Triggered by Rising Inflation, California’s Minimum Wage Projected to Increase to $15.50 Next Year

Last week, Governor Gavin Newsom projected California's minimum wage to increase to $15.50 by January 1, 2023. The increase is required by the state's minimum wage law, passed in 2016, which triggers an increase when inflation exceeds 7 percent.

The Governor's administration cited a current 40-year high inflation rate caused by the COVID-19 pandemic, persistent supply chain disruptions, labor market frictions, and the war in Ukraine as the basis for its prediction. Additional support for the Governor's forecast can be found in California's Department of Finance's recent announcement of a 7.6 percent projected inflation increase for the 2022 fiscal year which ends on June 30, 2022–the state's finalized inflation numbers are not expected until July 2022.

In 2016, California's legislators approved a minimum wage increase to $15 per hour to be phased in over several years. The current minimum wage is $15 per hour for employers with 25 or more workers and $14 per hour for employers with fewer than 25 workers. If these recent projections based on inflation and other factors are accurate, the minimum wage increase to $15.50 would apply to all workers, regardless of the number of employees at a company.

Additionally, a proposed ballot measure to raise California's minimum wage to $18 per hour is also receiving broad support, having submitted more than 1 million signatures that secures it a spot on the November ballot.

DWT will continue to provide updates on the topic of minimum wage and will immediately advise of any rate changes should they occur.