The California minimum wage is set to increase to $16 per hour on
January 1, 2024. California Labor Code requires the California
Department of Finance to make an annual determination that
economic conditions can support a statewide minimum wage increase
and certify to the Governor and the Legislature that such
conditions are met. The Department of Finance certified the
minimum wage increase in
a memo to Governor Gavin Newsom and Legislative leadership on
Monday, July 31.
Recent History of the Minimum Wage Increase
In 2016, California instituted a $15 minimum wage, to be
phased-in between 2017 and 2023 (SB
3, Leno). For an employer with 26 or more employees, the
minimum wage was scheduled to increase yearly until reaching $15
effective January 1, 2022. Employers with 25 or fewer employees
were granted one extra year to phase-in the $15 minimum wage,
which was set to become effective on January 1, 2023. Thereafter,
the minimum wage was scheduled to increase annually pursuant to
inflation. However, as inflation was above 7% in fiscal years
2020-21 and 2021-22, inflation outpaced the scheduled increases
in the minimum wage as defined in SB 3. Therefore, due to
heightened inflation, the minimum wage for employees was raised
to $15.50 as of January 1, 2023. Additionally, California Labor
Code allows the Governor to delay scheduled minimum wage
increases in the case of specified negative economic conditions
or if the state forecasts a budget deficit.
Future Changes to the Minimum Wage
California voters will consider a proposition on the November
2024 ballot that would raise the statewide minimum wage to $18
per hour by January 2025 for large employers and January 2026 for
smaller employers. The proposition (Initiative
21-0043) gathered more than the required threshold of voter
signatures and qualified for the fall 2024 ballot in mid-2022.
