CSAC Bulletin Article

State Minimum Wage to Increase to $16 in 2024

August 3, 2023

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.

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