California lawmakers approved a sweeping measure yesterday to increase the state’s minimum wage to $15 an hour over the next six years. The measure is headed for Governor Jerry Brown’s desk and he is expected to sign it into law.
Just a few days ago, Gov. Brown announced an agreement with labor leaders and workers that set in motion the whirlwind vote in the state Senate and Assembly. Gov. Brown was previously hesitant to raise the minimum wage beyond the current $10 an hour. However, last week, the Service Employees International Union United Healthcare Workers West said it had gathered enough voter signatures to place a proposal to increase the minimum wage to $15 an hour by 2021 on the November ballot. Gov. Brown said the compromise was a “careful and responsible way” to increase the minimum wage at a rate slower than the labor-sponsored ballot measure.
Under the plan approved yesterday, California’s hourly minimum wage will increase to $10.50 on January 1, 2017 for businesses with 26 or more employees. The following year, it will increase to $11, and increase by $1 annually until 2022. Businesses with 25 or fewer employees will get an additional year to comply. Once the minimum wage reaches $15 for all businesses, it can be adjusted each year for inflation. Additionally, the plan permits a governor to pause any of the increases by one year in the case of an economic downturn or state budget struggle.
According to a legislative analysis released this week, there are approximately 2.2 million Californians currently earning minimum wage, but the impact of the law will likely reach far more workers. Industries such as retail and restaurant/food services traditionally have a large portion of their workforce earning at or near the minimum wage and, consequently, may experience the heaviest burden as the minimum wage floor is raised. However, the wage hike will also effect the pay of workers who are exempt from state overtime rules because they must be paid at least double the minimum wage, and there will likely be a ripple effect on higher earners as businesses adjust their pay scales to retain key employees and attract top talent.