whole has added only a net 113,000 jobs over that period.

Jobs in Washington D.C., where lobbying is an all but recession-proof occupation, are up 49,000, or 7 percent. The gain was led by a 10 percent increase in hiring by private employers.

Wall Street's recovery from the financial crisis has helped New York gain 237,000 jobs since the recession ended, an increase of nearly 3 percent.

Moody's White says many states are struggling because the recession wiped out solid middle-class jobs — in manufacturing and construction — that haven't returned. He says it will take a stronger housing recovery to put significantly more people back to work building houses, installing wiring and plumbing and selling furniture and appliances to new owners of homes.

Housing has rebounded somewhat since bottoming a couple of years ago. But the industry's recovery has slowed. Home construction is running at barely half the pace of the early and mid-2000s. And the United States has lost nearly 1.5 million construction workers since the end of 2007 — a 20 percent plunge. Nevada has lost half its construction workforce.

Factories have added 105,000 jobs over the past year, but manufacturing payrolls remain down 1.6 million, or 12 percent, since the start of the recession. Manufacturing jobs in Michigan hit bottom in June 2009. But the state still has 45,000, or 7 percent, fewer factory workers than it did in December 2007.

California Raises Minimum Wage

Wed, 07/02/2014 - 7:45am 

Judy Lin, Associated Press

SACRAMENTO, Calif. (AP) -- California's minimum wage will rise to $9 an hour when a new law takes effect on Tuesday and provides workers with the first such increase since 2008.

That amount will increase again to $10 an hour starting on Jan. 1, 2016, under AB10, which Gov. Jerry Brown signed into law last fall.

"This first modest increase will help put more money in the pockets of hardworking Californians to provide food, clothes and housing for their families," Assemblyman Luis Alejo, D-Salinas, said in a statement.

AB10 is one of several laws that take effect in July. Others will provide additional protections to victims of domestic violence, expand the state's paid family leave program, and give tax breaks to manufacturers.

California's minimum wage increase comes amid a national debate about low-wage workers who have seen their purchasing power decline in recent years.

President Barack Obama has pushed Congress to raise the federal minimum wage to $10.10 an hour, but the proposal hasn't gained much traction. Instead, he has encouraged cities and states to raise those wages on their own.

New York City, Chicago, San Francisco and Oklahoma City are among the municipalities debating minimum wage increases. In early June, the Seattle City Council voted to raise the minimum wage within the city to $15 an hour, starting next April and phasing in over several years.

Currently, the highest minimum wage in the country is in SeaTac, a Washington state town of about 25,000 that is home to Seattle-Tacoma International Airport. The $15-an-hour minimum wage approved by voters took effect in January for workers at major hotels and parking lots, and the state Supreme Court will decide whether it also applies to workers at the airport, which is run by a separate authority.

Washington has the highest minimum wage of any state at $9.32 an hour.

In California, a bill that would have raised the state's minimum wage even higher and tied it to inflation failed in the Legislature this year.